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Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3975
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Tuesday, January 25, 2022 - 5:54 pm: | 
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Looking for Powell to lean on inflation mandate (and Fed put in process)
The FOMC started its two-day meeting today. The 2022 committee currently consists of Fed Chair Powell and Fed Governors Brainard, Bowman, and Waller, along with Fed Presidents Williams (New York), Bullard (St. Louis), George (Kansas City), and Mester (Cleveland). There are currently three vacancies on the Board of Governors.
The policy decision will be released at 2:00 p.m. ET on Wednesday. Fed Chair Powell's press conference will follow at 2:30 p.m. ET. This meeting will not produce an updated summary of economic projections (the next update will be provided at the March 15-16 meeting).
The CME FedWatch Tool indicates there is only a 5.6% probability of a rate hike tomorrow. In other words, if the FOMC elected to raise the target range for the fed funds rate, it would be a huge surprise and most likely greeted initially with a decidedly negative reaction. The reason being is that it would stoke fears that the Fed is going to be much more aggressive in tightening its policy to rein in inflation than the market thought.
We think the Fed is late in raising rates and has continued with its asset purchases far too long, but we don't think Jerome Powell relishes shock value when it comes to rate hikes. Accordingly, we would be as surprised as most everybody else if a rate hike was announced tomorrow.
The need for the Fed to regain some inflation-fighting credibility at this point, however, is far more important than the need to pacify the stock market masses with some calming narrative about not wanting to prompt an unnecessary tightening of financial conditions with an aggressive policy (or some spineless commentary like that).
We think the Fed knows it has already made a policy mistake keeping things as loose as it has for as long as it has. Hence, don't be surprised if you hear Fed Chair Powell spend more time, and express a greater emphasis, on the need to address the inflation side of the dual mandate than he has in past press conferences. That will likely keep the stock market on edge knowing the so-called Fed put is going kaput. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3974
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Tuesday, January 25, 2022 - 11:48 am: |
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Liquid Momentum is Briefing.com's proprietary Focus List for up to 50 of the most liquid, high Relative Strength stocks in the market that are ideal for Day and Swing trading high-quality names. It is generated from a proprietary algorithm that places heavy emphasis on superior Relative Strength versus the "all stocks universe," high Average True Range (ATR) values, and high Average Daily Volume, among a few other data points. An updated list is published by each Monday, along with some charts and commentary throughout the week highlighting the most compelling set-ups and patterns.
Stock have been under pressure over the last week, but managed to stage a reversal of weakness by midday on Monday.
This week's turnover wasn't as high as last week when volatility began to spike to the upside, knocking leaders out of their top spots while newer ones took on their role. Ford Motor Co (F) jumps onto the list at the #1 spot despite its recent -25% correction these last few days. Regardless, its relative strength over the last one-, three, and six months has been strong enough that it managed to fare better amongst other names in the ranks.
The Daily chart montage below highlights the various Sector and Industry ETFs that comprise nearly all of the Top 50 holdings. Energy and Financials continue to dominate most of the list to some degree or another. Only one Technology (Semiconductor) remained on this week's update... Taiwan Semi Conductor (TSM) at the #6 rank. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3973
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Tuesday, January 25, 2022 - 11:45 am: |
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ector Briefing: Technology (150.84 -4.29)
Ten out of eleven sectors trade in negative territory with top-weighted technology (-2.7%) trading at the bottom of the early leaderboard. However, many of the sector's influential components are fighting to stay above yesterday's lows.
Key factors driving today's performance include:
Continued pressure on growth stocks keeping the sector at the bottom of the January leaderboard. The tech sector is down 13.5% so far in January, trading only behind the consumer discretionary sector (-2.1%; -13.0% month-to-date) on this month's leaderboard.
Underperformance among chipmakers. The PHLX Semiconductor Index is down 3.3% widening its January loss to 14.7%. The SOX Index currently trades right below its 200-day moving average and above yesterday's opening level.
Notable movers:
Xerox (XRX 19.77, -1.20, -5.7%): weakest performer in the sector, falling for the seventh consecutive day to its lowest level in nearly eight weeks. Company beat Q4 EPS expectations on below-consensus revenue and issued above-consensus revenue guidance for FY22.
Lam Research (LRCX 591.46, -30.37, -4.9%): trading in the lower half of yesterday's range.
Xilinx (XLNX 176.59, -8.92, -4.8%): trading near the midpoint of yesterday's range.
Applied Materials (AMAT 134.68, -4.62, -3.3%): trading in the lower half of yesterday's range.
Intuit (INTU 517.31, -17.37, -3.3%): falling to the midpoint of yesterday's range.
AMD (AMD 113.14, -3.39, -2.9%): slipping toward its 200-day moving average (108.86) after bouncing off that level yesterday.
NVIDIA (NVDA 228.10, -5.62, -2.4%): falling back to its 200-day moving average (221.18), which offered support yesterday. Company will reportedly abandon its acquisition of Arm Holdings and lose a $1.25 bln deposit.
