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Chip titan Nvidia reports quarterly results AMC Wednesday, and
Global PMI data rolls in on Friday
Markets continue to digest fallout from the U.S. election
As a trader focus, Bitcoin and the Euro take center-stage
Next are Reuters’ five world market themes, re-ordered for equity traders—
(1) Nvidia Reports its Earnings Results, AMC on Wednesday, Nov. 20th.
The U.S. earnings season is coming to a close with Q3-24 results from chipmaker Nvidia (NVDA - Free Report) , a bellwether for the artificial intelligence craze that has boosted stocks this year.
Nvidia's chips are seen as the gold standard in the AI-space. Its shares are up nearly +200% this year, a gain that saw it dethrone Apple as the world's most valuable company in October.
The chipmaker's hefty weighting in the S&P500 has helped drive the index to record highs in 2024.
But Nvidia's blistering multi-year run has also raised the bar for earnings outperformance — a slip-up could fuel worries that the market's AI hopes have outstripped reality.
Analysts see Nvidia increasing Q3 revenue by over +80% to $32.9 billion when it reports its results on Nov. 20th, LSEG data showed earlier this month.
(2) Does Bitcoin Get to $100,000?
President-elect Trump’s win has unleashed a stampede of crypto bulls intent on driving bitcoin to the moon.
The price has risen +30% since the Nov. 5th Election Day and, having topped $90,000 for the first time on record, is showing no signs of stopping.
The entire crypto market has surpassed $3 trillion for the first time on record. Bitcoin & Co. are worth about as much as Elon Musk's Tesla (TSLA - Free Report) , Facebook parent Meta (META - Free Report) , and Warren Buffett's Berkshire Hathaway (BRK.B - Free Report) put together.
The promise of light-touch U.S. regulation means investors can't get enough of bitcoin right now. Flows into exchange-traded funds have rocketed in recent days.
LSEG data shows the largest ETFs tracked by Reuters took in a net $3.5 billion in the week to Nov. 14th, the most since March 15th.
There seems to be little standing in the way a six-figure bitcoin price tag.
(3) Could the Euro Reach USD Parity Shortly?
Threats of Trump tariffs are heightening fears about the weak euro area economy and the common currency has been flailing.
But how low could it go?
At around $1.054, the euro has slumped about -5% from more than one-year highs in September.
Some analysts now expect the Euro to fall to parity with the U.S. dollar.
The last ZEW Institute survey showed German investor confidence is gloomy while traders see a one in five chance the European Central Bank will cut rates by 50 basis points next month.
Breakdown German GDP data due out on Nov 22nd might give more hints.
Look out for silver linings, though.
A weaker euro boosts exporters and faster rate cuts could juice up bank lending and business activity.
(4) On Friday, Traders Get to See3 Preliminary NOV PMIs.
Friday's preliminary survey data on business activity will sketch a picture of the global economy before Trump returns to the White House in January.
PMIs from Europe and the U.S. will likely confirm that global manufacturing activity remains stuck in a downturn, while the services sector soldiers ahead.
Each country is facing its own unique uncertainties. Germany's flagging economy is on the cusp of new elections, Britain's employers are bracing for a rise in social security contributions expected to hit hiring and costs.
But it's Trump's re-election that is dominating the outlook.
The survey could give early indications on how U.S. companies are responding to the threat of Trump's proposed import tariffs — possibly boosting inventories before tariffs kick in — a data point that will be closely watched by markets going forward.
(5) In Emerging Markets, a Weaker Indonesian Rupiah, a South Africa Rate Cut.
Indonesia's central bank will decide on interest rates on Wednesday and it is a toss-up whether the policy makers will ease rates or stand pat.
Slowing inflation, disappointing growth and the Fed's recent rate cut cement the case for further easing.
But the weakening rupiah, currently languishing near three-month lows and down more than -4% from this year's peak, is putting a spanner in the works for a central bank whose main mandate is to maintain currency stability, even though much of that might be driven by the strong dollar.
Elsewhere in emerging markets, rate decisions in Turkey and South Africa are due on Thursday.
South African policymakers are expected to deliver a 25-basis-point cut at their final meeting of the year
Upward revisions to inflation forecasts in Turkey make chances of any near-term easing unlikely
Zacks #1 Rank (STRONG BUY) Stocks
These three large-cap stocks have nice Zacks Price, Consensus and Surprise Charts.
However, after the sharp share-price jump, coming after the recent U.S. Presidential election, it could be profit-taking time.
(1) Ingredion (INGR - Free Report) : This is a $149 a share stock in the Food-Miscellaneous industry. It has a market cap of $9.8B. I see a Zacks Value score of A, a Zacks Growth score of A and a Zacks Momentums score of C.
