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The Zacks Analyst Blog Highlights: Square, L'Air Liquide and Nintendo
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For Immediate Release
Chicago, IL – October 13, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Square, Inc. (SQ - Free Report) , L'Air Liquide S.A. (AIQUY - Free Report) and Nintendo Co., Ltd. (NTDOY - Free Report) .
Here are highlights from Monday’s Analyst Blog:
Q3 Earnings Season Kicks Off: Global Week Ahead
In the Global Week Ahead, the S&P 500’s Q3 earnings season kicks off.
According to Zacks Research Director Sheraz Mian, ~10% of S&P 500 results will be in.
“In total, we will get Q3 results from 43 companies this week, including 26 S&P 500 members.
“With results from 22 S&P 500 members with fiscal quarters ending in August already on the books (that we and other data vendors count as part of the Q3 tally), we will have seen 48 results for this earnings season by the end of the week.”
The Q3 earnings festivities get underway mostly on Tuesday.
As usual, the first week of earnings season focuses on big money center banks.
But other key reports do come out. Among them two major U.S. airlines.
What I noted—
On Tuesday, I see the big banks JPM and C report Before the Market Opens (BMO). The airline DAL and the drug company JNJ also report BMO.
On Wednesday, I see more big banks/brokerages BAC, GS and WFC report BMO. The airline UAL reports After Market Closes (AMC).
On Thursday, I see big bank/brokerage MS reports BMO. The surgery robot company ISRG is up AMC. Chip monster TSM in Taiwan will report too.
On Friday, oil field giant SLB and freight transporter JBHT will be interesting.
Next are Reuters’ five world market themes, reordered for equity traders.
(1) Q3 Earnings Reports Start to Roll In
After U.S. Q2 results beat expectations, Q3 will show whether dire forecasts for companies’ bottom lines were justified.
Most sectors will again show steep drops in earnings but it should be less dramatic than the previous quarter; expectations are for an average -21% decline, versus the -31% contraction of Q2, when coronavirus-linked lockdowns decimated economic activity.
Energy companies are seen faring worse, with earnings down -115% from a year ago, according to Refinitiv. Tech earnings are predicted to fall just -0.5% percent.
Banks -- Citi and JPMorgan report on Tuesday -- may see earnings slip -19% on average, but there is hope that after two quarters of hefty provisioning against bad loans, potential loan losses have mostly been covered.
(2) Are U.S. Treasury Yields About to Rise?
Will the Fed do something about the Treasury yield curve?
Bets on a spending boost from any incoming administration — Democrat or Republican — has seen record shorts build up in long-dated Treasury futures and a jump in long yields has pushed the gap between five-year and 30-year borrowing costs to the widest since 2016.
Curve steepening isn’t bad news if it signals higher growth and inflation, yet for an economy recovering from recession, too quick a move is a threat and a headache for the Fed.
It hasn’t committed to capping yields or buying bonds of any particular maturity. But further steepening might test its patience. Fed research suggests bond holdings may need to raise another $3.5 trillion to boost the economy.
Policymakers speaking in coming days will certainly be quizzed on that.
(3) Will There Be a Brexit Endgame?
With a UK-imposed Oct. 15 deadline for a post-Brexit EU trade deal upon us, there are signs a bare-bones agreement is taking shape.
But is the endgame really in sight?
Negotiators warn of a huge amount of textual work even if a deal is struck. Another report suggests the EU is preparing for negotiations to last until mid-November. Several sticking points still remain.
The EU’s Oct. 15-16 summit will evaluate the progress. Sterling is on the rise meanwhile, but even if a deal is struck, the ebb and flow of Britain’s new relationship with the EU may continue to hold markets hostage.
(4) How Strong Is Mainland China’s COVID Recovery?
China returns to work on Monday after a week of rest and, hopefully, recreation.
Policymakers and investors will have fresh trade and credit data to weigh up in the coming days. But they will also scour railway bookings, box office sales and petrol usage to gauge how consumers spent during vacation. With consumption still a soft spot in an otherwise remarkable post-COVID rebound, a spending leap could offer a second wind for the economy.
One early indicator might be traffic. Back at last year’s levels for the first time since the outbreak, it’s a hint that Chinese travelers are out and about, but preferring private transport.
(5) A Virtual IMF/World Bank Annual Meeting
Each year, up to 10,000 policymakers, business people, NGOs and journalists congregate in downtown Washington DC for the semi-annual IMF/World Bank shindigs.
This year, meetings are virtual but there is still pressing business at hand.
More than 100 countries have requested IMF help; demand for support could reach $100 billion. One issue is a possible extension of the G20’s Debt Service Suspension Initiative (DSSI) for poor countries. Extending that by six months would provide another $6.4 billion of relief, rising to $11.4 billion if it runs to end-2021.
But amid warnings 100 million people could fall into extreme poverty, World Bank President David Malpass wants banks and investors to also provide relief to DSSI countries.
He may face opposition, with many arguing of defaults that could bar countries from borrowing for years to come.
Top Zacks #1 Rank (STRONG BUY) Stocks
(1) Square: This is a contactless payment darling now. I see a market cap of $81.4B and a share price of $183. The Zacks Value score of F, and the Zacks Growth score of F say this. Beware new money!
(2) Air Liquide: This is a French Diversified Chemical firm. The Materials sector has come alive, and the Chemicals firms are part of that. This is a $74.2B market cap stock with a $31 share price. I see a Zacks Value score of F and a Zacks Growth score of C. Not really that attractive.
