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.
In the Global Week Ahead, chaos likely reigns in crypto-land.
Bankruptcy at crypto-currency exchange FTX resonates, as steep Fed rate hikes and ongoing cuts to liquidity continue to expose the worst speculators — and the crooks.
FTX's new CEO, John J. Ray, III, was the lawyer brought on to clean up Enron.
Meanwhile, fresh and important U.S. and China macro data comes out, just as hopes of a peak in Fed interest rates grows. The U.S. Census’s “advance” monthly U.S. Retail Sales data for OCT is out on Wednesday, Nov. 16th at 8:30 am ET.
Across the Atlantic Pond, London-based Reuters writes that the long-awaited U.K. fiscal plan is (almost) here. After the quarrels unleashed by September's mini-budget, traders are paying close attention.
Next are Reuters’ five world market themes, reordered for equity traders—
(1) What happens to big Info Tech stocks, absent the “growth”?
This year's Big Tech equity plunge shows little sign of ending — dogged by squeezed consumer real incomes, recession fears and a valuation rethink due to the soaring interest rates that discount their future revenues to today's price.
After warnings about online advertising and streaming services littered Q3 earnings season, mass layoffs are now emerging.
Meta Platforms (META - Free Report) just announced it would cut more than 11,000 jobs, or 13% of its workforce.
That's among the biggest this year, and follows job cuts at other tech firms including Elon Musk-owned Twitter, Microsoft (MSFT - Free Report) and Snap (SNAP - Free Report) .
Big banks, too, are starting to pare back staffing levels.
Markets are watching closely to see if others follow — and trying to gauge whether this is merely retrenchment from over-exuberant, pandemic-distorted staffing levels or the thin end of the wedge that deepens any oncoming recession.
Central banks will be watching like hawks, too.
(2) The cryptos are plunging. Chaos reigns.
The crypto world has been thrown into fresh chaos by a meltdown at FTX.
As of last Thursday, the major exchange was on the brink of collapse and users were unable to withdraw their funds.
A proposed rescue deal from rival exchange Binance fell through last Wednesday, sending top cryptocurrency bitcoin below $16,000 for the first time since late 2020.
Crypto investors are in a state of shock: FTX founder Sam Bankman-Fried was seen by many as the "poster child" of the industry.
Investors are now waiting to see if FTX can be saved and the extent of the contagion within crypto markets, which have already taken a beating this year as central banks reverse pandemic-era monetary policy.
(3) U.S. Retail Sales for October come out.
Wednesday's U.S. October retail sales should provide markets with a sense of how consumers are faring ahead of the key holiday shopping season.
And remember the Federal Reserve is intent on hiking interest rates to contain hot inflation, even if that means a squeeze on consumption in the process.
September data showed a measure of underlying retail sales rising thanks to strong wage gains and savings, even as the broader number came in flat. Analysts polled by Reuters expect a +0.8% increase for October.
The “good news is bad news” crowd would likely see a strong number as evidence that the Fed has more work to do in cooling the economy. That outlook is unlikely to bring joy to markets battered by expectations of more monetary policy tightening this year.
(4) Where do Mainland Chinese shares go from here?
Chinese shares are celebrating Beijing easing some of its draconian COVID rules, including shortening quarantines by two days for close contacts of infected people and for inbound travelers.
This comes despite cases on the mainland at 6-month highs and some big cities under fresh lockdowns.
Upcoming data will be a rude reminder of the toll the strict COVID policy has been taking: retail sales are falling, industrial production has been hurt by strict lockdowns during last month's 20th Party Congress, and property sales are in an extended decline.
The “glass half-full” view sees green shoots in promises the authorities have made on growth and hopes for more policy support.
One test is whether China's central bank renews a massive trillion yuan in medium term loans to banks, maturing on Tuesday.
(5) The U.K.’s new (or just the rewrapped old?) budget plan.
The moment sterling traders have been waiting for is almost here. On Nov. 17, finance minister Jeremy Hunt unveils the government's fiscal plan.
September's mini-budget from predecessor Kwasi Kwarteng brought the pound to its knees and forced the Bank of England to intervene to stem a rout in the bond market.