Micron (MU 81.06, -1.89, -2.3%): slipping to its 200-day moving average (79.64) after bouncing off that level yesterday.
Microsoft (MSFT 289.69, -6.68, -2.3%): falling back below its 200-day moving average (292.94) after bouncing off that level yesterday.
Texas Instruments (TXN 175.34, -3.00, -1.7%): trading in the lower half of yesterday's range ahead of tonight's release of quarterly results.
Intel (INTC 51.09, -0.85, -1.6%): falling back below its 50-day moving average (51.50) after bouncing off that mark yesterday.
Apple (AAPL 159.45, -2.17, -1.3%): trading in the upper half of yesterday's range.
Visa (V 199.71, -2.14, -1.1%): trading near the midpoint of yesterday's range.
IBM (IBM 133.07, +4.25, +3.3%): lone advancer in the sector, rising to its 200-day moving average (132.08) after beating Q4 expectations. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3972
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Tuesday, January 25, 2022 - 11:44 am: |
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Market Briefing: Back on 2022 form
There has been no follow-through on yesterday's huge afternoon rally effort. The major indices all opened in negative territory on renewed selling pressure, following their 2022 form.
Small-cap stocks, which were yesterday's biggest winners, are today's biggest losers. The Russell 2000 is down 2.6%.
Mega-cap stocks, which forged a much needed rebound try yesterday, are back on the defensive. The Vanguard Mega-Cap Growth ETF (MGK 224.80, -4.80) is down 2.1%. On a related note, Microsoft (MSFT 288.37, -8.00, -2.7%) reports its quarterly results after the close.
Dow components American Express (AXP 168.62, +9.69, +6.1%), IBM (IBM 132.29, +3.47, +2.7%), Verizon (VZ 52.57, -0.39, -0.7%), 3M (MMM 170.35, -2.45, -1.4%), and Johnson & Johnson (JNJ 164.05, +1.08, +0.7%) all reported better-than-expected earnings results since yesterday's close. The reactions have been mixed, but these reports did nothing to detract from the opening selling interest.
The major indices are off their lows of the day, but remain entrenched in negative territory. The Dow Jones Industrial Average for its part was down as many as 819 points but has cut that loss in half.
Volatility is to be expected in front of the FOMC decision tomorrow and Fed Chair Powell's press conference to discuss the committee's decision. The uncertainty surrounding what the Fed Chair will say -- and how he says it -- has been a contributor to the volatility.
All 11 S&P 500 sectors are lower with losses ranging from 0.8% (utilities) to 2.4% (information technology). The Russell 3000 Growth Index is down 2.4% and the Russell 3000 Value Index is down 1.7%, underscoring the broad-based selling interest currently afflicting the market.
The Dow Jones Industrial Average is down 1.4%; the S&P 500 is down 1.9%; and the Nasdaq Composite is down 2.4%. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3971
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Tuesday, January 25, 2022 - 11:43 am: |
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Verizon dials up another EPS beat as 5G rollout gains steam, but growth still underwhelms (52.55 -0.41)
Verizon's (VZ) consistency is on display this morning after the telecom giant reported better-than-expected 4Q21 results, including its eighth straight quarterly EPS beat. The upside results can be linked to VZ's aggressive push to secure the country's most extensive 5G coverage. After VZ shelled out a whopping $45 bln in last February's C-Band auction, it's vital that the company shows a solid return on its investment. With more than one third of VZ's wireless customers now having 5G-capable devices, it's evident that its massive bet is paying dividends.
However, whether those dividends, including the addition of 558,000 postpaid wireless phone subscribers in Q4, are worth the steep price is still up for debate. Notably, rival AT&T (T) spent about half as much as VZ in that auction, but it added 880,000 postpaid phone subscribers in Q4.
An argument can be made that VZ's wireless phone subscription adds are worth more than AT&T's due to VZ's premium 5G service. The problem with that assertion, though, is that VZ's adjusted EBITDA declined in both its consumer and business segments, dropping 120 bps and 110 bps, respectively, on a yr/yr basis. Meanwhile, the company's long-term debt ballooned to $143.4 bln from $123.2 bln in the year-earlier period.
More time will be needed to fully decipher whether VZ is generating enough bang for its buck. When AT&T issues its full Q4 report tomorrow morning (having already provided some Q4 metrics on January 5), another data point in this competitive landscape will be revealed. For now, what we can definitively say is that VZ is performing reasonably well, as illustrated by these points:
In the Consumer segment, VZ reported 336,000 phone net additions, up from 267,000 in 3Q21.
While the Business segment experienced a 3% drop in total revenue due to legacy wireline declines, strength in small and medium sized businesses fueled the segment's best quarterly net phone addition performance since the onset of the pandemic. For the quarter, the segment reported 222,000 phone net additions.
The work-from-home trend continues to support VZ's Broadband segment, which added 106,000 net new customers, including 55,000 Fios Internet additions.
