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With U.S. Treasury Bonds at 5%, Wednesday PMIs Will Tell the Tale
AI Safety Continues to Be a Top Concern
President Xi Visits DC This Week for Talks with President Trump
What happens across this Global Week Ahead?
World markets have another high-stakes week in store, showcasing live geopolitics—
A summit between the U.S. and Chinese presidents in Washington D.C., and
The United Nations General Assembly are taking place, against
A backdrop of multiplying global crises
In macro news—
There will be PMI data for the global bond markets to digest
There's an important central bank meeting in Southeast Asia's largest economy Indonesia, and
The debate about how to stop AI "wiping out humanity" rages on
Next are Reuters’ five world market themes, re-ordered for equity traders—
(1) 10-yr U.S. Treasury Yield Reaches 5.0% Rubicon; PMIs Wednesday
Flash purchasing managers index (PMI) data from the U.S. manufacturing sector landing on Wednesday will give the growling global bond markets something to chew on.
The 10-year US Treasury yield — a key driver of global borrowing costs and currencies, too — has just tested the psychologically important 5% threshold and the Federal Reserve has just delivered its first interest rate hike in more than three years, so investors are waiting to see if anything snaps.
But many assets are not trading as the finance textbooks suggest. World stocks have barely sagged in the last month and the dollar hasn't really risen either, despite the rise in Treasury yields.
Still, it would be brave to ignore the 10-year yield, considering why it has been climbing.
(2) AI Safety Concerns Mount Serious Regulations Discussed
AI development will remain firmly center stage as companies, governments and investors all grapple with the increasingly apocalyptic warnings about the dangers of the emerging technology.
The calls this month by Anthropic's CEO and other top AI lab heads to "pace" its development have come amid some dire pronouncements about its potential threats to humanity itself, worries that began to impact the share prices of the semiconductor and so-called hyper-scaler giants at the center of the boom.
Investors though are now looking for more concrete signs that things really will slow before declaring the stratospheric two-year rise in AI stocks and the related capital spending over.
President Donald Trump has called the recent AI-mageddon warnings a hoax, signaling he won't let developers apply the brakes, while European Commission President Ursula von der Leyen wants to get the main AI players to Europe to discuss the risks.
(3) China’s President Xi Jinping Visits DC on a 3-Day State Visit
Next week's headline event will be Chinese President Xi Jinping's three-day state visit to Washington to meet his US counterpart Donald Trump.
The two last met in Beijing in May and have largely had stable relations since a shaky trade truce last October, but markets will be eager to see how things play out here given everything that's unfolded since, especially regarding the Iran war.
US allies in Asia also worry Trump may be tempted to soften his support for Taiwan in return for an economic win ahead of US midterms, while the fierce US-China AI arms race and the US's military buildup in space will be other hot topics, given the depth of the two countries' rivalry.
Trump will also hold a state dinner at the White House. It is only the second of his current term and the guest list is expected to be heavily loaded with top tech chiefs, including Nvidia CEO Jensen Huang.
(4) The 81st U.N. General Assembly Kicks Off. Stay Away from Manhattan!
The 81st UN General Assembly High-Level Week kicks off tomorrow against a backdrop of deep multilateral paralysis and multiplying global crises and with a summit theme of "Restoring Trust, Managing Transformation.”
The primary draw will be the deepening fractures of a fragmenting world order. With deadlocked conflicts in Ukraine and the Middle East widening the gap between the West and the Global South, the debates will spotlight the costs of transactional diplomacy.
The behind-the-scenes horse-trading over who will be the next UN Secretary-General will intensify, too, acting as a proxy battle for future superpower influence.
Meanwhile, urgent panels on artificial intelligence governance, global climate change threats and sovereign debt mechanisms will test whether fragmented states can still unite on the key issues, or avoid a "world of fortresses” that threatens global economic stability.
(5) On Wednesday, Indonesia Central Bank’s Latest Policy Rate Decision
Markets will closely watch Indonesia's central bank interest rate decision on Wednesday after the latest round of changes in the country's top economic personnel and amid a crisis of confidence of sorts among investors.