Hunt has since junked most of that plan, and signaled some 60 billion pounds ($68.70 billion) in tax rises and spending cuts are coming to plug a gaping hole in the public finances.
U.K. markets have recouped most of the maxi-losses from the mini-budget, but the outlook is grim.
The U.K. economy faces its longest recession in a century, as a cost-of-living crisis bites.
Latest U.K. inflation and U.K. jobs numbers are also on the calendar. Inflation hit a blistering +10.1% in September, and there's little reason to expect much of a respite.
Top Zacks #1 Rank (STRONG BUY) Stocks
Here are three interesting Zacks #1 large-cap picks to consider.
(1) ParkerHannifin (PH - Free Report) : This is a $303 a share, very large Manufacturing – General Industrial firm, of motion & control technology systems, with a market cap of $38.9B. I see a Zacks Value score of C, a Zacks Growth score of B and a Zacks Momentum score of F.
(2) Arista Networks (ANET - Free Report) : This is a $127 a share Communication Components firm, providing cloud networking solutions from Santa Clara, CA, with a market cap of $38.8B. I see a Zacks Value score of D, a Zacks Growth score of D and a Zacks Momentum score of C.
(3) Nordea Bank (NRDBY - Free Report) : This is a $10 a share Foreign Bank firm, based in Helsinki, Finland, with a market cap of $36.8B. I see a Zacks Value score of F, a Zacks Growth score of F and a Zacks Momentum score of F.
Key Global Macro
Wednesdays’ U.S. retail sales report for OCT should garner trader interest.
On Monday, Mainland Chinese Foreign Direct Investment (FDI) for OCT has come out, matching the +15.6% y/y number from the prior month. That is still quite substantial.
On Tuesday, Mainland Chinese industrial production for OCT comes out. I see +5.1% y/y is the consensus, with +6.3% y/y the prior.
However, Mainland Chinese retail sales for OCT? The consensus sees a paltry +0.9% y/y number.
Eurozone GDP for Q3 comes out. Consensus sees +2.1% y/y. Q2 was +2.1% y/y.
On Wednesday, Mainland China’s house price index for OCT comes out. The prior is a 1.5% y/y reading. Weak.
The U.K. core CPI reading for OCT comes out. I see a +6.5% y/y prior.
U.S. Retail Sales for OCT should be up +0.8%, after posting a flat 0.0% number in SEPT.
On Thursday, U.S. Housing Starts should be 1.42M in OCT, after 1.44M in SEPT. Still, that’s decent home construction data. But likely down -1.8% y/y.
On Friday, U.K. Retail Sales come out for OCT. I see a -6.9% y/y prior print. That is a recessionary reading, folks.
U.S. existing home sales should be 4.36M in OCT, after a 4.71M prior reading. Lower.
Conclusion
I finish with Zacks Research Director Sheraz Mian’s earnings season closing thoughts:
“The earnings picture has been weighed down by headwinds like inflation, supply-chain bottlenecks and macroeconomic uncertainty over the last few quarters, and these factors were very much at play in the Q3 earnings season as well.
“In addition to these headwinds, the strong U.S. dollar emerged as a significant negative earnings factor that weighed on the profitability of all companies with big international operations.
“These multinationals range from Info Tech players like Microsoft and Adobe (ADBE - Free Report) to consumer operators like Coke (KO - Free Report) and others.
“With respect to the Q3 earnings season scorecard, we now have Q3 results for 461 S&P500 members, or 92.2% of the index’s total membership.
“Total earnings for these companies:
Are up +2.6% from the same period last year,
On +12.4% higher revenues,
With 69.4% beating EPS estimates,
And 67.9% beating revenue estimates.”
My analysis: Take +8.2% (the Sept. CPI data) out of that +12.4% y/y revenue growth number for Q3.
You acquire an annualized, proxy, +4.2% ‘real’ S&P500-collective, major U.S. multinational company, revenue growth remainder.
In closing, no recession in actual output is visible.
In Q3.
The consensus “bottoms-up” for Q4 shows up as +4.4% revenue growth.
That is absent any CPI subtraction.
Do the math: 4.4% minus 7.7% (the Oct. CPI data).
You get a remainder. A proxy -3.3% ‘real’ revenue growth rate for Q4.
Ahem.
