For Immediate Release
Chicago, IL – October 18, 2022 – 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: The Southern Company (
SO Quick Quote SO - Free Report) , Valero Energy ( VLO Quick Quote VLO - Free Report) and Fortinet ( FTNT Quick Quote FTNT - Free Report) . Here are highlights from Monday’s Analyst Blog: Entering Q3 Earnings Season: Global Week Ahead
In the Global Week Ahead, U.S. stock traders will enter the U.S. Q3 earnings season.
China stock traders have seen a congress of China's ruling Communist Party kick off.
FX traders are back on Japanese yen intervention watch.
And across the remainder of global risk markets?
According to Reuters, Britain’s government, for now, remains the key to whether a calmer mood can take a hold in markets unnerved by turmoil in the U.K. financial center. This has stoked wider worries about financial stability elsewhere.
Next are Reuters’ five world market themes, reordered for equity traders: (1) Q3 U.S. S&P 500 Earnings Season Now Underway
Third-quarter U.S. earnings season heats up as companies report results in the throes of a difficult operating environment given a strengthening dollar and surging inflation.
Earnings for S&P 500 companies overall are expected to have climbed +4.1% from the year-earlier period, which would be the slowest growth since the fourth quarter of 2020.
But more focus may be on how executives project the future; consensus analyst estimates are for a nearly +8% rise in profits next year, according to Refinitiv IBES.
But many investors are dubious of that forecast as recession risks loom.
A market slide has moderated stock valuations, but a downgrade in the earnings outlook could dampen equities' attractiveness.
Upcoming earnings reports include results from
Tesla, Netflix and Johnson & Johnson. (2) Global Financial Market Stress Update
On top of UK turmoil, unease triggered by decades-high inflation, an energy shock and aggressive global rate hikes are putting markets through a stress test.
The carnage in British gilts has exposed vulnerabilities in the pensions sector, shining a light on financial stability risks.
So, the coming days will see increased focus on other possible hot spots that have gone under the radar of regulators.
The IMF warns of "disorderly asset repricings" and "financial market contagion.”
Asset manager PIMCO reckons the U.K. is unlikely to be the only source of instability, adding that loan and private credit markets may also face stress.
(3) Bank of England May Be Only the Beginning
Barring a last-minute extension, from Monday the Bank of England (BoE) will no longer be the buyer of last resort of battered British bonds.
The government's "mini-Budget" on Sept. 23rd sparked some of the biggest ever jumps in U.K. bond yields, spooked wider markets and triggered a crisis among pension funds needing to find bucket loads of cash.
The BoE has been forced to intervene repeatedly to ensure financial stability, even as those measures contradict its task of fighting inflation by jacking up interest rates and selling some of the bonds it owns.
The pensions industry has warned schemes aren't ready for bond-buying to end, while the government has suggested that if more volatility ensues the blame lies with the BoE.
Growing expectations of a government u-turn on most of its unfunded tax cuts should end much of the pain.
If it doesn't, buckle up for a messy Monday.
(4) An FX Crisis Intervention Watch Is On, Too
Traders are back on currency intervention watch as the dollar scales:
Fresh 24-year peaks to the yen, and Heads back towards multi-year highs versus the Chinese yuan and Korean won. Japan's currency careened to the cusp of 147 per dollar on Wednesday, crashing through the trough at 145.89 that spurred the Bank of Japan to intervene last month to support the yen for the first time since 1998.
South Korea also sold billions of dollars last quarter to prop up its currency, as the won plumbed a 13-year low just shy of 1,445 per dollar last month. Even so, it's not strayed far from there, nearing 1,440 this week.
China has likely been deploying state banks to sell dollars and cushion the yuan's slide to ever-deeper 14-year lows, and traders are jittery over more aggressive steps to come.
(5) Mainland China’s (Twice a Decade) Communist Party Congress Underway
China's twice-a-decade Communist party congress kicked off on Sunday, and the week-long, closed-door assembly is set to hand Xi Jinping an unprecedented third five-year term as supreme leader, securing his place as the country's most powerful ruler since Mao Zedong.
It puts Xi in a position to pursue his vision for the "rejuvenation of the Chinese nation," which includes the "common prosperity" policies that toppled behemoths including Alibaba and Evergrande.
A desire to bring Taiwan under Beijing's control is also ramping up tensions with Washington.
As for the economy, Xi has let that fall victim to other priorities: growth is set to miss a +5.5% target after repeated lockdowns under the zero-COVID program.
The latest reading of gross domestic product is due Tuesday, after growth ground to a virtual halt in the second quarter.
Hopes of pandemic controls relaxing at this congress could prove unfounded, considering how Beijing met a flare-up in cases just beforehand by barring many travelers in the recent Golden Week holiday from returning to the capital.
Zacks #1 Rank (STRONG BUY) Stocks
Here are three top large-cap picks, drawn from our latest #1 list.
(1) The Southern Company: This is a $64 a share Electric Power Utility company, with a market cap of $65.3B. I see a Zacks Value score of D, a Zacks Growth score of C and a Zacks Momentum score of F. (2) Valero Energy: This is a $121 a share U.S. Oil and Gas Refining company, with a market cap of $45.4B. I see a Zacks Value score of A, a Zacks Growth score of A and a Zacks Momentum score of D. (3) Fortinet: This is a $49 a share Computer Security company, with a market cap of $38.0B. I see a Zacks Value score of F, a Zacks Growth score of B and a Zacks Momentum score of A.
They come from three very different sectors and industries.
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