It will be new Governor Destry Damayanti's second meeting, and the first since she was officially sworn in as the first woman to head the central bank following July's surprise resignation of previous Governor Perry Warjiyo. The decision itself is expected to be either be a hold or a small cut.
It will also come just a week after Indonesian President Prabowo Subianto sacked outspoken Finance Minister Purbaya Yudhi Sadewa following a spate of bureaucratic infighting.
Analysts hope replacing Purbaya with his deputy Suahasil Nazara would help restore some investor confidence in the $1.5 trillion G20 economy after a string of crises amid long-festering concerns about policymaking, fiscal profligacy and a possible downgrade of its equity market to "frontier" status by index provider MSCI.
Zacks #1 Rank (STRONG BUY) Stocks
Next, I picked three Oil and Gas Zacks #1 (STRONG BUY) large-cap stocks.
(1) Valero (VLO - Free Report) : This is a $413 a share oil & gas refining stock, with a market cap of $116.1B
It is found in the Zacks Oil and Gas – Refining and Marketing industry. The stock holds a Zacks Value score of B, a Zacks Growth score of A, and a Zacks Momentum score of A.
F12M P/E: 8.6.
Image Source: Zacks Investment Research
Valero Energy Corporation is the largest independent refiner and marketer of petroleum products in the United States.
It has refineries located throughout the United States, Canada and the United Kingdom.
Moreover, Valero is a leading ethanol producer with ethanol plants in the Midwest.
The products of the company are sold in the markets of the United States, Canada, the United Kingdom, Ireland and Latin America.
The company's brand names are carried by outlets.
The company organizes its business through three reportable segments, namely:
Refining
Ethanol and
Renewable Diesel
(2) Phillips 66 (PSX - Free Report) : This is a $274 a share stock, with a market cap of $105.6B
It is found in Zacks Oil and Gas – Refining and Marketing industry. The stock holds a Zacks Value score of B, a Zacks Growth score of A, and a Zacks Momentum score of A.
F12M P/E: 9.8.
Image Source: Zacks Investment Research
Phillips 66's operations incorporate refining, midstream, marketing and specialties, and chemicals.
The company's operations include processing, transportation, storing and marketing fuels and products all over the world.
The company operates through the four business segments, namely, Midstream, Chemicals, Refining, and Marketing and Specialties.
Midstream gathers, processes, transports and markets natural gas; and transports, fractionates and markets NGL in the United States. In addition, this segment transports crude oil and other feedstocks to its refineries and other locations, and delivers refined and specialty products to the market.
Chemicals manufacture and markets petrochemicals and plastics on a worldwide basis.
Refining buys, sells and refines crude oil and other feedstocks at its refineries.
Marketing and Specialties purchases for resale and markets refined products. In addition, this segment includes the manufacturing and marketing of specialty products.
(3) Eni (E - Free Report) : This is a $55 a share oil and gas stock, with a market cap of $93.3B
It is found in the Zacks Oil and Gas – Integrated International industry. The stock holds a Zacks Value score of A, a Zacks Growth score of C, and a Zacks Momentum score of B.
F12M P/E: 9.2.
Image Source: Zacks Investment Research
Eni SpA, is among the leading integrated energy players in the world.
Their upstream operations include the exploitation and production of oil and natural gas resources. Through midstream activities Eni transports and store hydrocarbons. Eni is also engaged in refining hydrocarbons and distributing the end products.
Apart from providing oil & natural gas, Eni also generates and sells electricity.
Eni operates primarily through 3 business segments — Exploration & Production, Gas & Power and Refining & Marketing and Chemicals.
Through the Exploration & Production segment, Eni exploits and extracts oil and natural gas. Eni's upstream operations also include businesses related to LNG. Through 2021, Eni managed to drill several development wells.
Eni's Global Gas & LNG Portfolio segment engages in distributing and marketing natural gas and liquefied natural gas in the wholesale market.
Eni's Refining & Marketing and Chemicals segment is involved in refining and marketing of petroleum products at retail and wholesale markets.