(3) Nintendo: This is the Japanese Electronic Game company. This is a $72B market cap stock with a $69 share price. I see a Zacks Value score of F, and a Zacks Growth score of B. Once again, getting on our #1 list comes with a nosebleed valuation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Square, L'Air Liquide and Nintendo
For Immediate Release
Chicago, IL – October 13, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Square, Inc. (SQ - Free Report) , L'Air Liquide S.A. (AIQUY - Free Report) and Nintendo Co., Ltd. (NTDOY - Free Report) .
Here are highlights from Monday’s Analyst Blog:
Q3 Earnings Season Kicks Off: Global Week Ahead
In the Global Week Ahead, the S&P 500’s Q3 earnings season kicks off.
According to Zacks Research Director Sheraz Mian, ~10% of S&P 500 results will be in.
“In total, we will get Q3 results from 43 companies this week, including 26 S&P 500 members.
“With results from 22 S&P 500 members with fiscal quarters ending in August already on the books (that we and other data vendors count as part of the Q3 tally), we will have seen 48 results for this earnings season by the end of the week.”
The Q3 earnings festivities get underway mostly on Tuesday.
As usual, the first week of earnings season focuses on big money center banks.
But other key reports do come out. Among them two major U.S. airlines.
What I noted—
On Tuesday, I see the big banks JPM and C report Before the Market Opens (BMO). The airline DAL and the drug company JNJ also report BMO.
On Wednesday, I see more big banks/brokerages BAC, GS and WFC report BMO. The airline UAL reports After Market Closes (AMC).
On Thursday, I see big bank/brokerage MS reports BMO. The surgery robot company ISRG is up AMC. Chip monster TSM in Taiwan will report too.
On Friday, oil field giant SLB and freight transporter JBHT will be interesting.
Next are Reuters’ five world market themes, reordered for equity traders.
(1) Q3 Earnings Reports Start to Roll In
After U.S. Q2 results beat expectations, Q3 will show whether dire forecasts for companies’ bottom lines were justified.
Most sectors will again show steep drops in earnings but it should be less dramatic than the previous quarter; expectations are for an average -21% decline, versus the -31% contraction of Q2, when coronavirus-linked lockdowns decimated economic activity.
Energy companies are seen faring worse, with earnings down -115% from a year ago, according to Refinitiv. Tech earnings are predicted to fall just -0.5% percent.
Banks -- Citi and JPMorgan report on Tuesday -- may see earnings slip -19% on average, but there is hope that after two quarters of hefty provisioning against bad loans, potential loan losses have mostly been covered.
(2) Are U.S. Treasury Yields About to Rise?
Will the Fed do something about the Treasury yield curve?
Bets on a spending boost from any incoming administration — Democrat or Republican — has seen record shorts build up in long-dated Treasury futures and a jump in long yields has pushed the gap between five-year and 30-year borrowing costs to the widest since 2016.
Curve steepening isn’t bad news if it signals higher growth and inflation, yet for an economy recovering from recession, too quick a move is a threat and a headache for the Fed.
It hasn’t committed to capping yields or buying bonds of any particular maturity. But further steepening might test its patience. Fed research suggests bond holdings may need to raise another $3.5 trillion to boost the economy.
Policymakers speaking in coming days will certainly be quizzed on that.
(3) Will There Be a Brexit Endgame?
With a UK-imposed Oct. 15 deadline for a post-Brexit EU trade deal upon us, there are signs a bare-bones agreement is taking shape.
But is the endgame really in sight?
Negotiators warn of a huge amount of textual work even if a deal is struck. Another report suggests the EU is preparing for negotiations to last until mid-November. Several sticking points still remain.
The EU’s Oct. 15-16 summit will evaluate the progress. Sterling is on the rise meanwhile, but even if a deal is struck, the ebb and flow of Britain’s new relationship with the EU may continue to hold markets hostage.
(4) How Strong Is Mainland China’s COVID Recovery?
China returns to work on Monday after a week of rest and, hopefully, recreation.
Policymakers and investors will have fresh trade and credit data to weigh up in the coming days. But they will also scour railway bookings, box office sales and petrol usage to gauge how consumers spent during vacation. With consumption still a soft spot in an otherwise remarkable post-COVID rebound, a spending leap could offer a second wind for the economy.
One early indicator might be traffic. Back at last year’s levels for the first time since the outbreak, it’s a hint that Chinese travelers are out and about, but preferring private transport.
(5) A Virtual IMF/World Bank Annual Meeting
Each year, up to 10,000 policymakers, business people, NGOs and journalists congregate in downtown Washington DC for the semi-annual IMF/World Bank shindigs.
This year, meetings are virtual but there is still pressing business at hand.
More than 100 countries have requested IMF help; demand for support could reach $100 billion. One issue is a possible extension of the G20’s Debt Service Suspension Initiative (DSSI) for poor countries. Extending that by six months would provide another $6.4 billion of relief, rising to $11.4 billion if it runs to end-2021.
But amid warnings 100 million people could fall into extreme poverty, World Bank President David Malpass wants banks and investors to also provide relief to DSSI countries.
He may face opposition, with many arguing of defaults that could bar countries from borrowing for years to come.
Top Zacks #1 Rank (STRONG BUY) Stocks
(1) Square: This is a contactless payment darling now. I see a market cap of $81.4B and a share price of $183. The Zacks Value score of F, and the Zacks Growth score of F say this. Beware new money!
(2) Air Liquide: This is a French Diversified Chemical firm. The Materials sector has come alive, and the Chemicals firms are part of that. This is a $74.2B market cap stock with a $31 share price. I see a Zacks Value score of F and a Zacks Growth score of C. Not really that attractive.
(3) Nintendo: This is the Japanese Electronic Game company. This is a $72B market cap stock with a $69 share price. I see a Zacks Value score of F, and a Zacks Growth score of B. Once again, getting on our #1 list comes with a nosebleed valuation.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.