VZ provided upside EPS guidance of $5.40-5.55 for FY22, even as it projects $16.5-17.5 bln in capital spending.
Overall, VZ registered another solid performance. There is room for some disappointment, though, because the staggering amount of capital it's deploying into 5G infrastructure has yet to produce meaningfully higher adjusted EBITDA (flat) or revenue (+1.8%) growth. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3970
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Tuesday, January 25, 2022 - 10:23 am: |
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Consumer confidence slips in January as outlook takes a hit
The Conference Board's Consumer Confidence Index dropped to 113.8 (Briefing.com consensus 112.0) from a downwardly revised 115.2 (prior 115.8) in December. The dip came after three consecutive monthly increases but is still well above the 87.1 reading registered in the same period a year ago.
The key takeaway from the report is the moderation in the outlook, which points to some potential weakening economic activity in the short term.
The Present Situation Index increased to 148.2 from 144.8.
The Expectations Index fell to 90.8 from 95.4. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3969
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Tuesday, January 25, 2022 - 10:23 am: |
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ScalpTrader Morning Notes
Investor infatuation with growth stocks appears to have hit a wall for now. Of course, they will return when the stocks start going up again.
My current plan is to continue researching stories and looking for great, long-term opportunities. In my world, the most compelling opportunities are found once investors/speculators have given up on asset class. I think SPACs are racing down the road of investor capitulation.
I've followed the venture capital industry for a long time and have often wished there was an easy way to participate in funding rounds when private market company valuations are negatively impacted by multiple compression in the public markets. I think certain SPACs will eventually provide that opportunity.
One benefit of rising interest rates and increased market uncertainty is more interesting deals in the high yield space. It has been well over a year since I put on a new Preferred or Baby Bond position. Low rates and rising stock prices allowed speculative companies to either: 1) issue stock, 2) issue convertible bonds, 3) issue Preferreds at absurdly low "coupons"... High yield is a great space for investing and trading. I'm looking forward to an increase in deal flow. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3968
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Tuesday, January 25, 2022 - 10:22 am: |
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Wake-Up Call Briefing
S&P 500 futures 1.3% below fair value; Nasdaq 100 futures 2.0% below fair value; and DJIA futures 0.6% below fair value
Factors influencing futures market action:
Lack of belief in yesterday's huge reversal move
Disappointing response by Asian markets in wake of Wall Street's reversal (Nikkei -1.7%; Shanghai -2.6%; KOSPI -2.6%)
Festering rate-hike angst in front of FOMC decision and Fed Chair Powell press conference tomorrow
Upward drift in market rates stoking ongoing valuation worries
Geopolitical tension
Dow components IBM, AXP, VZ, MMM, and JNJ all top earnings expectations, but overall response is mixed at best
NVDA slumps nearly 4.0% amid reports it is on cusp of abandoning ARM Ltd. deal
Ratings changes of note:
Upgrades: DAL, NKE, VIAC, MDRX, NI, SNOW
Downgrades: AAL, ISRG, PLAN, CTXS, KR, MPC, and VMW
WTI crude futures flat at $83.02/bbl; nat gas futures -1.2% to $3.83/mmbtu
10-yr note yield +3 bps to 1.77%; 2-yr note yield +3 bps to 1.00
Today's Econ Data: November FHFA Housing Price Index (09:00 ET); November S&P Case-Shiller Home Price Index (09:00 ET); and January Consumer Confidence (10:00 ET) |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3967
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Tuesday, January 25, 2022 - 10:22 am: |
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Overnight Summary -- World markets roller coaster ride continues
The global equity markets are mixed. The seesaw environment continued in the US futures overnight. S&P Futures are down about 42 points to trade around the 4360 area. The market was unable to sustain Monday's afternoon bid and saw sellers take control during the early portion of trading. Spoos sank as low as 4328.75 before buyers stepped in shortly after the European trade got underway. The rebound attempt has taken the market to current levels. The overnight high was established early on at 4406.75.
In Asia, both China and Japan closed significantly lower. Although these markets held up on Monday, they could not stave off pressure last night. The Shanghai slumped over 2.5% and closed at the low of the day. The Nikkei fell as well, led lower by top constituents SoftBank (-5%) and Tokyo Electron (-3%). The Japanese benchmark finished the session at a five-month low.
In Europe, the major bourses are bouncing following yesterday's rout. Credit Suisse is not participating in the rally, falling 3% after the company warned of a net loss for the fourth quarter. Logitech (+9%) is outpacing the indices after the company posted better than expected quarterly results and raised its fiscal-year outlook.
Market Updates
S&P Futures vs Fair Value: -42.0
10 yr Note: 1.790%
USD/JPY: 114.07 +0.09
EUR/USD: 1.1289 -0.0037
Europe: FTSE: +0.9% DAX: +0.8% CAC: +1.0%
Asia: Hang Seng: -1.7% Shanghai: -2.6% Nikkei: -1.7%
Gold (1838.20 -3.50) Silver (23.78 -0.02) Crude (84.39 +1.07) |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3966
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Monday, January 24, 2022 - 3:19 pm: |
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Market Briefing: Small caps pacing tentative recovery bid
On most days, the current standing of the major indices wouldn't be seen as a good thing. This isn't most days, however. The Nasdaq Composite is down 2.2% but it had been down 4.9%. The S&P 500 is down 2.2% but it had been down 4.0%. The Russell 2000 is up 0.8% but it had been down 2.8%.