Key Global Macro
The big PMI day is Wednesday.
On Sunday, the People’s Bank of China (PBoC) set monetary policy. A 3.0% loan policy rate is in place.
On Monday, the Bank of Canada (BoC) Governor Macklem and the Reserve Bank of Australia (RBA) Governor Bullock gave speeches.
The European Central Bank’s (ECB) President LaGarde also gave a speech.
On Tuesday, the U.S. Federal Reserve of New York’s Williams gives a speech. Ditto the Fed’s Jefferson and Barkin.
On Wednesday, the Euro Area HCOB manufacturing PMI for September comes out. 52.7 was the prior reading.
The S&P Global Manufacturing PMI for Sept. also comes out. 53.9 was the prior reading.
Australia’s household unemployment rate for August comes out. 4.5% was the prior reading.
On Thursday, the Swiss National Bank (SNB) sets its monetary policy. Their current policy rate is 0%. There is a presser.
U.S. New Home Sales come out for August. 0.61M is what to expect.
New and existing homes are 2 distinct segments inside the U.S. housing market.
You can thank Former Fed Chair Powell’s 2020 and 2021 “QE” money printing for that.
On Friday, the University of Michigan Consumer Sentiment Index for Sept. comes out. A low 47.8 was the August reading.
Conclusion
On Sept. 16th, Zacks Research Director Sheraz Mian shared his earnings look-ahead.
Key points:
(1) Total S&P 500 earnings are currently expected to increase +24.0% from the same period last year on +11.3% higher revenues.
14 of the 16 Zacks sectors are expected to enjoy positive earnings growth, and 6 sectors produce double-digit growth.
This will be the most broad-based earnings growth performance in recent times.
(2) The revisions trend remains positive, sustaining the favorable revisions trend that has been in place for a year now.
Since the start of Q3-26, earnings estimates have moved higher for half of the 16 Zacks sectors.
(3) With Conglomerates (-35.4%) as the only Zacks sector expected to have lower Q3 earnings relative to the year-earlier period, the quarter is on track to produce an impressively broad-based growth performance.
Q3 will also be the 8th straight quarter of double-digit earnings growth for the S&P500 index.
(4) Zacks #2 Rank (BUY) Micron (MU - Free Report) and Zacks #1 Rank (STRONG BUY) Nvidia (NVDA - Free Report) continue to be material contributors to the Tech sector’s growth picture.
Excluding these two companies?
Q3 earnings for the rest of the Tech sector would be +23.7% (vs. +42.0% otherwise).
That’s all for this Global Week Ahead.
Happy trading and investing!
John Blank, PhD. Zacks Chief Equity Strategist and Economist
View the Zacks #1 Rank List
Image: Shutterstock
Xi Comes to the USA: Global Week Ahead
Key Takeaways
What happens across this Global Week Ahead?
World markets have another high-stakes week in store, showcasing live geopolitics—
In macro news—
Next are Reuters’ five world market themes, re-ordered for equity traders—
(1) 10-yr U.S. Treasury Yield Reaches 5.0% Rubicon; PMIs Wednesday
Flash purchasing managers index (PMI) data from the U.S. manufacturing sector landing on Wednesday will give the growling global bond markets something to chew on.
The 10-year US Treasury yield — a key driver of global borrowing costs and currencies, too — has just tested the psychologically important 5% threshold and the Federal Reserve has just delivered its first interest rate hike in more than three years, so investors are waiting to see if anything snaps.
But many assets are not trading as the finance textbooks suggest. World stocks have barely sagged in the last month and the dollar hasn't really risen either, despite the rise in Treasury yields.
Still, it would be brave to ignore the 10-year yield, considering why it has been climbing.
(2) AI Safety Concerns Mount Serious Regulations Discussed
AI development will remain firmly center stage as companies, governments and investors all grapple with the increasingly apocalyptic warnings about the dangers of the emerging technology.
