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The Zacks Analyst Blog Highlights: Square, Goldman Sachs and Canadian Imperial Bank of Commerce
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For Immediate Release
Chicago, IL – January 12, 2021 – 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) , The Goldman Sachs Group, Inc. (GS - Free Report) and Canadian Imperial Bank of Commerce (CM - Free Report) .
Here are highlights from Monday’s Analyst Blog:
The Biden Trades: Global Week Ahead
In the Global Week Ahead, Thursday looks to be a big day.
Here is how Scotiabank's global economics team put the day's two big political events together.
I like to apply their perspective. Canada is a key U.S. ally. This FX-focused team offers economists like me, based in the USA, a credible, external perspective. On what they are watching.
This Global Week Ahead holds a double whammy for policy wonks, and those playing the "Biden Trades."
A. President-elect Joe Biden has guided that he will announce the outlines of a stimulus plan on Thursday
Biden has guided that the price tag with be "high" and in the "trillions" and is expected to include plans for US$2,000 stimulus cheques, more generous unemployment assistance and enhanced aid to city and state governments.
One issue is the degree to which the Democrats will support such an aggressive package.
Senator Joe Manchin, for example, initially objected to stimulus cheques that high at about a US$400B price tag, but later indicated that he might be convinced if the amounts were to be targeted.
Targeted means-tested assistance that doesn't send cheques to millionaires might be the easy and generally sensible way of achieving agreement.
B. On that same day, Fed Chair Powell will speak in a fluid conversation format at a Princeton University event (12:30 pm ET)
He's likely to generally reinforce the more upbeat take offered by Vice Chair Clarida in published (here) and verbal remarks, but he may have a greater sense of Biden's fiscal plans by then.
In play is the shift in the policy balance more toward fiscal policy relative to monetary policy and how the Federal Reserve may react over time.
The Fed spent years beseeching Congress to apply more fiscal stimulus and it may be getting it in spades now. Bond markets are already reacting with persistent curve steepening.
Still, the 10-year Treasury yield has only risen toward 1.1% from about ½% at last summer's low.
Next are Reuters' Five World Market themes, re-ordered for equity traders.
(1) The "Biden Bets"
One trade is gripping markets in the early days of 2021: reflation — nowhere more evident than in bonds, where U.S. 10-year Treasury yields topped 1.0% on Georgia's Senate runoff results.
Betting on a fiscal boost under President-elect Joe Biden, investors pushed the 10-year TIPS breakeven inflation rate above 2% for the first time since 2018. Eurozone long-term inflation expectations are near one-year highs.
But COVID-19 is raging and economies gripped with stricter economic lockdowns and fast-spreading variants. Can a pick-up in prices be sustained? Eurozone December inflation was unchanged at -0.3%, pulling the bloc's bond yields back down. Only one side of the reflation debate will be proved right.
(2) On Friday, Money Center Banks Kick Off Q4-20 Earnings Season
Banks kick off the U.S. corporate earnings season in earnest with JP Morgan, Citigroup and Wells Fargo posting fourth-quarter results on Friday — the first S&P 500 companies to report for that period.
Bank stocks have been on a roll as breakthrough COVID-19 vaccine data encouraged hopes of a potential economic reopening over coming months. Since early November, the S&P 500 banks index has soared some 37% against an 8% rise for the overall benchmark. Earnings for financial companies are expected to have dropped 6.6% in the fourth quarter against a 10.3% drop for S&P 500 companies overall, according to Refinitiv data as of Dec 31.
(3) Where Goes the China Stock Delisting Narrative?
A volley of parting shots in the direction of Beijing will have investors holding their breath until Jan. 20th, when U.S. President Donald Trump hands over the keys to 1600 Pennsylvania Ave.
Since November, audits have been forced onto Chinese firms, trade restrictions have expanded as have bans on transactions over Chinese apps and on investment in Chinese companies, leading in turn to index removals.
China has responded angrily but without action; Biden has stayed silent. The worry is things sour further. Market nerves are evident in the gyrations in Chinese telcos amid the New York Stock Exchange' double backflip over their listing status as well as in Alibaba and Tencent shares on speculation that bans could be extended to them.
(4) What is the State of the Mainland China Economy?
Upcoming Chinese data, from inflation and trade to credit and money supply numbers, should confirm Beijing has dialed back on most of its pandemic-period easy-money policies by December.