The stock market is in a recovery mode of sorts, trying to rebound from some short-term oversold conditions and double-digit losses in the first three weeks of trading.
Even so, there is bound to be some nervousness that this recovery try won't stick since the market has succumbed to late-day selling pressure most days in this new year. Seeing that it doesn't happen again will be the start of believing in a rebound effort, but there is a lot of trading time left today.
Strikingly, the micro-cap and small-cap stocks are the ones exhibiting the most relative strength, most likely because they are the ones that have suffered the largest percentage declines in a sell-off that has been accented with serious multiple compression, particularly in stocks that traded on a multiple of sales because they didn't have any earnings.
Most S&P 500 sectors have pared larger losses, but notably, the defensive-oriented utilities (-3.0%) and consumer staples (-2.3%) sectors are setting new lows for the day as the broader market attempts to recover. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3965
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Monday, January 24, 2022 - 3:19 pm: |
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Sector Briefing: Technology (149.16 -5.17)
All eleven sectors continue trading in the red with top-weighted technology (-3.5%) sitting at the bottom of today's leaderboard.
Key factors driving today's performance include:
Continuation of the market's recent slide weighing on investor sentiment. The technology sector has given up 14.4% so far in January versus a 10.3% month-to-date drop in the S&P 500 (-2.8%) and a 14.9% drop in the Nasdaq (-3.3%).
Weak showing among growth stocks despite a downtick in Treasury yields. Top sector components Microsoft (MSFT 284.02, -12.01, -4.1%), NVIDIA (NVDA 214.94, -18.80, -8.0%), and Mastercard (MA 336.69, -18.39, -5.2%) trade among the laggards while Apple (AAPL 156.97, -5.44, -3.4%) trades in-line with the sector, though it is also sharply lower for the day.
Notable movers:
Xilinx (XLNX 171.31, -16.48, -8.8%): weakest performer in the sector, falling to its lowest level since mid-October with its 200-day moving average (160.79) looming below.
Enphase Energy (ENPH 115.25, -10.77, -8.6%): falling to its lowest level since mid-May. Truist issued cautious commentary about solar stocks.
NVIDIA (NVDA 214.94, -18.80, -8.0%): falling past its 200-day moving average (220.70) to its lowest level since mid-October.
AMD (AMD 110.23, -8.58, -7.2%): falling past its 200-day moving average (108.65) to its lowest level since mid-October.
PayPal (PYPL 153.68, -9.86, -6.0%): falling to its lowest level since June 2020.
Western Digital (WDC 54.61, -3.20, -5.5%): falling to its lowest level since early November.
Mastercard (MA 336.69, -18.39, -5.2%): falling past its 50-day moving average (350.63) to its lowest level since early December.
Microsoft (MSFT 284.02, -12.01, -4.1%): falling past its 200-day moving average (292.70) to its lowest level since late July.
Micron (MU 78.76, -3.17, -3.9%): falling past its 200-day moving average (79.69) to a two-month low.
Intel (INTC 50.09, -1.95, -3.8%): falling past its 50-day moving average (51.45) to a one-month low.
Apple (AAPL 156.97, -5.44, -3.4%): falling to its lowest level since mid-November with its 200-day moving average (147.50) looming below.
Cisco (CSCO 55.32, -1.36, -2.4%): falling past its 200-day moving average (55.77) to its lowest level in nearly two months.
Broadcom (AVGO 521.09, -12.14, -2.3%): falling to its 200-day moving average (512.09).
Skyworks (SWKS 136.64, -3.26, -2.3%): falling to its lowest level since late November 2020.
Adobe (ADBE 493.00, -6.90, -1.4%): falling to its lowest level since May.
Vontier (VNT 28.29, +0.02, +0.1%): best performer in the sector, touched its lowest level since November 2020 before turning positive. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3964
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Monday, January 24, 2022 - 3:17 pm: |
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Blue Chip Trader - - Sell First, Ask Questions Later
About 2 hours into this Monday morning and Sellers still dominating the action.
I highlighted on Friday's expiration how there's a "snowball rolling downhill" effect in these markets, fueled by buyers overleveraging themselves and taking on too much risk to find the bottom and then having to blow out their position as prices roll back down to new lows. It's a vicious cycle that's evident in the extreme bearish breadth readings over the last few days, even more so today (VIX > 35; Put/Calls > 1.20; cumulative A/D line -5500; TRIN 2.0, etc).
Hopefully everyone has heeded my tips to cut back on position size and have a few Swing Short/Hedges out there to reduce any significant damage to their portfolios.