Happy Trading!
Warm Regards,
John Blank
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Shutterstock
Crypto Chaos: Global Week Ahead
In the Global Week Ahead, chaos likely reigns in crypto-land.
Bankruptcy at crypto-currency exchange FTX resonates, as steep Fed rate hikes and ongoing cuts to liquidity continue to expose the worst speculators — and the crooks.
FTX's new CEO, John J. Ray, III, was the lawyer brought on to clean up Enron.
Meanwhile, fresh and important U.S. and China macro data comes out, just as hopes of a peak in Fed interest rates grows. The U.S. Census’s “advance” monthly U.S. Retail Sales data for OCT is out on Wednesday, Nov. 16th at 8:30 am ET.
Across the Atlantic Pond, London-based Reuters writes that the long-awaited U.K. fiscal plan is (almost) here. After the quarrels unleashed by September's mini-budget, traders are paying close attention.
Next are Reuters’ five world market themes, reordered for equity traders—
(1) What happens to big Info Tech stocks, absent the “growth”?
This year's Big Tech equity plunge shows little sign of ending — dogged by squeezed consumer real incomes, recession fears and a valuation rethink due to the soaring interest rates that discount their future revenues to today's price.
After warnings about online advertising and streaming services littered Q3 earnings season, mass layoffs are now emerging.
Meta Platforms (META - Free Report) just announced it would cut more than 11,000 jobs, or 13% of its workforce.
That's among the biggest this year, and follows job cuts at other tech firms including Elon Musk-owned Twitter, Microsoft (MSFT - Free Report) and Snap (SNAP - Free Report) .
Big banks, too, are starting to pare back staffing levels.
Markets are watching closely to see if others follow — and trying to gauge whether this is merely retrenchment from over-exuberant, pandemic-distorted staffing levels or the thin end of the wedge that deepens any oncoming recession.
Central banks will be watching like hawks, too.
(2) The cryptos are plunging. Chaos reigns.
The crypto world has been thrown into fresh chaos by a meltdown at FTX.
As of last Thursday, the major exchange was on the brink of collapse and users were unable to withdraw their funds.
A proposed rescue deal from rival exchange Binance fell through last Wednesday, sending top cryptocurrency bitcoin below $16,000 for the first time since late 2020.
Crypto investors are in a state of shock: FTX founder Sam Bankman-Fried was seen by many as the "poster child" of the industry.
Investors are now waiting to see if FTX can be saved and the extent of the contagion within crypto markets, which have already taken a beating this year as central banks reverse pandemic-era monetary policy.
(3) U.S. Retail Sales for October come out.
Wednesday's U.S. October retail sales should provide markets with a sense of how consumers are faring ahead of the key holiday shopping season.
And remember the Federal Reserve is intent on hiking interest rates to contain hot inflation, even if that means a squeeze on consumption in the process.
September data showed a measure of underlying retail sales rising thanks to strong wage gains and savings, even as the broader number came in flat. Analysts polled by Reuters expect a +0.8% increase for October.
The “good news is bad news” crowd would likely see a strong number as evidence that the Fed has more work to do in cooling the economy. That outlook is unlikely to bring joy to markets battered by expectations of more monetary policy tightening this year.
(4) Where do Mainland Chinese shares go from here?
Chinese shares are celebrating Beijing easing some of its draconian COVID rules, including shortening quarantines by two days for close contacts of infected people and for inbound travelers.
This comes despite cases on the mainland at 6-month highs and some big cities under fresh lockdowns.
Upcoming data will be a rude reminder of the toll the strict COVID policy has been taking: retail sales are falling, industrial production has been hurt by strict lockdowns during last month's 20th Party Congress, and property sales are in an extended decline.
The “glass half-full” view sees green shoots in promises the authorities have made on growth and hopes for more policy support.
One test is whether China's central bank renews a massive trillion yuan in medium term loans to banks, maturing on Tuesday.
(5) The U.K.’s new (or just the rewrapped old?) budget plan.
The moment sterling traders have been waiting for is almost here. On Nov. 17, finance minister Jeremy Hunt unveils the government's fiscal plan.
September's mini-budget from predecessor Kwasi Kwarteng brought the pound to its knees and forced the Bank of England to intervene to stem a rout in the bond market.