The People's Bank of China says monetary policy in 2021 will be targeted and flexible. Debt forgiveness and cheap money will be available for small firms. The recent string of corporate defaults also shows the economy is deleveraging.
Rate cuts are over, analysts say, but policy won't be tightened abruptly. Subtle tightening is already underway via the yuan, up 7% against the dollar in 2020, but even there the central bank has signaled it doesn't want any excesses.
(5) Keep an Eye on Global Trade Figures
Global merchandise trade will rebound by 7.2% in 2021 after shrinking by a tenth last year, the World Trade Organization predicts. The uptick is already evident in shipping rates, container traffic volumes and freight indexes.
Recent data bode well. U.S. imports are almost back to pre-crisis levels, German November exports rose for the seventh straight month and Taiwan's December exports hit record highs. Figures from China on Thursday and the Eurozone on Friday will show how their trades fared towards the end of 2020.
Pandemic-related medical gear and goods linked to remote working dominate exports. Chip sales have led export growth in bellwether South Korea. This has also upped demand for copper, iron and other raw materials, benefiting African and South American exporters.
Good news for global GDP, which is closely linked to trade and forecast to expand by more than +5% this year.
Top Zacks #1 Rank (STRONG BUY) Stocks
With big banks kicking off earnings season, I thought to purposefully put up the top three Finance stocks on our #1 list, in order of Market Cap.
(1) Square: I see a $241 share price, producing a market cap of $124.5B. This, predictably, garners a Zacks Value score of F, but it comes with a Zacks Growth score of A, and a Zacks Momentum score of F.
(2) Goldman Sachs: I see a share price of $290, producing a market cap of $100.3B. This also comes with a Zacks Value score of F, a Zacks Growth score of F, and a Zacks Momentum score of A.
(3) Canadian Imperial Bank of Commerce: This is an $88 a share stock. That makes for a $39.4B market cap. I see a Zacks Value score of C, a Zacks Growth score of D, and a Zacks Momentum score of D.
Note: Square gets a Zacks Growth of A.
The older established firms? Goldman Sachs stock gets a Zacks Growth of F, Canadian Imperial gets a Zacks Growth score of D.
The marked differences in Zacks Growth scores show the FinTech angle being played.
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, Goldman Sachs and Canadian Imperial Bank of Commerce
For Immediate Release
Chicago, IL – January 12, 2021 – 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) , The Goldman Sachs Group, Inc. (GS - Free Report) and Canadian Imperial Bank of Commerce (CM - Free Report) .
Here are highlights from Monday’s Analyst Blog:
The Biden Trades: Global Week Ahead
In the Global Week Ahead, Thursday looks to be a big day.
Here is how Scotiabank's global economics team put the day's two big political events together.
I like to apply their perspective. Canada is a key U.S. ally. This FX-focused team offers economists like me, based in the USA, a credible, external perspective. On what they are watching.
This Global Week Ahead holds a double whammy for policy wonks, and those playing the "Biden Trades."
A. President-elect Joe Biden has guided that he will announce the outlines of a stimulus plan on Thursday
Biden has guided that the price tag with be "high" and in the "trillions" and is expected to include plans for US$2,000 stimulus cheques, more generous unemployment assistance and enhanced aid to city and state governments.
One issue is the degree to which the Democrats will support such an aggressive package.
Senator Joe Manchin, for example, initially objected to stimulus cheques that high at about a US$400B price tag, but later indicated that he might be convinced if the amounts were to be targeted.
Targeted means-tested assistance that doesn't send cheques to millionaires might be the easy and generally sensible way of achieving agreement.
B. On that same day, Fed Chair Powell will speak in a fluid conversation format at a Princeton University event (12:30 pm ET)
He's likely to generally reinforce the more upbeat take offered by Vice Chair Clarida in published (here) and verbal remarks, but he may have a greater sense of Biden's fiscal plans by then.
In play is the shift in the policy balance more toward fiscal policy relative to monetary policy and how the Federal Reserve may react over time.
The Fed spent years beseeching Congress to apply more fiscal stimulus and it may be getting it in spades now. Bond markets are already reacting with persistent curve steepening.
Still, the 10-year Treasury yield has only risen toward 1.1% from about ½% at last summer's low.
Next are Reuters' Five World Market themes, re-ordered for equity traders.