Image Source: Zacks Investment Research
Ingredion Inc. is an ingredients solutions provider, specializing in nature-based sweeteners, starches and nutrition ingredients.
The company serves diverse sectors in food, beverage, brewing, pharmaceuticals and other industries. Its sweetener products include dextrose, glucose, polyols, HFCS and Maltodextrin.
The company's nutrition solutions include prebiotic fibers, resistant starch, soluble fibers and Inulin fibers. Its starch-based products include both industrial and food-grade starches.
Ingredion, formerly known as Corn Products International, Inc., is headquartered in Chicago.
(2) Celestica (CLS - Free Report) : This is a $80 a share stock in the Electronics-Manufacturing industry. It has a market cap of $9.7B. I see a Zacks Value score of B, a Zacks Growth score of B and a Zacks Momentums score of D.
Image Source: Zacks Investment Research
Celestica, Inc. is one of the largest electronics manufacturing services companies in the world, serving the computer, and communications sectors.
The company provides competitive manufacturing technology and service solutions for printed circuit assembly and system assembly, as well as post-manufacturing support to many of the world's leading original equipment manufacturers.
Celestica's extensive depth and breadth of offerings supports a wide variety of customer requirements from low volume, high complexity custom products to high volume commodity products.
(3) Leonardo DRS Inc. (DRS - Free Report) : This is a $34 a share stock in the Aerospace-Defense industry. It has a market cap of $9.5B. I see a Zacks Value score of D, a Zacks Growth score of D and a Zacks Momentums score of B.
Image Source: Zacks Investment Research
Leonardo DRS Inc. develops and manufactures advanced defense products for the U.S. military, intelligence agencies and allies.
The company's broad technology portfolio focuses on advanced sensing, network computing, force protection and electric power and propulsion as well as a range of key defense priorities.
Leonardo DRS Inc., formerly known as RADA Electronic Industries Ltd., is based in Arlington, VA.
Key Global Macro
On Monday, there is a G20 summit for heads of state, held in Rio de Janeiro, Brazil. The 2024 Summit’s theme is ‘Building a Just World and a Sustainable Planet.’
Bank of Japan (BoJ) Governor Ueda gives a speech.
On Tuesday, the G20 summit meeting continues in Brazil.
Core HICP inflation for OCT comes out for the Euro Area. +2.7% y/y looks to stick around, for another month, with +0.3% as the m/m lift.
U.S. Building Permits for OCT should be out. The prior reading was 1.425M. Housing Starts come out too, with a prior reading of 1.354M there.
On Wednesday, there is a People’s Bank of China (PBoC) rate decision. That policy rate there is 3.1%.
On Thursday, U.S. Weekly Jobless Claims come out. They were at a low 217K last week. The 4-week moving average is at 221K.
U.S. Existing Homes Sales for OCT comes out. The look is for 3.88M in OCT, following 3.84M in the prior month.
On Friday, the Euro Area HCOB preliminary manufacturing PMI for NOV comes out. The prior reading was 46.
The U. of Michigan NOV consumer sentiment index comes out. It was 73 last time.
Conclusion
On Nov. 15th, 2024 Zacks Research Director Sheraz Mian made fresh Q3 earnings comments—
With respect to the Q3 scorecard, we now have results from 460 S&P 500 members, or 92% of the index’s total membership.
Total earnings are up +6.8% on +5.3% higher revenues
73.7% beat EPS estimates, and
61.3% beat revenue estimates
The Q3 earnings season is on track to show another quarter of positive earnings growth.
In fact, the +7.6% earnings growth in Q3 will be the 5th quarter in a row of positive year-over-year earnings growth
If we look at aggregate earnings growth excluding the Energy sector drag, Q3 earnings would be up a much healthier +10.1%
Retailers on deck:
We have yet to see Q3 earnings results from most of the conventional or brick-and-mortar retailers, with Walmart (WMT - Free Report) on Tuesday, Nov. 19th, Target (TGT - Free Report) on Wednesday, Nov. 20th, and others on deck to report results in the coming days.
We know from other consumer-facing companies that have reported results already that consumer spending remains stable, with households continuing to spend at a healthy clip.
We know already that the lower end of income distribution has been under pressure.
We have also known for some time now that consumers have been leaning more towards spending on services like leisure, travel, dining and hospitality and ignoring other discretionary products.
This spending behavior has proved a headwind for operators that are heavily indexed towards discretionary merchandise or big-ticket items.
Target has a heavier exposure to such discretionary merchandise and has been struggling as a result of this unfavorable spending behavior
There have been some recent indicators suggesting a shift in this behavior, with demand for these discretionary services starting to ease.
We don’t know if this emerging trend simply reflects pre-election jitters among consumers or the sign of an enduring shift.