Hunt has since junked most of that plan, and signaled some 60 billion pounds ($68.70 billion) in tax rises and spending cuts are coming to plug a gaping hole in the public finances.
U.K. markets have recouped most of the maxi-losses from the mini-budget, but the outlook is grim.
The U.K. economy faces its longest recession in a century, as a cost-of-living crisis bites.
Latest U.K. inflation and U.K. jobs numbers are also on the calendar. Inflation hit a blistering +10.1% in September, and there's little reason to expect much of a respite.
Top Zacks #1 Rank (STRONG BUY) Stocks
Here are three interesting Zacks #1 large-cap picks to consider.
(1) ParkerHannifin (PH - Free Report) : This is a $303 a share, very large Manufacturing – General Industrial firm, of motion & control technology systems, with a market cap of $38.9B. I see a Zacks Value score of C, a Zacks Growth score of B and a Zacks Momentum score of F.
(2) Arista Networks (ANET - Free Report) : This is a $127 a share Communication Components firm, providing cloud networking solutions from Santa Clara, CA, with a market cap of $38.8B. I see a Zacks Value score of D, a Zacks Growth score of D and a Zacks Momentum score of C.
(3) Nordea Bank (NRDBY - Free Report) : This is a $10 a share Foreign Bank firm, based in Helsinki, Finland, with a market cap of $36.8B. I see a Zacks Value score of F, a Zacks Growth score of F and a Zacks Momentum score of F.
Key Global Macro
Wednesdays’ U.S. retail sales report for OCT should garner trader interest.
On Monday, Mainland Chinese Foreign Direct Investment (FDI) for OCT has come out, matching the +15.6% y/y number from the prior month. That is still quite substantial.
On Tuesday, Mainland Chinese industrial production for OCT comes out. I see +5.1% y/y is the consensus, with +6.3% y/y the prior.
However, Mainland Chinese retail sales for OCT? The consensus sees a paltry +0.9% y/y number.
Eurozone GDP for Q3 comes out. Consensus sees +2.1% y/y. Q2 was +2.1% y/y.
On Wednesday, Mainland China’s house price index for OCT comes out. The prior is a 1.5% y/y reading. Weak.
The U.K. core CPI reading for OCT comes out. I see a +6.5% y/y prior.
U.S. Retail Sales for OCT should be up +0.8%, after posting a flat 0.0% number in SEPT.
On Thursday, U.S. Housing Starts should be 1.42M in OCT, after 1.44M in SEPT. Still, that’s decent home construction data. But likely down -1.8% y/y.
On Friday, U.K. Retail Sales come out for OCT. I see a -6.9% y/y prior print. That is a recessionary reading, folks.
U.S. existing home sales should be 4.36M in OCT, after a 4.71M prior reading. Lower.
Conclusion
I finish with Zacks Research Director Sheraz Mian’s earnings season closing thoughts:
“The earnings picture has been weighed down by headwinds like inflation, supply-chain bottlenecks and macroeconomic uncertainty over the last few quarters, and these factors were very much at play in the Q3 earnings season as well.
“In addition to these headwinds, the strong U.S. dollar emerged as a significant negative earnings factor that weighed on the profitability of all companies with big international operations.
“These multinationals range from Info Tech players like Microsoft and Adobe (ADBE - Free Report) to consumer operators like Coke (KO - Free Report) and others.
“With respect to the Q3 earnings season scorecard, we now have Q3 results for 461 S&P500 members, or 92.2% of the index’s total membership.
“Total earnings for these companies:
My analysis: Take +8.2% (the Sept. CPI data) out of that +12.4% y/y revenue growth number for Q3.
You acquire an annualized, proxy, +4.2% ‘real’ S&P500-collective, major U.S. multinational company, revenue growth remainder.
In closing, no recession in actual output is visible.
In Q3.
The consensus “bottoms-up” for Q4 shows up as +4.4% revenue growth.
That is absent any CPI subtraction.
Do the math: 4.4% minus 7.7% (the Oct. CPI data).
You get a remainder. A proxy -3.3% ‘real’ revenue growth rate for Q4.
Ahem.
Happy Trading!
Warm Regards,
John Blank