There's no doubt we are looking at extreme selling pressure taking place, but with nearly every strong trending market, we need to see a turn before committing. No one knows when it will come, but when it does, it should become apparent that it is happening. Anything before that is just speculation.
I will say I am monitoring the Technology XLK space closely as there likely won't be any meaningful bounce without it moving back to the upside. The 145/150 lows from July/October looks like a zone from which a reversal can happen soon.
The longer sellers remain resilient on the offer today, the more I'm thinking a Turnaround Tuesday is the better prospect.
Bottom line is we have "fast and loose" market conditions with a strong bearish bias. Daytraders are better off Shorting first and managing that risk until proven otherwise. Buyers need to be more patient and plan out how to manage potential further downside risk. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3963
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Monday, January 24, 2022 - 3:17 pm: |
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Dow Dogs outperform as broader market sinks (336.06 -6.29)
Year-to-date the S&P 500 is down 10.1%, the Nasdaq Composite is down 14.7%, and the Dow Jones Industrial Average is down 7.6%.
Below are the 10 Dow stocks that qualified for a 2022 Dogs of the Dow portfolio. Briefly, the Dogs of the Dow are the ten Dow Jones Industrial Average components with the highest dividend yield as of the close on the last day of trading of the preceding year.
A simple strategy is to buy these ten stocks at the start of the year, allocating an equal dollar amount to each stock. Another approach is to buy the five lowest-priced of the ten highest-yielding Dow stocks (which are known as the "Small Dogs of the Dow).
Every "dog" has outperformed the market so far this year. The average return for the portfolio is -0.25% year-to-date (before dividends).
Investor interest in these companies has presumably been bolstered by the fallout in the growth stocks and the appeal of having a reliable, and higher-yielding, income source in a volatile market. Returns indicated are year-to-date before dividends.
DOW, Inc. (DOW -2.3%)... reports earnings before the open on Jan. 27
IBM (IBM -5.6%)... reports earnings after the close today
Verizon (VZ +2.3%)... reports earnings before the open on Jan. 25
Chevron (CVX +5.9%)... reports earnings before the open on Jan. 28
Walgreens Boots Alliance (WBA -0.8%)... reported better than expected earnings on Jan. 6
Merck (MRK +1.3%)... reports earnings before the open on Feb. 3
Amgen (AMGN +0.7%)... reports earnings after the close on Feb. 7
3M (MMM -4.0%)... reports earnings before the open on Jan. 25
Coca-Cola (KO +0.2%)... reports earnings before the open on Feb. 10
Intel (INTC -0.2%)... reports earnings after the close on Jan. 26 |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3962
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Monday, January 24, 2022 - 3:17 pm: |
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Kohl's likes put to items on sale, but some PE firms want to buy the whole company (62.60 +15.76)
Kohl's (KSS 62.60, +15.76, +34%) likes put to items on sale, but some private equity firms want to buy the whole company. The department store giant has been struggling with sluggish top line growth, and inflation is expected to weigh heavily on its earnings in the coming quarters. Its challenges can be blamed partly on the pandemic, but it has underperformed peers that are facing the same industry headwinds.
Briefing.com profiled KSS as a YIELD Leaders idea on January 13 at $49.80 (+28%), so we are happy to see today's announcement of takeover interest.
Kohl's confirmed today that it has received letters expressing interest in acquiring the company. The company did not provide further details about the overtures it has received, like which firms are involved or what the buyout prices could be. However, WSJ reported that a Starboard Value consortium was aiming to bid $64/share, and CNBC reported yesterday that Sycamore is willing to pay at least $65/share. The press release from Kohl's notably says "letters", implying that at least two offers are in play, which backs up the reporting. The company said that it will determine the best course of action and will not comment further. The prices reported would be nice premiums from Friday's close of $46.84 at 37-39%.
Activist investors have been nipping at the board of Kohl's to take action for some time now. In fact, Kohl's reached an agreement with major investor Macellum in April 2021 to add two of the firm's people to its board. The company has also been enacting a strategic turnaround plan by trying to rebrand itself away from its discount model and toward focus on active and casual lifestyle products. Among recent endeavors, it reached a store-within-a-store partnership with Sephora to launch Sephora at Kohl's in a total of 850 locations by 2023, and it partnered with Amazon to allow customers to return items, which helped drive traffic to Kohl's stores.
However, activist investors want more steps to be taken. For example, activist investor firm Engine Capital recently sent a letter to the board arguing that KSS should consider spinning off its successful ecommerce segment Kohls.com, which the firm thinks could fetch a $12.4 bln market cap on its own. Jana Partners is advocating for Macy's (M) to take a similar step.
Another potential move Kohl's could make is to monetize some of its real estate assets. Unlike a lot of retailers, Kohl's owns a lot of the real estate in which it has stores. Kohl's could conceivably sell a lot of the land and do a lease-back with a real estate company, potentially unlocking $3 bln in cash, but Kohl's has rebuffed that idea.
