We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will protracted DC stimulus negotiations derail the U.S. economy’s recovery? What about contentious spending discussions in Europe and Japan?
With the S&P500 testing a record high of 3,400, fiscal debates are a worthy wall of worry.
For traders inside the world’s stock markets, here is a Zacks Earnings update.
I pulled it from Zacks Research Director Sheraz Mian’s notes--
Through Friday, August 14th, we have seen Q2 results from 458 S&P500 members or 91.6% of the index’s total membership.
• Total earnings (or aggregate net income) for those 458 S&P500 members are down -35.4% on -11.3% lower revenues.
• Another 18 index members are on deck to report results this week.
Zacks expects Q3 earnings for the S&P500 to decline -24% from the same period last year. But that growth picture has been steadily improving. Since the start of July.
We see a similar trend in place for Q4-2020 and full-year 2020 earnings estimates.
Want the big individual stock narrative within the Global Week Ahead?
It is likely the latest earnings reports from big U.S. retail outfits. They will wrap up Q2 earnings season.
But don’t neglect the latest numbers from chip-maker NVIDIA (NVDA - Free Report) out of Wednesday!
Here is what Refinitiv --a 2018 joint venture owned by Blackstone and Thompson Reuters-- has to say about these reports:
1) Walmart (WMT - Free Report) on Tuesday is expected to post a rise in same-store sales in the second quarter, banking on resilient demand for groceries as well as increased consumer spending on higher-priced products like shoes and electronics.
For the big box retailer, its margins are likely to be squeezed in the quarter but are expected to improve due to higher discretionary spend.
Investors and analysts will also be looking out for any detail on the launch of Walmart plus, a subscription service that is expected to rival Amazon Prime.
2) Home Depot (HD - Free Report) is expected to report a rise in second-quarter sales on Tuesday, as people spent more on paint and tools to do minor remodeling work around their houses during the pandemic
3) Lowe's Cos. (LOW - Free Report) is expected to report a rise in quarterly same-store sales on Wednesday, boosted by demand from consumers doing minor repair and remodeling work while spending more time at home due to the COVID-19 pandemic.
Investors will be keen to see if the company can make up ground on its larger rival, Home Depot.
4) On Wednesday, Target (TGT - Free Report) is expected to post a rise in Q2 same-store sales on rising 2 demand for products like electronics and apparel as well as daily essentials with many states easing lockdown restrictions.
Target is likely to report a bump in online sales as well, as shoppers use up their stimulus checks and unemployment benefits.
5) Nvidia is expected to post a rise in second-quarter revenue on Wednesday, benefiting from a rise in demand for its chips used in data centers as more people work from home. Investors will be looking at comments on demand trends for the current quarter.
6) Alibaba Group (BABA - Free Report) reports its calendar second-quarter 2020 earnings on Thursday. The e-commerce giant is expected to report a rise in quarterly revenue as demand for online orders surge with people staying at home.
Next are Reuter’s five world market themes, reordered for equity traders.
(1) Will DC Stimulus Negotiations Bear Fruit?
U.S. lawmakers negotiating a fresh dose of stimulus have reached an impasse.
Trillions of dollars injected by the Federal Reserve and huge government spending increases have stemmed coronavirus-linked economic damage, fueling a rebound in a Citi index that tracks economic data relative to expectations.
But with almost 30 million Americans unemployed and coronavirus still spreading, Fed policymakers have been warning the recovery could sputter unless politicians come through with further measures.
The S&P500 index is holding just off record highs. The wait is on to see if negotiations resume and bear fruit.
(2) More Stock Splits…
Apple (AAPL - Free Report) and Tesla’s (TSLA - Free Report) stock-split announcements rekindle memories of the dotcom bubble, when companies were actively dividing shares into multiple new ones. That trend eventually died — is it making a comeback?
Tesla is giving out five shares for each share held; Apple has a four-for-one offer. Companies typically split shares to make them cheaper for retail investors, but these days, with platforms already offering fractional shares for as little as $1, such splits don’t attract investors in droves.
Shares have risen since the announcements, but it remains to be seen whether gains continue until Aug. 31, when trading starts on a split-adjusted basis for both Apple and Tesla.
(3) Watch Gold Prices and the U.S. Dollar’s Value.
The dollar’s 5% plunge in five weeks has got gold bugs excited. Prices for the metal vaulted to a record above $2,000 per ounce before retreating as the greenback regained some poise.