(1) The "Biden Bets"
One trade is gripping markets in the early days of 2021: reflation — nowhere more evident than in bonds, where U.S. 10-year Treasury yields topped 1.0% on Georgia's Senate runoff results.
Betting on a fiscal boost under President-elect Joe Biden, investors pushed the 10-year TIPS breakeven inflation rate above 2% for the first time since 2018. Eurozone long-term inflation expectations are near one-year highs.
But COVID-19 is raging and economies gripped with stricter economic lockdowns and fast-spreading variants. Can a pick-up in prices be sustained? Eurozone December inflation was unchanged at -0.3%, pulling the bloc's bond yields back down. Only one side of the reflation debate will be proved right.
(2) On Friday, Money Center Banks Kick Off Q4-20 Earnings Season
Banks kick off the U.S. corporate earnings season in earnest with JP Morgan, Citigroup and Wells Fargo posting fourth-quarter results on Friday — the first S&P 500 companies to report for that period.
Bank stocks have been on a roll as breakthrough COVID-19 vaccine data encouraged hopes of a potential economic reopening over coming months. Since early November, the S&P 500 banks index has soared some 37% against an 8% rise for the overall benchmark. Earnings for financial companies are expected to have dropped 6.6% in the fourth quarter against a 10.3% drop for S&P 500 companies overall, according to Refinitiv data as of Dec 31.
(3) Where Goes the China Stock Delisting Narrative?
A volley of parting shots in the direction of Beijing will have investors holding their breath until Jan. 20th, when U.S. President Donald Trump hands over the keys to 1600 Pennsylvania Ave.
Since November, audits have been forced onto Chinese firms, trade restrictions have expanded as have bans on transactions over Chinese apps and on investment in Chinese companies, leading in turn to index removals.
China has responded angrily but without action; Biden has stayed silent. The worry is things sour further. Market nerves are evident in the gyrations in Chinese telcos amid the New York Stock Exchange' double backflip over their listing status as well as in Alibaba and Tencent shares on speculation that bans could be extended to them.
(4) What is the State of the Mainland China Economy?
Upcoming Chinese data, from inflation and trade to credit and money supply numbers, should confirm Beijing has dialed back on most of its pandemic-period easy-money policies by December.
The People's Bank of China says monetary policy in 2021 will be targeted and flexible. Debt forgiveness and cheap money will be available for small firms. The recent string of corporate defaults also shows the economy is deleveraging.
Rate cuts are over, analysts say, but policy won't be tightened abruptly. Subtle tightening is already underway via the yuan, up 7% against the dollar in 2020, but even there the central bank has signaled it doesn't want any excesses.
(5) Keep an Eye on Global Trade Figures
Global merchandise trade will rebound by 7.2% in 2021 after shrinking by a tenth last year, the World Trade Organization predicts. The uptick is already evident in shipping rates, container traffic volumes and freight indexes.
Recent data bode well. U.S. imports are almost back to pre-crisis levels, German November exports rose for the seventh straight month and Taiwan's December exports hit record highs. Figures from China on Thursday and the Eurozone on Friday will show how their trades fared towards the end of 2020.
Pandemic-related medical gear and goods linked to remote working dominate exports. Chip sales have led export growth in bellwether South Korea. This has also upped demand for copper, iron and other raw materials, benefiting African and South American exporters.
Good news for global GDP, which is closely linked to trade and forecast to expand by more than +5% this year.
Top Zacks #1 Rank (STRONG BUY) Stocks
With big banks kicking off earnings season, I thought to purposefully put up the top three Finance stocks on our #1 list, in order of Market Cap.
(1) Square: I see a $241 share price, producing a market cap of $124.5B. This, predictably, garners a Zacks Value score of F, but it comes with a Zacks Growth score of A, and a Zacks Momentum score of F.
(2) Goldman Sachs: I see a share price of $290, producing a market cap of $100.3B. This also comes with a Zacks Value score of F, a Zacks Growth score of F, and a Zacks Momentum score of A.
(3) Canadian Imperial Bank of Commerce: This is an $88 a share stock. That makes for a $39.4B market cap. I see a Zacks Value score of C, a Zacks Growth score of D, and a Zacks Momentum score of D.
Note: Square gets a Zacks Growth of A.
The older established firms? Goldman Sachs stock gets a Zacks Growth of F, Canadian Imperial gets a Zacks Growth score of D.
The marked differences in Zacks Growth scores show the FinTech angle being played.
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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.