Bottom line, KSS has been a serial underperformer, and if its stock could not move following Q3's (Oct) huge beat, maybe it should consider a spin-off of its online unit or sell some real estate. We think taking the company private, making changes, then allowing the company to re-emerge as an IPO in a few years is just what is needed because the market is not rewarding KSS with a proper multiple. However, management has been resistant, so it may be advisable to keep hopes in check.
If KSS does remain public, the main concern for its performance is supply constraints. KSS has a good amount of production coming from Vietnam, where COVID-19 shutdowns have weighed on output. To its credit, KSS says it took such risks into account when it recently increased its full year adjusted EPS guidance to $7.10-7.30 from prior guidance of $5.80-6.10. The new guidance computes to a reasonable P/E of 8.7x at the mid-point and a forward P/E of only 9.4x, so the stock is quite cheap even after today's move. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3961
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Monday, January 24, 2022 - 10:50 am: |
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Market Briefing: No reprieve yet from selling pressure
The stock market picked up today where it left off Friday. Selling interest hit across the board and the major indices slumped further from the all-time highs they registered not that long ago.
The Russell 2000 is down more than 20% from the closing high it set in November; the Nasdaq Composite is down 16% from the closing high it hit in November; the S&P 500 is down nearly 11% from the closing high it set on January 3; and the Dow Jones Industrial Average is down 9.0% from the closing high it reached on January 4.
Today's selling interest has been precipitated by the following influences:
The price action itself, which is feeding selling momentum and some panicky behavior as concerns about margin calls -- and the prospect of lower lows -- increases.
Heightened geopolitical tension between Russia and the West over Ukraine (the State Dept. ordered family members of U.S. embassy workers in Kyiv to leave Ukraine).
Festering worries about the Fed raising interest rates to rein in inflation (the FOMC has its meeting Jan. 25-26).
All 11 S&P 500 sectors are lower with eight sectors down at least 2.2%; value stocks are down and so are growth stocks; mega-cap stocks continue to act poorly, as do stocks of all sizes; declining shares lead advancing shares at the NYSE by an 11-to-1 margin; and the CBOE Volatility Index is up 24% to 35.84.
The selling is pretty indiscriminate, put buying is elevated; and Treasuries have been in demand. The 10-yr note yield, which scraped 1.90% early last week, is back to 1.71%. Some weaker than expected preliminary manufacturing and services PMI data from IHS today has lent some support along with safe-haven flows.
Talk is starting to pick up, however, about the potential for a strong bounce from the short-term oversold conditions. Presumably, the Fed -- or the market's assumptions about the Fed -- will play a role in driving any such bounce.
The Dow Jones Industrial Average is down 2.1%; the Russell 2000 is down 2.3%; the S&P 500 is down 2.5%; and the Nasdaq Composite is down 2.9%. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3960
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Monday, January 24, 2022 - 10:27 am: |
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Over the past 6 months, I've stated several times that this is the most overvalued market that I've seen since the 2000 tech frenzy. It's the first time since then that I've felt that every asset class was in a bubble (stocks, bonds, real estate, alt investments, etc).
Yet, each of these assets continued to climb in value. So, I played the game of musical chairs, but with a great deal of caution. I greatly overweighted cash and waited for significant pullbacks to start new swing positions.
I've given back a portion of 2021 gains because I wasn't completely in cash and I started scaling into some new Swing positions in late-Dec in anticipation of a tax loss selling bounce opportunities. In general, I was looking for stocks that were down 30-60% from their 52-week highs with most of the decline occurring in Nov/Dec. We saw most of those positions bounce in early-Jan, but then the rug was pulled from under the markets, leading to the most aggressive selloff we've seen in Tech since the start of Covid.
So where do we stand?: As you know, my approach is that lower prices lead to more compelling opportunities. I hate seeing my Portfolio decline in value, but I know that this type of unwinding will create much more compelling situations in the future.
An ideal scenario for my core swing approach as a Speculator in value opptys and distressed assets would be a continued cleansing of the system, which includes retail margin calls, some hedge fund blow ups and the average investor wanting to change the subject when you bring up the stock market. That process will take some time.
This morning, it makes sense that we are seeing aggressive selling in pre-mkt. News of the stock market implosion had a chance to make it to the average investor over the weekend, so sell orders are being placed. This is actually what you want if attempting to time a short-term bounce, which I may do on a selective basis if interesting opptys appear over the course of the morning.
Going to be stopped out of the UPST swing position this morning on the gap down. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3959
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Monday, January 24, 2022 - 10:26 am: |
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S&P 500 futures 0.5% below fair value; Nasdaq 100 futures 1.1% below fair value; DJIA futures 0.1% below fair value
Negative disposition attributed to following influences:
Geopolitical angst as tension between Russia and the West over Ukraine intensifies
European bourses seeing sharp losses
Festering worries about hawkish signalling from Fed (FOMC meeting Jan. 25-26)
Continuance of disappointing price action (still no shift from selling into strength)
KSS up 32% on reports of takeover interest
UL pops 7% on reports Nelson Peltz is building a stake in company
Vaccine makers take a hit on reports discussing improvement in Omicron case trends
PTON down 2.7% with activist investor suggesting company fire CEO and look at possible sale
Cryptocurrencies seeing sizable losses as speculative energy fizzles
WTI crude futures down 0.3% to $84.91/bbl; gold futures +0.3% to $1837.00/troy oz.