Dollar weakness could run further — it remains strong across various trade-weighted indexes. But correlations between gold and the dollar, tenuous at best, have weakened under the impact of central bank stimulus, with 90-day correlations approaching cyclical lows.
Finally, rising inflation expectations boost hedges such as gold. Refinitiv data shows U.S., U.K., German and Japanese 10-year real, inflation-adjusted yields in negative territory, a first for all of them simultaneously.
So even if gold struggles above $2,000, gold bugs can probably rest assured a big selloff isn’t imminent.
(4) Brexit? Gads. Yes. Negotiations begin on August 17th.
The twin troubles of Brexit and coronavirus ensured Britain’s second-quarter contraction of 20.4% was greater than any other major economy. And recovery will be elusive unless a free-trade deal is reached with the European Union before the post-Brexit transition period ends on Dec. 31st.
EU-UK talks begin on Aug 17th. The two sides remain far apart, but the meetings may show if they can lay aside their differences in time to reach a deal by the Oct. 2nd deadline. An impasse may spell trouble for sterling and further pressure on domestic-focused shares.
The Bank of England is not considering negative interest rates just yet, but the prospect of crashing out of the European Union without a deal might leave it with no alternative.
(5) Iron Ore Earnings Reports from Australia.
The world’s biggest listed mining company and the third-biggest digger of iron ore, Australia’s BHP, reports annual results on Tuesday.
With iron ore prices soaring and rival Rio Tinto beating forecasts, strong numbers are expected of BHP. But BHP is more than just a miner — steel is a bellwether for economic growth and its main ingredient, iron ore, sits at a critical juncture.
Many question whether Chinese demand is enough to offset crumbling orders elsewhere.
BHP is also a gauge of China’s economic health. After July shipments to China from the world’s largest export hub, Australia’s Port Hedland, dipped 17.5% from June, investors will be listening out for management’s view on the outlook.
Top Zacks #1 Rank (STRONG BUY) Stocks—
Sustained U.S. dollar weakness begets strength in Commodity prices, and in non-U.S. share listings, more generally.
Let’s look at three major non-U.S. mining stocks this week.
(1) Rio Tinto (RIO - Free Report) : This Aussie mining giant is already on our Zacks #1 List, in front of this week’s BHP Billiton earnings. They are rivals down there.
Rio Tinto has a $76.9B market cap at nearly $62 a share. The Zacks Value score is B, the Zacks Growth score is B, and the Zacks Momentum score is D.
(2) Southern Copper (SCCO - Free Report) : This is a major copper miner, based in the U.S. state of Arizona. Its major operations are in South America. As I stated already, commodity players on our Zacks #1 List speak for itself.
At $45 a share, this stock garners a 434.9B market cap. I see a Zacks Value score of D, a Zacks Growth score of F, and a Zacks Momentum score of D.
(3) AngloGold Ashanti (AU - Free Report) : This is a major Johannesburg, South African gold miner.
AU is the 3rd biggest gold mining company globally, in terms of production. At $28 a share, the market cap is $11.8B. I see a Zacks Value score of B, a Zacks Growth score of B, and a Zacks Momentum score of C.
Key Global Macro
Macro fundamentals to focus on this week are U.S. housing numbers. They will work well with the big retail reports, in providing direction to key stock sectors.
On Monday, the U.S. NAHB Housing Market Index comes out. The consensus is looking for 60, after the prior hot reading of 72. Housing is working, during this pandemic.
Japan’s Industrial Production data for July comes out. It rose +2.7% m/m in June, but that data was down -17.7% y/y.
On Tuesday, U.S. July Building Permits (consensus 1.29M) and Housing Starts (consensus 1.169M) come out.
On Wednesday, the latest FOMC minutes come out.
On Thursday, last week’s U.S. continuing jobless claims come out (15.486M is the prior). With stimulus negotiations ongoing, this data takes on out-sized importance. The 4-wk average of additions was 1.252M.
On Friday, the Jibun Bank Japan manufacturing PMI for July comes out. I see a 45.2 from June.
In comparison, the Markit EU manufacturing PMI should be 52.5 and the Markit U.S. manufacturing PMI should be 51.5.
Conclusion
The middle of August? This is never the most exciting time for stock traders.
I must acknowledge. We saw weak NYSE share trading volumes on Friday last week. It appeared many traders were away from their screens, enjoying time with their families.
Nonetheless, a spare set of catalysts will make this week interesting.
Happy trading to all!
