For Immediate Release
Chicago, IL –December 17, 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: Suzuki Motor
SZKMY, Burberry BURBY and Momo Inc. ( MOMO Quick Quote MOMO - Free Report) . Here are highlights from Monday’s Analyst Blog: More Central Bank Juice, Please! Global Week Ahead
Looking into this week’s major Global Week Ahead macro events, I moved all the monetary policy meetings on Thursday to the top of this week’s list.
Don’t ever forget this: The world’s central banks are supporting your stocks the most.
You will surely hear more spin on the U.S.-China trade deal. This daily trade deal spin will likely appear to dominate monetary policymaker moves — across the week ahead.
That stock market story is in the rear-view mirror. Stock markets move mainly to reprice events in the future. They have already fully priced in what is in the past.
Last week on Friday Dec. 13th, what did ScotiaBank’s FX economists in Canada write about the U.S.-China trade deal?
“As further details are digested on the path to a formal written agreement and potential signing ceremony early in the New Year, markets will also consider macro releases in the lead-up to the Christmas holiday season.
“Markets don’t particularly trust either side in the U.S.-China trade negotiations and are waiting to verify concrete signs that a meaningful deal has been achieved, and not just one that swaps uncertain purchases of hogs and soybeans for scaling back only some of the tariffs.”
These well-trained FX macro analysts also make another key point. It endures as solid guidance. It is one I fully comprehend, as a trained PhD macroeconomist too.
I have made this very same point, several times, to a Zacks equity audience before:
“The widened U.S. ‘twin deficits’ (fiscal and trade or current account balances) are the product of U.S. domestic policies more than anything else, and they are linked to one another.”
What that means in the U.S.-China trade war context? Long-term equity investors (not short-term traders) need to see a bi-partisan U.S. budget balance deal accomplished, not a U.S.-China “Phase Two” deal.
That U.S.-only “Made in DC” tax and spending deal needs to target Federal fiscal budget balance over 3 or 4 years of time. That would address the chronic U.S. overall trade deficit, also fully “Made in DC.”
This action would likely roll up the U.S.-China trade deficit part of that, succinctly, over time.
Short-term traders? They just need to see more U.S. and global central bank juice!
Next are Reuters’ five world market themes, reordered for equity traders—
(1) We hear from Boris Johnson all week long… and the BoE on Thursday
A thumping election win for Prime Minister Boris Johnson has raised hopes that 3 1/2 years of Brexit-fueled chaos will finally end.
Expectations that he may swing slightly nearer the center of his Conservative Party, sidelining the fiercest euroskeptics, and ease the path towards a free-trade deal with the European Union have sent sterling and British shares surging.
Yet there are signs of caution, with sterling stalling around $1.35. Further gains will hinge on Johnson’s new cabinet, how the global growth and trade war backdrop pans out and what the Bank of England might do.
At the U.K. central bank’s Dec. 19th meeting, markets will watch for any shifts in its views on inflation, the U.K. economy and the interest rate outlook for 2020.
While policymakers have skewed dovish of late amid a torrent of dismal data and sub-target inflation, the election result — and a hoped-for growth recovery — have seen money markets halve the probability of an end-2020 cut to 25 per cent.
Without more clarity, investors might just be wary of chasing sterling much higher.
(2) The Bank of Japan (BoJ) meets on Thursday, too
Japan’s central bank meets on Thursday with the global economic outlook “relatively bright,” according to Governor Haruhiko Kuroda.
Growth green shoots, a possible U.S.-China trade deal and something nearing certainty on Brexit has got almost everyone expecting the BOJ will do very little: Interest rates are at -0.1 per cent and the bank has eased off bond buying — even though the bank’s balance sheet is bursting with negative-yielding paper.
The government has flagged a gigantic $122 billion stimulus package to keep things moving after next year’s Olympics. Yet the business mood is dire with Friday’s “tankan” survey at its lowest reading since 2013. Big manufacturers — especially automakers — are gloomiest, as the trade war takes its toll.
A surprise on Tuesday export data forecast to show further contraction and Thursday’s inflation reading could jolt yen longs out of their slumber.