Notable research calls:
Upgrades: AFRM, ANET, CHTR, CMCSA, FOXA, DFS, SPLK, MTB, and UBS
Downgrades: SNAP, NFLX, and PPG
10-yr note yield -1 bp to 1.74%, supported by some safe-haven flows |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3958
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Monday, January 24, 2022 - 7:30 am: |
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Jan 24th to Jan 28th
World markets crack under pressure
The global equity markets are mostly lower to start the week. Sentiment tuned sour with geopolitical tensions surrounding the Ukraine mounting. S&P Futures are down about 19 points to trade around the 4371 area. The market saw an early rebound with the S&P trading as high as 4427.50 during the Asian session. The gains were not sustained after Europe got underway. Spoos saw a swift swoon and are now trading just off the low of 4361.25.
In Asia, both China and Japan closed little changed. The Shanghai was kept at bay after a former PBOC member stated that a loose monetary policy would not be enough to stimulate growth in China and will need more government spending. In Japan, the Nikkei edged higher despite Preliminary Manufacturing PMI missing expectations. The December print came in at 54.6 and below the forecast of 55.0.
In Europe, the major bourses are witnessing sellers take control. The chatter of a Russian military build up along the Ukraine border has ramped up trader anxiety. Even a better than expected December PMI from Germany did nothing to stave off pressure. Unilever is a notable outlier, rising 6% after it was revealed Nelson Peltz has built a stake in the company. Vodafone is also up around 6% after reports it is considering consolidating operations with Iliad in Italy. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3957
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Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Friday, January 21, 2022 - 2:20 pm: |
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Midday Market Summary: Sellers have a tight grip on the market
The S&P 500 is down another 1.0%, as the market struggles to overcome relentless selling pressure, which has Netflix (NFLX 400.94, -107.44, -21.1%) tumbling over 20% on disappointing Q1 guidance. Today, the benchmark index has been down as much as 1.4% and up as much as 0.3%.
The Dow Jones Industrial Average (-0.5%) and Russell 2000 (-0.6%) are down modestly while the Nasdaq Composite underperforms with a 1.4% decline.
Eight of the 11 S&P 500 sectors are trading lower, with communication services (-2.2%), consumer discretionary (-1.6%), energy (-1.6%), financials (-1.1%), and materials (-1.1%) down more than 1.0%.
Accordingly, investors have assumed a defensive posture: the consumer staples (+0.3%), utilities (+0.3%), and real estate (+0.4%) sectors are trading higher, and the 10-yr yield is trading lower by eight basis points to 1.75% in a flight to safety.
Regarding Netflix, the company forecasted slower paid subscriber growth for Q1, as well as a smaller operating margin compared to last year's quarter amid higher programming costs. The latter, combined with downside Q1 EPS guidance from PPG Industries (PPG 156.84, -2.86, -1.8%), has tugged on profit-margin concerns.
Netflix, like Peloton (PTON 27.03, +2.79, +11.5%) yesterday, has fueled a sense of caution in investing in highly-valued growth stocks due to the potential for huge losses if they disappoint with their growth stories -- even as many growth stocks trade at 52-week lows.
Furthermore, the inability to sustain any sort of rebound effort has been detrimental for risk sentiment. Notably, the S&P 500 peaked above its flat line earlier today after finding technical support just below its 200-day moving average (4429). Traders might be watching to see if the benchmark index holds this level on a closing basis.
In other corporate news, Intel (INTC 52.37, +0.33, +0.6%) announced plans for an initial investment of more than $20 billion in the construction of two chip factories in Ohio. CSX (CSX 34.09, -1.16, -3.3%) beat top and bottom-line estimates, but shares are down 3% despite the good news.
Today's economic data was limited to the Conference Board's Leading Economic Index for December, which increased 0.8% (Briefing.com consensus 0.8%) following a revised 0.7% increase (from 1.1%) in November. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3956
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Friday, January 21, 2022 - 12:19 pm: |
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Sentiment and Breadth Readings:
The VIX readings above 20 favor a "risk off/bearish" approach to markets. On the rise this week over 25, reflecting the higher volatility as stocks widen their ranges on weakness.
The Put/Call ratio has treated the 0.80 level as its new "neutral" zone for over a year, rarely probing 1.0, so still favoring strong underlying strength in the market. A jump over 1.0 has signaled a "buy the dip" opportunity for a year and half now. Drops below 0.80 have hinted at a strong market.
The NYSE McClellan Oscillator measures the spread between the 19 and 39 day moving averages of Advancing vs. Declining stocks. Slides lower this week into "oversold" below -50.