Regards,
John Blank
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Will Recoveries Stay on Track? Global Week Ahead
Will protracted DC stimulus negotiations derail the U.S. economy’s recovery? What about contentious spending discussions in Europe and Japan?
With the S&P500 testing a record high of 3,400, fiscal debates are a worthy wall of worry.
For traders inside the world’s stock markets, here is a Zacks Earnings update.
I pulled it from Zacks Research Director Sheraz Mian’s notes--
Through Friday, August 14th, we have seen Q2 results from 458 S&P500 members or 91.6% of the index’s total membership.
• Total earnings (or aggregate net income) for those 458 S&P500 members are down -35.4% on -11.3% lower revenues.
• Another 18 index members are on deck to report results this week.
Zacks expects Q3 earnings for the S&P500 to decline -24% from the same period last year. But that growth picture has been steadily improving. Since the start of July.
We see a similar trend in place for Q4-2020 and full-year 2020 earnings estimates.
Want the big individual stock narrative within the Global Week Ahead?
It is likely the latest earnings reports from big U.S. retail outfits. They will wrap up Q2 earnings season.
But don’t neglect the latest numbers from chip-maker NVIDIA (NVDA - Free Report) out of Wednesday!
Here is what Refinitiv --a 2018 joint venture owned by Blackstone and Thompson Reuters-- has to say about these reports:
1) Walmart (WMT - Free Report) on Tuesday is expected to post a rise in same-store sales in the second quarter, banking on resilient demand for groceries as well as increased consumer spending on higher-priced products like shoes and electronics.
For the big box retailer, its margins are likely to be squeezed in the quarter but are expected to improve due to higher discretionary spend.
Investors and analysts will also be looking out for any detail on the launch of Walmart plus, a subscription service that is expected to rival Amazon Prime.
2) Home Depot (HD - Free Report) is expected to report a rise in second-quarter sales on Tuesday, as people spent more on paint and tools to do minor remodeling work around their houses during the pandemic
3) Lowe's Cos. (LOW - Free Report) is expected to report a rise in quarterly same-store sales on Wednesday, boosted by demand from consumers doing minor repair and remodeling work while spending more time at home due to the COVID-19 pandemic.
Investors will be keen to see if the company can make up ground on its larger rival, Home Depot.
4) On Wednesday, Target (TGT - Free Report) is expected to post a rise in Q2 same-store sales on rising 2 demand for products like electronics and apparel as well as daily essentials with many states easing lockdown restrictions.
Target is likely to report a bump in online sales as well, as shoppers use up their stimulus checks and unemployment benefits.
5) Nvidia is expected to post a rise in second-quarter revenue on Wednesday, benefiting from a rise in demand for its chips used in data centers as more people work from home. Investors will be looking at comments on demand trends for the current quarter.
6) Alibaba Group (BABA - Free Report) reports its calendar second-quarter 2020 earnings on Thursday. The e-commerce giant is expected to report a rise in quarterly revenue as demand for online orders surge with people staying at home.
Next are Reuter’s five world market themes, reordered for equity traders.
(1) Will DC Stimulus Negotiations Bear Fruit?
U.S. lawmakers negotiating a fresh dose of stimulus have reached an impasse.
Trillions of dollars injected by the Federal Reserve and huge government spending increases have stemmed coronavirus-linked economic damage, fueling a rebound in a Citi index that tracks economic data relative to expectations.
But with almost 30 million Americans unemployed and coronavirus still spreading, Fed policymakers have been warning the recovery could sputter unless politicians come through with further measures.
The S&P500 index is holding just off record highs. The wait is on to see if negotiations resume and bear fruit.
(2) More Stock Splits…
Apple (AAPL - Free Report) and Tesla’s (TSLA - Free Report) stock-split announcements rekindle memories of the dotcom bubble, when companies were actively dividing shares into multiple new ones. That trend eventually died — is it making a comeback?
Tesla is giving out five shares for each share held; Apple has a four-for-one offer. Companies typically split shares to make them cheaper for retail investors, but these days, with platforms already offering fractional shares for as little as $1, such splits don’t attract investors in droves.
Shares have risen since the announcements, but it remains to be seen whether gains continue until Aug. 31, when trading starts on a split-adjusted basis for both Apple and Tesla.
(3) Watch Gold Prices and the U.S. Dollar’s Value.
The dollar’s 5% plunge in five weeks has got gold bugs excited. Prices for the metal vaulted to a record above $2,000 per ounce before retreating as the greenback regained some poise.