But if it is the start of a shift in spending behavior, then it would be welcome news for Target and others, as some of those dollars can be expected to start paying for discretionary merchandise.
Walmart had noted at the time of its last earnings call that also suggested some signs of improvement in their discretionary merchandise.
Have a nice evening!
Warm regards,
John Blank
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Nvidia on Deck: Global Week Ahead
In the Global Week Ahead:
Next are Reuters’ five world market themes, re-ordered for equity traders—
(1) Nvidia Reports its Earnings Results, AMC on Wednesday, Nov. 20th.
The U.S. earnings season is coming to a close with Q3-24 results from chipmaker Nvidia (NVDA - Free Report) , a bellwether for the artificial intelligence craze that has boosted stocks this year.
Nvidia's chips are seen as the gold standard in the AI-space. Its shares are up nearly +200% this year, a gain that saw it dethrone Apple as the world's most valuable company in October.
The chipmaker's hefty weighting in the S&P500 has helped drive the index to record highs in 2024.
But Nvidia's blistering multi-year run has also raised the bar for earnings outperformance — a slip-up could fuel worries that the market's AI hopes have outstripped reality.
Analysts see Nvidia increasing Q3 revenue by over +80% to $32.9 billion when it reports its results on Nov. 20th, LSEG data showed earlier this month.
(2) Does Bitcoin Get to $100,000?
President-elect Trump’s win has unleashed a stampede of crypto bulls intent on driving bitcoin to the moon.
The price has risen +30% since the Nov. 5th Election Day and, having topped $90,000 for the first time on record, is showing no signs of stopping.
The entire crypto market has surpassed $3 trillion for the first time on record. Bitcoin & Co. are worth about as much as Elon Musk's Tesla (TSLA - Free Report) , Facebook parent Meta (META - Free Report) , and Warren Buffett's Berkshire Hathaway (BRK.B - Free Report) put together.
The promise of light-touch U.S. regulation means investors can't get enough of bitcoin right now. Flows into exchange-traded funds have rocketed in recent days.
LSEG data shows the largest ETFs tracked by Reuters took in a net $3.5 billion in the week to Nov. 14th, the most since March 15th.
There seems to be little standing in the way a six-figure bitcoin price tag.
(3) Could the Euro Reach USD Parity Shortly?
Threats of Trump tariffs are heightening fears about the weak euro area economy and the common currency has been flailing.
But how low could it go?
At around $1.054, the euro has slumped about -5% from more than one-year highs in September.
Some analysts now expect the Euro to fall to parity with the U.S. dollar.
The last ZEW Institute survey showed German investor confidence is gloomy while traders see a one in five chance the European Central Bank will cut rates by 50 basis points next month.
Breakdown German GDP data due out on Nov 22nd might give more hints.
Look out for silver linings, though.
A weaker euro boosts exporters and faster rate cuts could juice up bank lending and business activity.
(4) On Friday, Traders Get to See3 Preliminary NOV PMIs.
Friday's preliminary survey data on business activity will sketch a picture of the global economy before Trump returns to the White House in January.
PMIs from Europe and the U.S. will likely confirm that global manufacturing activity remains stuck in a downturn, while the services sector soldiers ahead.
Each country is facing its own unique uncertainties. Germany's flagging economy is on the cusp of new elections, Britain's employers are bracing for a rise in social security contributions expected to hit hiring and costs.
But it's Trump's re-election that is dominating the outlook.
The survey could give early indications on how U.S. companies are responding to the threat of Trump's proposed import tariffs — possibly boosting inventories before tariffs kick in — a data point that will be closely watched by markets going forward.
(5) In Emerging Markets, a Weaker Indonesian Rupiah, a South Africa Rate Cut.
Indonesia's central bank will decide on interest rates on Wednesday and it is a toss-up whether the policy makers will ease rates or stand pat.
Slowing inflation, disappointing growth and the Fed's recent rate cut cement the case for further easing.
But the weakening rupiah, currently languishing near three-month lows and down more than -4% from this year's peak, is putting a spanner in the works for a central bank whose main mandate is to maintain currency stability, even though much of that might be driven by the strong dollar.
Elsewhere in emerging markets, rate decisions in Turkey and South Africa are due on Thursday.
Zacks #1 Rank (STRONG BUY) Stocks
These three large-cap stocks have nice Zacks Price, Consensus and Surprise Charts.
However, after the sharp share-price jump, coming after the recent U.S. Presidential election, it could be profit-taking time.
(1) Ingredion (INGR - Free Report) : This is a $149 a share stock in the Food-Miscellaneous industry. It has a market cap of $9.8B. I see a Zacks Value score of A, a Zacks Growth score of A and a Zacks Momentums score of C.
