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The Zacks Analyst Blog Highlights: Roche, LVMH-Moet Hennessy Louis Vuitton and General Electric
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For Immediate Release
Chicago, IL – July 30, 2019 – 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: Roche Holdings (RHHBY - Free Report) , LVMH-Moet Hennessy Louis Vuitton SA (LVMUY - Free Report) and General Electric (GE - Free Report) .
Here are highlights from Monday’s Analyst Blog:
A Packed Global Week Lies Ahead
A packed Global Week Ahead lies in front of us.
We will see everything, in terms of potential market-moving catalysts:
·From the Fed, BoJ and BoE monetary policy decisions,
·To U.S. China trade negotiations on Tuesday,
·A key Friday U.S. nonfarm payroll report and,
·A host of Q2 S&P500 earnings releases.
A Q2 earnings deluge truly arrives this week, with 164 S&P 500 listed firms reporting. Breadth deepens. Reporting names include Apple, Merck and Pfizer.
All in one week!
Don’t ask me for clean advice -- on what moves the equity market most. We will likely know that only in hindsight.
Next are Reuters’ five world market themes, in order of importance to equities.
(1) The bet is the Fed cuts rates 25 bps on July 31st
Investors have zero doubt the U.S. Federal Reserve will cut interest rates on July 31 for the first time in more than a decade. For weeks, money markets have bet on a 25 basis-point rate reduction in July, CME Group’s FedWatch tool shows, and while chances of a half-point cut briefly shot up to 60% in mid-July, they have settled back at around 25%.
But interest rates may not be the only item on the to-do list during the two-day debate around the Fed’s board room table. Currently, the U.S. central bank rolls off billions of dollars of maturing bonds from its balance sheet each month without reinvesting the proceeds. That balance sheet reduction — “quantitative tightening,” as it’s known — has, since October 2017, whittled down what had been $4.25 trillion of bond holdings which the Fed accumulated between 2008 and 2014.
The program is set to end in September, but with only a month to go, why wait? Many Fed policymakers are leery of having two policy tools — interest rates and balance sheet size — working at cross-purposes. Top Wall Street firms, Goldman Sachs among them, are in the end-it-now camp.
(2) U.S. and China trade negotiators in Shanghai meet on Tuesday
U.S. and Chinese chief trade negotiators will lock horns on Tuesday in Shanghai in what will officially be their 12th round of meetings to try to diffuse a year-long trade war.
With President Trump’s November 2020 re-election campaign not in full swing yet and Wall Street swaggering at record highs, Trump may not be feeling much pressure for the ‘big beautiful deal’ he has touted but markets will still want something.
What they don’t want to see is the additional $300 billion of punitive tariffs on China coming back into view, followed by inevitable retaliation from Beijing.
World stocks have surged roughly 8% since early June. That sweet spot is of course down to central banks promising to go easy on policy but there also haven’t been many trade war headlines to sour the mood. A bad meeting may well disrupt all that.
(3) Where the European Q2 Earnings Season Stands…
ECB Chief Mario Draghi reckons the risk of economic recession in the bloc is “pretty low.” Indeed, Europe Inc. looks more likely at the moment to dip into an earnings recession — Refinitiv data shows corporate profits are on track to decline for the second straight quarter for the first time since mid-2016.
With the first slew of Q2 results out, full-year profit growth is now seen rising just 3%, whereas early-2019 forecasts put it at just under 10%.
Markets seem to be taking it in their stride. They have been rewarding companies with share price gains of 1.5%-3% if profits beat or meet already lowered estimates, while those falling short are not being penalized as much.
Nearly a fifth of Eurozone companies have reported quarterly earnings so far and nearly half of them have beaten analysts’ consensus. But that’s mainly because expectations were sharply lowered ahead of the earnings season.
Two months back, analysts expected European companies to report 3.6% profit growth; now they see a half-percent decline.
Meanwhile, U.S. corporations seem to be in a much better position — three-quarters of the S&P 500 companies have beaten earnings estimates so far this season, with post-earnings market reactions similar to Europe.