The calls this month by Anthropic's CEO and other top AI lab heads to "pace" its development have come amid some dire pronouncements about its potential threats to humanity itself, worries that began to impact the share prices of the semiconductor and so-called hyper-scaler giants at the center of the boom.
Investors though are now looking for more concrete signs that things really will slow before declaring the stratospheric two-year rise in AI stocks and the related capital spending over.
President Donald Trump has called the recent AI-mageddon warnings a hoax, signaling he won't let developers apply the brakes, while European Commission President Ursula von der Leyen wants to get the main AI players to Europe to discuss the risks.
(3) China’s President Xi Jinping Visits DC on a 3-Day State Visit
Next week's headline event will be Chinese President Xi Jinping's three-day state visit to Washington to meet his US counterpart Donald Trump.
The two last met in Beijing in May and have largely had stable relations since a shaky trade truce last October, but markets will be eager to see how things play out here given everything that's unfolded since, especially regarding the Iran war.
US allies in Asia also worry Trump may be tempted to soften his support for Taiwan in return for an economic win ahead of US midterms, while the fierce US-China AI arms race and the US's military buildup in space will be other hot topics, given the depth of the two countries' rivalry.
Trump will also hold a state dinner at the White House. It is only the second of his current term and the guest list is expected to be heavily loaded with top tech chiefs, including Nvidia CEO Jensen Huang.
(4) The 81st U.N. General Assembly Kicks Off. Stay Away from Manhattan!
The 81st UN General Assembly High-Level Week kicks off tomorrow against a backdrop of deep multilateral paralysis and multiplying global crises and with a summit theme of "Restoring Trust, Managing Transformation.”
The primary draw will be the deepening fractures of a fragmenting world order. With deadlocked conflicts in Ukraine and the Middle East widening the gap between the West and the Global South, the debates will spotlight the costs of transactional diplomacy.
The behind-the-scenes horse-trading over who will be the next UN Secretary-General will intensify, too, acting as a proxy battle for future superpower influence.
Meanwhile, urgent panels on artificial intelligence governance, global climate change threats and sovereign debt mechanisms will test whether fragmented states can still unite on the key issues, or avoid a "world of fortresses” that threatens global economic stability.
(5) On Wednesday, Indonesia Central Bank’s Latest Policy Rate Decision
Markets will closely watch Indonesia's central bank interest rate decision on Wednesday after the latest round of changes in the country's top economic personnel and amid a crisis of confidence of sorts among investors.
It will be new Governor Destry Damayanti's second meeting, and the first since she was officially sworn in as the first woman to head the central bank following July's surprise resignation of previous Governor Perry Warjiyo. The decision itself is expected to be either be a hold or a small cut.
It will also come just a week after Indonesian President Prabowo Subianto sacked outspoken Finance Minister Purbaya Yudhi Sadewa following a spate of bureaucratic infighting.
Analysts hope replacing Purbaya with his deputy Suahasil Nazara would help restore some investor confidence in the $1.5 trillion G20 economy after a string of crises amid long-festering concerns about policymaking, fiscal profligacy and a possible downgrade of its equity market to "frontier" status by index provider MSCI.
Zacks #1 Rank (STRONG BUY) Stocks
Next, I picked three Oil and Gas Zacks #1 (STRONG BUY) large-cap stocks.
(1) Valero (VLO - Free Report) : This is a $413 a share oil & gas refining stock, with a market cap of $116.1B
It is found in the Zacks Oil and Gas – Refining and Marketing industry. The stock holds a Zacks Value score of B, a Zacks Growth score of A, and a Zacks Momentum score of A.
F12M P/E: 8.6.
Image Source: Zacks Investment Research
Valero Energy Corporation is the largest independent refiner and marketer of petroleum products in the United States.
It has refineries located throughout the United States, Canada and the United Kingdom.
Moreover, Valero is a leading ethanol producer with ethanol plants in the Midwest.
The products of the company are sold in the markets of the United States, Canada, the United Kingdom, Ireland and Latin America.
The company's brand names are carried by outlets.