(3) Negative-rate Sweden steps up to the monetary plate on Thursday… to hike
While most central banks are busy pondering whether to hold or cut interest rates, Sweden may swim against the tide and deliver a 25 basis-point rate hike on Dec. 19th.
That will end half a decade of negative interest rates in the country and make it the first in Europe to pull borrowing costs from sub-zero territory.
Policymakers flagged a rate hike in October and recent data showing inflation rising to 1.7 per cent — just off the 2 per cent target — cemented those expectations. The krona has rallied to eight-month highs versus the euro, up almost 5 per cent since October.
The proposed interest rate increase has its critics, who cite still-sluggish inflation and factory activity, at its weakest since 2012.
Meanwhile, neighboring Norway’s policy meeting, scheduled for the same day, may be less exciting as no change is expected. Investors remain baffled by the Norwegian krone’s weakness: despite policy makers delivering four rate hikes since Sept 2018, it’s at near-record lows to the euro.
(4) We learn if Germany can avoid a Q4 recession
First clues as to whether Eurozone powerhouse Germany can avoid a fourth quarter recession emerge on Monday, when advance PMI readings for November are released globally.
The economic activity surveys, a key barometer of economic health, come after Citi’s economic surprise index showed Eurozone economic data beating consensus expectations at the fastest pace since February 2018. The latest surprise was a +1.2% rise in German exports in October, defying forecasts of a contraction.
Hopes are high that exports and private consumption, which helped Germany skirt recession, will hold up. Last month’s PMI data showed manufacturing remained in deep contraction across the bloc.
A Reuters poll showed expectations of a modestly higher 46.0 manufacturing reading in the Eurozone, but that’s still far below the 50-mark which separates growth from contraction. Services, which have held up better so far, are expected to grow modestly from November, at 52.0.
(5) With a “Phase One” deal done, is that it until after the Presidential Election?
U.S. President Donald Trump and Chinese officials have agreed to a “Phase One” trade deal that includes cutting U.S. tariffs on Chinese goods. Washington has agreed to suspend tariffs on $160 billion in Chinese goods due to go into effect on Dec. 15th, Trump said, and cut existing tariffs to 7.5%.
The agreement covers intellectual property, technology transfer, agriculture, financial services, currency and foreign exchange, according to Washington’s Trade Representative.
Neither side offered specific details on the amount of U.S. agricultural goods Beijing had agreed to buy — a key sticking point of the lengthy deal negotiations. News of the trade deal saw U.S. stocks romp to fresh record levels.
But few doubt that the rollercoaster is over yet.
While Trump announced that “Phase Two” trade talks would start immediately, Beijing made it clear that moving to the next stage of the trade negotiations would depend on implementing “Phase One” first.
While markets cheered the December rally, few expect the trade deal rollercoaster ride to be quite over yet.
Top Zacks #1 Rank Stocks (1) Suzuki Motor:This is a $172 share price stock in Japan, making this a $21B market cap stock.
I see a Zacks Value score of A (with a forward P/E of 13.55) and a Zacks Growth score of B (but a PEG ratio of 3.1) and a Zacks momentum score of B.
That $172 share price may sound rich to you. This stock was actually scratching above $260 a share last year. It has been shorted down since then. I do see $14.48 in EPS next year. So, there is fundamental earnings meat on the bones of this Japanese stock.
(2) Burberry: Ah yes! The well-known and respected U.K. retail apparel company. These shares price at $28.90 and the market cap is $11.9B.
I have a Zacks Value score of D and a Zacks Growth score of A.
It is Christmas shopping season. The stock made it to our top list in a timely manner.
(3) Momo Inc.: This is a $36 stock with a market cap of $7.5B.
I see a Zacks Value score of C and a Zacks Growth score of B and a Zacks Momentum score of B.
Momo Inc. provides mobile-based social networking platform primarily in the People’s Republic of China. Its platform includes mobile applications and related features, functionalities, tools and services.
The company offers two types of mobile game services: non-exclusive mobile game services and exclusive mobile game services. It also provides membership subscription and other services which include paid emoticons and mobile marketing services.
Momo Inc. is headquartered in Beijing, the People’s Republic of China.
Zacks Investment Research
800-767-3771 ext. 9339
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.