(4) The Bank of Japan (BoJ) will surely continue uber-accomodative policies
The European Central Bank is expected to go in all-guns-blazing with a variety of stimulus measures to ward off the curse of “Japanification” — depressed growth, near-zero inflation and low or negative interest rates. But in Japan, which has been trying for years to extricate itself from that situation, policymakers have an even tougher job.
The Bank of Japan is divided on whether to ease policy or hold off. A rate cut would seem to make sense given Japan’s dwindling exports, exposure to a slowing China and unwelcome currency strength. Oh, and stubbornly low inflation, of course.
On the other hand, Japan’s banks are already agonizing over negative interest rates. And many argue it may not be wise to dip into an alarmingly bare toolkit and use precious ammunition now, only to see the yen swiftly reverse any post-cut falls when the Fed lowers rates.
But not doing anything while everyone takes action is also not advisable. From that perspective, the ECB standing pat this month gives the BOJ some breathing space — it may use words rather than action to show it will not lag behind when it comes to easing policy.
(5) The Bank of England (BoE) then steps up to the plate on August 1st
It’s going to be a busy central banking week. The BOJ and Fed meetings will be followed by the Bank of England on Aug 1st. It is expected to keep interest rates on hold as policymakers wait for the Brexit fog to clear.
But the meeting will be watched for policymakers’ assessment of the British economy’s current downturn, and how they might respond should the UK exit the European Union without a transition deal under new prime minister Boris Johnson.
Sterling has fallen more than 5% since May, largely on fears of a disorderly no-deal Brexit. Johnson, less than a week into the job, has already clashed with Brussels after he again called for the withdrawal deal to be rewritten and vowed to take Britain out of the EU on Oct. 31 regardless.
BoE policymakers must also contend with stuttering growth. Some analysts reckon the economy shrank in the April-June quarter; another poor showing this quarter would tip it into recession.
Markets now price in a 75% chance of a 25 basis-point cut in interest rates in 2019 from the current 0.75%. That's a U-turn from a few months ago, when a rate hike was expected by some.
Still, the BoE may resist the global monetary easing tide and push back against rate-cut expectations. That would allow sterling to find support near 27-month lows of below $1.24 -- unless the deadlock between Brussels and London takes another turn for the worse.
Zacks #1 Rank (STRONG BUY) Stocks—
(1) Roche Holdings: This is a Swiss multinational healthcare company that operates worldwide under two divisions: Pharmaceuticals and Diagnostics.
The Zacks VGM score of A is also quite attractive.
The market cap is $234B now, with a $34 share price, a little down from a recent $35.50 high.
With European earnings season underway, you might want to take a look at this Health Care stock, while they are still out of favor.
(2) LVMH-Moet Hennessy Louis Vuitton SA: There is a French company at the top of the Large Cap Zacks Ranks this week too. This is a $217B market cap luxury goods conglomerate.
The Zacks VGM score is B.
These now $86 shares have been in a nice uptrend all year.
LVMH Moet Hennessy Louis Vuitton is an international group of companies that is principally engaged in the production and sale of prestigious luxury goods under world-famous brand names.
The five different sectors in which the company operates are:
·Wines & Spirits,
·Fashion & Leather Goods,
·Perfumes & Cosmetics,
·Watches & Jewelry and
·Selective retailing
The company has expanded its international retail network all over the world. LVMH Moet Hennessy Louis Vuitton is headquartered in Paris, France.
The strong rise in this stock made its major owner one of the richest people in the world this year.
(3) General Electric: I was happy to see this great company, but much maligned stock, return to our Zacks #1 Rank list this week.
But the Zacks VGM score is a terrible F.
The $91B market cap is still huge, though shares are $10.50 each now. The shares are range trading between $9 and $11 most of this year.
General Electric Company operates as a tech and financial services company.
Its segments include:
·Energy Infrastructure,
·Aviation,
·Healthcare,
·Transportation,
·Home & Business Solutions and
·GE Capital
Key Global Macro—
On Monday, Mexico’s unemployment rate is still low at 3.5%.