The company organizes its business through three reportable segments, namely:
(2) Phillips 66 (PSX - Free Report) : This is a $274 a share stock, with a market cap of $105.6B
It is found in Zacks Oil and Gas – Refining and Marketing industry. The stock holds a Zacks Value score of B, a Zacks Growth score of A, and a Zacks Momentum score of A.
F12M P/E: 9.8.
Image Source: Zacks Investment Research
Phillips 66's operations incorporate refining, midstream, marketing and specialties, and chemicals.
The company's operations include processing, transportation, storing and marketing fuels and products all over the world.
The company operates through the four business segments, namely, Midstream, Chemicals, Refining, and Marketing and Specialties.
(3) Eni (E - Free Report) : This is a $55 a share oil and gas stock, with a market cap of $93.3B
It is found in the Zacks Oil and Gas – Integrated International industry. The stock holds a Zacks Value score of A, a Zacks Growth score of C, and a Zacks Momentum score of B.
F12M P/E: 9.2.
Image Source: Zacks Investment Research
Eni SpA, is among the leading integrated energy players in the world.
Their upstream operations include the exploitation and production of oil and natural gas resources. Through midstream activities Eni transports and store hydrocarbons. Eni is also engaged in refining hydrocarbons and distributing the end products.
Apart from providing oil & natural gas, Eni also generates and sells electricity.
Eni operates primarily through 3 business segments — Exploration & Production, Gas & Power and Refining & Marketing and Chemicals.
Key Global Macro
The big PMI day is Wednesday.
On Sunday, the People’s Bank of China (PBoC) set monetary policy. A 3.0% loan policy rate is in place.
On Monday, the Bank of Canada (BoC) Governor Macklem and the Reserve Bank of Australia (RBA) Governor Bullock gave speeches.
The European Central Bank’s (ECB) President LaGarde also gave a speech.
On Tuesday, the U.S. Federal Reserve of New York’s Williams gives a speech. Ditto the Fed’s Jefferson and Barkin.
On Wednesday, the Euro Area HCOB manufacturing PMI for September comes out. 52.7 was the prior reading.
The S&P Global Manufacturing PMI for Sept. also comes out. 53.9 was the prior reading.
Australia’s household unemployment rate for August comes out. 4.5% was the prior reading.
On Thursday, the Swiss National Bank (SNB) sets its monetary policy. Their current policy rate is 0%. There is a presser.
U.S. New Home Sales come out for August. 0.61M is what to expect.
New and existing homes are 2 distinct segments inside the U.S. housing market.
You can thank Former Fed Chair Powell’s 2020 and 2021 “QE” money printing for that.
On Friday, the University of Michigan Consumer Sentiment Index for Sept. comes out. A low 47.8 was the August reading.
Conclusion
On Sept. 16th, Zacks Research Director Sheraz Mian shared his earnings look-ahead.
Key points:
(1) Total S&P 500 earnings are currently expected to increase +24.0% from the same period last year on +11.3% higher revenues.
14 of the 16 Zacks sectors are expected to enjoy positive earnings growth, and 6 sectors produce double-digit growth.
This will be the most broad-based earnings growth performance in recent times.
(2) The revisions trend remains positive, sustaining the favorable revisions trend that has been in place for a year now.
Since the start of Q3-26, earnings estimates have moved higher for half of the 16 Zacks sectors.
(3) With Conglomerates (-35.4%) as the only Zacks sector expected to have lower Q3 earnings relative to the year-earlier period, the quarter is on track to produce an impressively broad-based growth performance.
Q3 will also be the 8th straight quarter of double-digit earnings growth for the S&P500 index.
(4) Zacks #2 Rank (BUY) Micron (MU - Free Report) and Zacks #1 Rank (STRONG BUY) Nvidia (NVDA - Free Report) continue to be material contributors to the Tech sector’s growth picture.
Excluding these two companies?
Q3 earnings for the rest of the Tech sector would be +23.7% (vs. +42.0% otherwise).
That’s all for this Global Week Ahead.
Happy trading and investing!
John Blank, PhD.
Zacks Chief Equity Strategist and Economist