Image Source: Zacks Investment Research
Ingredion Inc. is an ingredients solutions provider, specializing in nature-based sweeteners, starches and nutrition ingredients.
The company serves diverse sectors in food, beverage, brewing, pharmaceuticals and other industries. Its sweetener products include dextrose, glucose, polyols, HFCS and Maltodextrin.
The company's nutrition solutions include prebiotic fibers, resistant starch, soluble fibers and Inulin fibers. Its starch-based products include both industrial and food-grade starches.
Ingredion, formerly known as Corn Products International, Inc., is headquartered in Chicago.
(2) Celestica (CLS - Free Report) : This is a $80 a share stock in the Electronics-Manufacturing industry. It has a market cap of $9.7B. I see a Zacks Value score of B, a Zacks Growth score of B and a Zacks Momentums score of D.
Image Source: Zacks Investment Research
Celestica, Inc. is one of the largest electronics manufacturing services companies in the world, serving the computer, and communications sectors.
The company provides competitive manufacturing technology and service solutions for printed circuit assembly and system assembly, as well as post-manufacturing support to many of the world's leading original equipment manufacturers.
Celestica's extensive depth and breadth of offerings supports a wide variety of customer requirements from low volume, high complexity custom products to high volume commodity products.
(3) Leonardo DRS Inc. (DRS - Free Report) : This is a $34 a share stock in the Aerospace-Defense industry. It has a market cap of $9.5B. I see a Zacks Value score of D, a Zacks Growth score of D and a Zacks Momentums score of B.
Image Source: Zacks Investment Research
Leonardo DRS Inc. develops and manufactures advanced defense products for the U.S. military, intelligence agencies and allies.
The company's broad technology portfolio focuses on advanced sensing, network computing, force protection and electric power and propulsion as well as a range of key defense priorities.
Leonardo DRS Inc., formerly known as RADA Electronic Industries Ltd., is based in Arlington, VA.
Key Global Macro
On Monday, there is a G20 summit for heads of state, held in Rio de Janeiro, Brazil. The 2024 Summit’s theme is ‘Building a Just World and a Sustainable Planet.’
Bank of Japan (BoJ) Governor Ueda gives a speech.
On Tuesday, the G20 summit meeting continues in Brazil.
Core HICP inflation for OCT comes out for the Euro Area. +2.7% y/y looks to stick around, for another month, with +0.3% as the m/m lift.
U.S. Building Permits for OCT should be out. The prior reading was 1.425M. Housing Starts come out too, with a prior reading of 1.354M there.
On Wednesday, there is a People’s Bank of China (PBoC) rate decision. That policy rate there is 3.1%.
On Thursday, U.S. Weekly Jobless Claims come out. They were at a low 217K last week. The 4-week moving average is at 221K.
U.S. Existing Homes Sales for OCT comes out. The look is for 3.88M in OCT, following 3.84M in the prior month.
On Friday, the Euro Area HCOB preliminary manufacturing PMI for NOV comes out. The prior reading was 46.
The U. of Michigan NOV consumer sentiment index comes out. It was 73 last time.
Conclusion
On Nov. 15th, 2024 Zacks Research Director Sheraz Mian made fresh Q3 earnings comments—
With respect to the Q3 scorecard, we now have results from 460 S&P 500 members, or 92% of the index’s total membership.
The Q3 earnings season is on track to show another quarter of positive earnings growth.
Retailers on deck:
We have yet to see Q3 earnings results from most of the conventional or brick-and-mortar retailers, with Walmart (WMT - Free Report) on Tuesday, Nov. 19th, Target (TGT - Free Report) on Wednesday, Nov. 20th, and others on deck to report results in the coming days.
We know from other consumer-facing companies that have reported results already that consumer spending remains stable, with households continuing to spend at a healthy clip.
We know already that the lower end of income distribution has been under pressure.
We have also known for some time now that consumers have been leaning more towards spending on services like leisure, travel, dining and hospitality and ignoring other discretionary products.
This spending behavior has proved a headwind for operators that are heavily indexed towards discretionary merchandise or big-ticket items.
Target has a heavier exposure to such discretionary merchandise and has been struggling as a result of this unfavorable spending behavior
There have been some recent indicators suggesting a shift in this behavior, with demand for these discretionary services starting to ease.
We don’t know if this emerging trend simply reflects pre-election jitters among consumers or the sign of an enduring shift.
But if it is the start of a shift in spending behavior, then it would be welcome news for Target and others, as some of those dollars can be expected to start paying for discretionary merchandise.
Walmart had noted at the time of its last earnings call that also suggested some signs of improvement in their discretionary merchandise.
Have a nice evening!
Warm regards,
John Blank