Japan’s jobless rate comes out too. 2.4% is the current level to watch there. No change is expected to this data.
On Tuesday, The Fed’s two day meeting ends on Wednesday and culminates in a 2pm ET statement followed by Chair Powell’s press conference. There will be no forecasts or dot plots until the September FOMC.
Don’t expect any change from the Bank of Japan. Their latest policy decisions and guidance will land on Tuesday.
U.S. and China trade negotiators meet in Shanghai on Tuesday.
China will update its purchasing managers’ indices (PMIs) for July on Tuesday (state) and Wednesday (private, manufacturing).
China’s manufacturing PMIs have been slightly in contraction territory. Overall GDP growth has been buoyed by more positive services PMIs.
On Wednesday, Canada’s latest quarterly GDP growth rate lands. Its Q2 GDP growth should be tracking around +2.75%. The Bank of Canada has +2.3%.
Banco Central do Brasil may cut its Selic rate by 25 bps on Wednesday.
Mexico reports Q2 GDP growth. Growth is expected to remain soft at around +0.8% y/y. Keep a close eye on the softness down there.
Mexico’s headline CPI inflation has likely fallen under +4.0% y/y in June with core CPI at about +3.9%. Both measures remain toward the upper end of Banxico’s inflation target rate of 2–4%.
On Thursday, the Bank of England gives up its monetary policy decision. No change in Bank Rate is expected (0.75%). Markets are pricing roughly 50% odds of a BoE rate cut after the October 31st Brexit deadline.
On Friday, we have a U.S. nonfarm payroll report for July.
Look for stable U.S. wage growth of +3.1% y/y, an unchanged U.S. household unemployment rate at 3.7%, and a U.S. payroll rise of +175K for July.
Will you retire a millionaire?
One out of every six people retires a multimillionaire. Get smart tips you can do today to become one of them in a new Special Report, “7 Things You Can Do Now to Retire a Multimillionaire.”
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Roche, LVMH-Moet Hennessy Louis Vuitton and General Electric
For Immediate Release
Chicago, IL – July 30, 2019 – 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: Roche Holdings (RHHBY - Free Report) , LVMH-Moet Hennessy Louis Vuitton SA (LVMUY - Free Report) and General Electric (GE - Free Report) .
Here are highlights from Monday’s Analyst Blog:
A Packed Global Week Lies Ahead
A packed Global Week Ahead lies in front of us.
We will see everything, in terms of potential market-moving catalysts:
· From the Fed, BoJ and BoE monetary policy decisions,
· To U.S. China trade negotiations on Tuesday,
· A key Friday U.S. nonfarm payroll report and,
· A host of Q2 S&P500 earnings releases.
A Q2 earnings deluge truly arrives this week, with 164 S&P 500 listed firms reporting. Breadth deepens. Reporting names include Apple, Merck and Pfizer.
All in one week!
Don’t ask me for clean advice -- on what moves the equity market most. We will likely know that only in hindsight.
Next are Reuters’ five world market themes, in order of importance to equities.
(1) The bet is the Fed cuts rates 25 bps on July 31st
Investors have zero doubt the U.S. Federal Reserve will cut interest rates on July 31 for the first time in more than a decade. For weeks, money markets have bet on a 25 basis-point rate reduction in July, CME Group’s FedWatch tool shows, and while chances of a half-point cut briefly shot up to 60% in mid-July, they have settled back at around 25%.
But interest rates may not be the only item on the to-do list during the two-day debate around the Fed’s board room table. Currently, the U.S. central bank rolls off billions of dollars of maturing bonds from its balance sheet each month without reinvesting the proceeds. That balance sheet reduction — “quantitative tightening,” as it’s known — has, since October 2017, whittled down what had been $4.25 trillion of bond holdings which the Fed accumulated between 2008 and 2014.