Dollar weakness could run further — it remains strong across various trade-weighted indexes. But correlations between gold and the dollar, tenuous at best, have weakened under the impact of central bank stimulus, with 90-day correlations approaching cyclical lows.
Finally, rising inflation expectations boost hedges such as gold. Refinitiv data shows U.S., U.K., German and Japanese 10-year real, inflation-adjusted yields in negative territory, a first for all of them simultaneously.
So even if gold struggles above $2,000, gold bugs can probably rest assured a big selloff isn’t imminent.
(4) Brexit? Gads. Yes. Negotiations begin on August 17th.
The twin troubles of Brexit and coronavirus ensured Britain’s second-quarter contraction of 20.4% was greater than any other major economy. And recovery will be elusive unless a free-trade deal is reached with the European Union before the post-Brexit transition period ends on Dec. 31st.
EU-UK talks begin on Aug 17th. The two sides remain far apart, but the meetings may show if they can lay aside their differences in time to reach a deal by the Oct. 2nd deadline. An impasse may spell trouble for sterling and further pressure on domestic-focused shares.
The Bank of England is not considering negative interest rates just yet, but the prospect of crashing out of the European Union without a deal might leave it with no alternative.
(5) Iron Ore Earnings Reports from Australia.
The world’s biggest listed mining company and the third-biggest digger of iron ore, Australia’s BHP, reports annual results on Tuesday.
With iron ore prices soaring and rival Rio Tinto beating forecasts, strong numbers are expected of BHP. But BHP is more than just a miner — steel is a bellwether for economic growth and its main ingredient, iron ore, sits at a critical juncture.
Many question whether Chinese demand is enough to offset crumbling orders elsewhere.
BHP is also a gauge of China’s economic health. After July shipments to China from the world’s largest export hub, Australia’s Port Hedland, dipped 17.5% from June, investors will be listening out for management’s view on the outlook.
Top Zacks #1 Rank (STRONG BUY) Stocks—
Sustained U.S. dollar weakness begets strength in Commodity prices, and in non-U.S. share listings, more generally.
Let’s look at three major non-U.S. mining stocks this week.
(1) Rio Tinto (RIO - Free Report) : This Aussie mining giant is already on our Zacks #1 List, in front of this week’s BHP Billiton earnings. They are rivals down there.
Rio Tinto has a $76.9B market cap at nearly $62 a share. The Zacks Value score is B, the Zacks Growth score is B, and the Zacks Momentum score is D.
(2) Southern Copper (SCCO - Free Report) : This is a major copper miner, based in the U.S. state of Arizona. Its major operations are in South America. As I stated already, commodity players on our Zacks #1 List speak for itself.
At $45 a share, this stock garners a 434.9B market cap. I see a Zacks Value score of D, a Zacks Growth score of F, and a Zacks Momentum score of D.
(3) AngloGold Ashanti (AU - Free Report) : This is a major Johannesburg, South African gold miner.
AU is the 3rd biggest gold mining company globally, in terms of production. At $28 a share, the market cap is $11.8B. I see a Zacks Value score of B, a Zacks Growth score of B, and a Zacks Momentum score of C.
Key Global Macro
Macro fundamentals to focus on this week are U.S. housing numbers. They will work well with the big retail reports, in providing direction to key stock sectors.
On Monday, the U.S. NAHB Housing Market Index comes out. The consensus is looking for 60, after the prior hot reading of 72. Housing is working, during this pandemic.
Japan’s Industrial Production data for July comes out. It rose +2.7% m/m in June, but that data was down -17.7% y/y.
On Tuesday, U.S. July Building Permits (consensus 1.29M) and Housing Starts (consensus 1.169M) come out.
On Wednesday, the latest FOMC minutes come out.
On Thursday, last week’s U.S. continuing jobless claims come out (15.486M is the prior). With stimulus negotiations ongoing, this data takes on out-sized importance. The 4-wk average of additions was 1.252M.
On Friday, the Jibun Bank Japan manufacturing PMI for July comes out. I see a 45.2 from June.
In comparison, the Markit EU manufacturing PMI should be 52.5 and the Markit U.S. manufacturing PMI should be 51.5.
Conclusion
The middle of August? This is never the most exciting time for stock traders.
I must acknowledge. We saw weak NYSE share trading volumes on Friday last week. It appeared many traders were away from their screens, enjoying time with their families.
Nonetheless, a spare set of catalysts will make this week interesting.
Happy trading to all!
Regards,
John Blank