For Immediate Release
Chicago, IL –August 6, 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: Disney (DIS - Free Report) , CBS (CBS - Free Report) , Kraft Heinz (KHC - Free Report) , Tyson Foods (TSN - Free Report) , Devon Energy (DVN - Free Report) , Pioneer Natural Resources (PXD - Free Report) , Intuitive Surgical (ISRG - Free Report) , Sun Hung Kai Properties (SUHJY - Free Report) and Hitachi (HTHIY - Free Report) .
Here are highlights from Monday’s Analyst Blog:
Global Week Ahead: An Update On Q2 Earnings
To start the Global Week Ahead, Zacks Research Director Sheraz Mian gives us an update on Q2 earnings.
“This week brings results from more than 1,000 companies, including 56 S&P500 members.
This week’s docket includes:
• Major media players like Disney and CBS
• Consumer Staples players like Kraft Heinz and Tyson Foods and
• Exploration and Production (E&P) operators like Devon Energy and Pioneer Natural Resources.
After seeing results from 388 S&P 500 members through Friday, August 2nd, there are no major surprises on the growth front.
We knew it would be anemic. We should keep in mind (however) that the growth challenge is more a function of tough comparisons to last year’s record results than a cyclical downturn in profitability.
Total earnings for the 388 S&P500 index members that reported are up +0.8% from the same period last year on +4.3% higher revenues.
Earnings and revenue growth for the same cohort of companies had been -0.3% and +4.5% in Q1, respectively.
In other words, Q2 earnings growth is tracking modestly above what we saw in Q1. Revenue growth is almost even between Q1 and Q2.”
Next, are five Reuters world market themes. The ones that matter most to traders in the Global Week Ahead—
(1) The U.S. China Trade War Ramps
It’s been a familiar pattern in the Sino-U.S. trade war since 2018: Combative tweets from Donald Trump, high-level talks between the two sides, a stalemate, more tariffs and counter-tariffs, and then conciliatory messages.
This time it was Trump’s turn for a surprise move, raising the stakes in this real world version of the poker game. China then swiftly said it will have to take counter measures.
The question of who’s suffering most from a trade war has no straight answers. Many reckon no one wins. The Fed’s interest rate cut this week may help ease the manufacturing pain in the United States, but the dollar has surged against the yuan since and will offset that for U.S. firms. China has done a lot more targeted fiscal and monetary easing, can more easily source U.S. imports from elsewhere and also has the ability to inflict pain on U.S. commodity and farm sectors that back a Trump presidency.
(2) So. Buy More Bonds!
Investors can’t get enough of U.S. Treasuries these days and that’s good news for the upcoming auction of $84 billion of new debt. The U.S. Treasury Department is looking to sell $38 billion of 3-year notes, $27 billion of 10-year notes and $19 billion of 30-year bonds between August 6 and August 8.
Appetite seems insatiable for U.S. Treasuries after the U.S. Federal Reserve’s first interest rate cut in more than a decade and President Trump’s move on Thursday to extend tariffs to essentially all Chinese imports, escalating a trade conflict that is now poised to further hit U.S. consumers and businesses.
(3) Will The Rest of the World’s Central Banks Follow the Fed?
The central banks of Norway, New Zealand, Australia, India, Philippines and Thailand all hold interest rate meetings this week and hot on the heels of the first cut in U.S. rates in over a decade, action is almost guaranteed.
Some will be looking to follow suit. New Zealand is expected to trim another 25 basis points off its 1.50% main rate and there are outside bets that Australia could even make it three cuts in row having already dropped borrowing costs down to 1%.
(4) Watch German Economic and Company Data
It will be busy in Europe next week with a blitz of data ranging from updated euro zone July services PMIs and HSBC results on Monday, German industrial orders, output on Tuesday and Wednesday and ThyssenKrupp (TKAG.DE) and Adidas (ADSGn.DE) results on Thursday that should show how European consumer and industrial wallets have been holding up.
It comes after two top German firms offered a snapshot of the euro zone’s flagging economy this week: Industrial heavyweight Siemens (SIEGn.DE) joined a chorus warning of weaker demand for automotive parts and other products, highlighting how the region’s manufacturing recession is sending shivers through the corporate heartland.
(5) Finally, a Rising Fear of a Hard Brexit
The plunge in the British pound in recent days delivered investors a dose of what might happen should the market’s worst fears about Brexit - a disorderly, disruptive break from the European Union in October - come to pass.
Sterling skidded to a 30-month low against the dollar, below $1.21 and down 2.2% in less than a week, as fund managers, industry executives and Bank of England Governor Mark Carney all lined up to warn about the hit to the economy of a no-deal Brexit under new Prime Minister Boris Johnson.
The week should provide some insight into how the economy is holding up amid the political uncertainty: On Monday, the Purchasing Managers’ Index for Britain’s all-important services sector is published for July, with a Reuters poll forecasting a reading of 50.2, barely above the line of 50 that separates growth from contraction.
Top Zacks #1 Rank (STRONG BUY) Stocks—
(1) Intuitive Surgical: This is a $59B market cap medical instrument stock. The company makes the hot Da Vinci surgery robot. The Value Score is D and the Growth score is C.
With a $513 price on a hot company, let’s see what happens when the ‘risk-off’ trade war ramps. My guess is there will be cheaper prices on stocks like this, on the way.
(2) Sun Hung Kai Properties: This is an Asian/China centric real estate company with a $44B market cap. The Zacks Value score is C and the Growth score is F.
I will put up the full company operating description on this $15 stock. It is interesting. It made our #1 list, in the middle of a huge U.S. China trade war and riots in Hong Kong. Not sure I am a buyer here. More likely I would be a spectator.
(3) Hitachi: Here is a Zacks #1 Rank company I have seen the ticker on our list regularly. This Japanese diversified electronics operations stalwart holds a Zacks Value score of A and a Growth score of B.
At $71 a share, this is still a GARP (growth at a reasonable price) stock.
Key Global Macro—
On Monday, the ISM non-manufacturing composite comes out. The consensus has 55.5. The latest was 55.1. U.S. services activity keep on humming despite the trade war.
French services PMI should be 52.2, Italy should be 50.6 and Germany is at 55.4.
The EU composite PMI should be 51.5.
On Tuesday, St. Louis Fed President Bullard addresses the U.S. economy.
German factory orders come out.
Australia’s RBA should keep the cash target rate at 1.0%. But New Zealand may cut its official cash rate to 1.25% from 1.5%.
India’s repo rate could be cut to 5.25% from 5.50%.
The Bank of Thailand should keep its repo rate flat at 1.75%.
On Wednesday, Chicago Fed President Evans hosts a media chat.
German industrial production figures come out.
China should release fresh trade figures.
On Thursday, Spanish industrial production figures come out.
The central bank in the Philippines should cut its overnight borrowing rate to 4.25% from 4.50%.
On Friday, Banco Central de Reserva del Peru is expected to stay on hold at 2.75% next Friday. Peru’s inflation decelerated to +2.1% y/y in July, versus a 2.3% prior reading.
German trade figures come out.
The U.K. is expected to show NO GDP growth for Q2.
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