The program is set to end in September, but with only a month to go, why wait? Many Fed policymakers are leery of having two policy tools — interest rates and balance sheet size — working at cross-purposes. Top Wall Street firms, Goldman Sachs among them, are in the end-it-now camp.
(2) U.S. and China trade negotiators in Shanghai meet on Tuesday
U.S. and Chinese chief trade negotiators will lock horns on Tuesday in Shanghai in what will officially be their 12th round of meetings to try to diffuse a year-long trade war.
With President Trump’s November 2020 re-election campaign not in full swing yet and Wall Street swaggering at record highs, Trump may not be feeling much pressure for the ‘big beautiful deal’ he has touted but markets will still want something.
What they don’t want to see is the additional $300 billion of punitive tariffs on China coming back into view, followed by inevitable retaliation from Beijing.
World stocks have surged roughly 8% since early June. That sweet spot is of course down to central banks promising to go easy on policy but there also haven’t been many trade war headlines to sour the mood. A bad meeting may well disrupt all that.
(3) Where the European Q2 Earnings Season Stands…
ECB Chief Mario Draghi reckons the risk of economic recession in the bloc is “pretty low.” Indeed, Europe Inc. looks more likely at the moment to dip into an earnings recession — Refinitiv data shows corporate profits are on track to decline for the second straight quarter for the first time since mid-2016.
With the first slew of Q2 results out, full-year profit growth is now seen rising just 3%, whereas early-2019 forecasts put it at just under 10%.
Markets seem to be taking it in their stride. They have been rewarding companies with share price gains of 1.5%-3% if profits beat or meet already lowered estimates, while those falling short are not being penalized as much.
Nearly a fifth of Eurozone companies have reported quarterly earnings so far and nearly half of them have beaten analysts’ consensus. But that’s mainly because expectations were sharply lowered ahead of the earnings season.
Two months back, analysts expected European companies to report 3.6% profit growth; now they see a half-percent decline.
Meanwhile, U.S. corporations seem to be in a much better position — three-quarters of the S&P 500 companies have beaten earnings estimates so far this season, with post-earnings market reactions similar to Europe.
(4) The Bank of Japan (BoJ) will surely continue uber-accomodative policies
The European Central Bank is expected to go in all-guns-blazing with a variety of stimulus measures to ward off the curse of “Japanification” — depressed growth, near-zero inflation and low or negative interest rates. But in Japan, which has been trying for years to extricate itself from that situation, policymakers have an even tougher job.
The Bank of Japan is divided on whether to ease policy or hold off. A rate cut would seem to make sense given Japan’s dwindling exports, exposure to a slowing China and unwelcome currency strength. Oh, and stubbornly low inflation, of course.
On the other hand, Japan’s banks are already agonizing over negative interest rates. And many argue it may not be wise to dip into an alarmingly bare toolkit and use precious ammunition now, only to see the yen swiftly reverse any post-cut falls when the Fed lowers rates.
But not doing anything while everyone takes action is also not advisable. From that perspective, the ECB standing pat this month gives the BOJ some breathing space — it may use words rather than action to show it will not lag behind when it comes to easing policy.
(5) The Bank of England (BoE) then steps up to the plate on August 1st
It’s going to be a busy central banking week. The BOJ and Fed meetings will be followed by the Bank of England on Aug 1st. It is expected to keep interest rates on hold as policymakers wait for the Brexit fog to clear.
But the meeting will be watched for policymakers’ assessment of the British economy’s current downturn, and how they might respond should the UK exit the European Union without a transition deal under new prime minister Boris Johnson.
Sterling has fallen more than 5% since May, largely on fears of a disorderly no-deal Brexit. Johnson, less than a week into the job, has already clashed with Brussels after he again called for the withdrawal deal to be rewritten and vowed to take Britain out of the EU on Oct. 31 regardless.
BoE policymakers must also contend with stuttering growth. Some analysts reckon the economy shrank in the April-June quarter; another poor showing this quarter would tip it into recession.
Markets now price in a 75% chance of a 25 basis-point cut in interest rates in 2019 from the current 0.75%. That's a U-turn from a few months ago, when a rate hike was expected by some.
Still, the BoE may resist the global monetary easing tide and push back against rate-cut expectations. That would allow sterling to find support near 27-month lows of below $1.24 -- unless the deadlock between Brussels and London takes another turn for the worse.
Zacks #1 Rank (STRONG BUY) Stocks—
(1) Roche Holdings: This is a Swiss multinational healthcare company that operates worldwide under two divisions: Pharmaceuticals and Diagnostics.
The Zacks VGM score of A is also quite attractive.
The market cap is $234B now, with a $34 share price, a little down from a recent $35.50 high.
With European earnings season underway, you might want to take a look at this Health Care stock, while they are still out of favor.
(2) LVMH-Moet Hennessy Louis Vuitton SA: There is a French company at the top of the Large Cap Zacks Ranks this week too. This is a $217B market cap luxury goods conglomerate.
The Zacks VGM score is B.
These now $86 shares have been in a nice uptrend all year.
LVMH Moet Hennessy Louis Vuitton is an international group of companies that is principally engaged in the production and sale of prestigious luxury goods under world-famous brand names.
The five different sectors in which the company operates are:
· Wines & Spirits,
· Fashion & Leather Goods,
· Perfumes & Cosmetics,
· Watches & Jewelry and
· Selective retailing
The company has expanded its international retail network all over the world. LVMH Moet Hennessy Louis Vuitton is headquartered in Paris, France.
The strong rise in this stock made its major owner one of the richest people in the world this year.
(3) General Electric: I was happy to see this great company, but much maligned stock, return to our Zacks #1 Rank list this week.
But the Zacks VGM score is a terrible F.
The $91B market cap is still huge, though shares are $10.50 each now. The shares are range trading between $9 and $11 most of this year.
General Electric Company operates as a tech and financial services company.
Its segments include:
· Energy Infrastructure,
· Aviation,
· Healthcare,
· Transportation,
· Home & Business Solutions and
· GE Capital
Key Global Macro—
On Monday, Mexico’s unemployment rate is still low at 3.5%.
Japan’s jobless rate comes out too. 2.4% is the current level to watch there. No change is expected to this data.
On Tuesday, The Fed’s two day meeting ends on Wednesday and culminates in a 2pm ET statement followed by Chair Powell’s press conference. There will be no forecasts or dot plots until the September FOMC.
Don’t expect any change from the Bank of Japan. Their latest policy decisions and guidance will land on Tuesday.
U.S. and China trade negotiators meet in Shanghai on Tuesday.
China will update its purchasing managers’ indices (PMIs) for July on Tuesday (state) and Wednesday (private, manufacturing).
China’s manufacturing PMIs have been slightly in contraction territory. Overall GDP growth has been buoyed by more positive services PMIs.
On Wednesday, Canada’s latest quarterly GDP growth rate lands. Its Q2 GDP growth should be tracking around +2.75%. The Bank of Canada has +2.3%.
Banco Central do Brasil may cut its Selic rate by 25 bps on Wednesday.
Mexico reports Q2 GDP growth. Growth is expected to remain soft at around +0.8% y/y. Keep a close eye on the softness down there.
Mexico’s headline CPI inflation has likely fallen under +4.0% y/y in June with core CPI at about +3.9%. Both measures remain toward the upper end of Banxico’s inflation target rate of 2–4%.
On Thursday, the Bank of England gives up its monetary policy decision. No change in Bank Rate is expected (0.75%). Markets are pricing roughly 50% odds of a BoE rate cut after the October 31st Brexit deadline.
On Friday, we have a U.S. nonfarm payroll report for July.
Look for stable U.S. wage growth of +3.1% y/y, an unchanged U.S. household unemployment rate at 3.7%, and a U.S. payroll rise of +175K for July.
Will you retire a millionaire?
One out of every six people retires a multimillionaire. Get smart tips you can do today to become one of them in a new Special Report, “7 Things You Can Do Now to Retire a Multimillionaire.”
Click to get it free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.