The Weekly AAII Sentiment (as of January 19) shows Bullishness fell another -5%, now about -17% below historical average. Bearishness jumped +8%, currently about +15% above its historical average. The Fear & Greed Index sits along 52 for a neutral read. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3955
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Friday, January 21, 2022 - 12:19 pm: |
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Sellers Rushing for the Exits This Week
Futures taking another round of distribution as sellers weigh in hard this week.
The Major Indices have all given up their 50-day moving averages, which puts the market in more of a "defensive" or "concerned" state of mind. Any position that is under-performing is often cut from portfolios and various hedging strategies are deployed on remaining Longs.
Volatility has been on the rise as usual when sellers start to rush for the exits. Traders who fail to adjust their risk and approach when volatility rises have a higher probability of struggling with it.
Overall, the market is looking like it is going a little "too far, too fast" to the downside as various sentiment and breadth indicators start to reach "oversold" extremes. So while keeping losses under control is first on the agenda, traders should be making a list of stocks to pounce on when signs of a reversal/bounce get underway.
Intermarket Analysis:
Transports (IYT) drop below its 50-day sma to challenge the December 20th "bullish gap zone" near $260.
The 10-Year Yield ($TNX) trending up the right side of the chart, but pulling back in after stalling along 1.85% this week.
The US Dollar ($USD) bounced back after a hard breakdown under weekly support/50-day ma, which now acts as a temporary resistance level for buyers to battle.
Crude ($WTIC) continues to rise, currently back up to its Oct/Nov highs at $85/barrel. Next stop is $90/91, taking it to multi-year highs back near 2013/2014 levels.
Gold ($GOLD) finally captures a bid to break above multi-week resistance along 1830. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3954
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Friday, January 21, 2022 - 12:18 pm: |
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Market Briefing: A technical driver
The stock market is in a much better position than it was a little more than an hour ago when ongoing de-risking efforts carried the S&P 500 below its 200-day moving average (4429). The violation of that key technical support level, though, stirred the buy-the-dip masses.
What has unfolded in the interim is a rebound with technical underpinnings. It counts all the same, but there wasn't a fundamental news trigger for the turnaround.
Of course, the pressing question now is, will this rebound move be sustained or will it again succumb to an inclination to sell into strength? We haven't the answer, but market participants will be keeping a close watch on this key technical support level now that it has proven to be an inflection point for today's action.
Another re-test, and failure, could trigger a renewed escalation in selling interest.
The information technology sector (+0.5%), down 1.3% earlier, has played a featured role in the recovery effort. Similarly, the consumer discretionary sector (-0.4%), down 2.4% earlier, is also on the mend.
The Russell 2000 is up 0.7%; the Dow Jones Industrial Average is up 0.3%; the S&P 500 is up 0.1%; and the Nasdaq Composite is down 0.1%. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3953
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Friday, January 21, 2022 - 12:17 pm: |
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Sector Briefing: Communication Services (73.89 -0.86)
The stock market started today's session on a weak note, though it is trying to bounce with the Dow (+0.3%) turning positive in recent trade. However, five sectors continue trading lower with the communication services sector (-1.5%) sitting at the bottom of the early leaderboard.
Key factors driving today's performance include:
Considerable pressure from a plunge in Netflix (NFLX 386.25, -121.99, -24.0%) after the streaming service's above-consensus EPS was overshadowed by a smaller than expected number of new subscribers.
Relative weakness in most other media names, including Disney (DIS 139.45, -8.16, -5.5%), which also operates a streaming service.
Notable movers:
Netflix (NFLX 386.25, -121.99, -24.0%): weakest performer in the sector, falling to its lowest level since April 2020 after adding fewer subscribers than the market expected in Q4 and guiding Q1 revenue below consensus. Stock was downgraded at Barclays, Morgan Stanley, Truist, Evercore ISI, Robert W. Baird, KeyBanc Capital Markets, and Macquarie while The Benchmark Company upgraded shares.
Disney (DIS 139.45, -8.16, -5.5%): falling to its lowest level since mid-November 2020 in sympathy with Netflix.
ViacomCBS (VIAC 32.57, -1.16, -3.4%): falling to its 50-day moving average (32.42). Company renewed its affiliate agreement with Nexstar Media Group (NXST 156.98, +1.18, +0.8%).
Twitter (TWTR 36.48, -0.80, -2.2%): sliding to its lowest level since August 2020.
Discovery (DISCA 26.92, -0.57, -2.1%): falling toward its 50-day moving average (25.60) after finding resistance at its 200-day moving average (28.79) yesterday.
Facebook (FB 315.15, -1.41, -0.5%): falling to its lowest level since early December.
Electronic Arts (EA 139.80, +0.92, +0.7%): holding just above its 200-day moving average (138.47) after reclaiming that mark yesterday.
T-Mobile US (TMUS 104.90, +0.84, +0.8%): touched its lowest level since July 2020 before turning positive.
Comcast (CMCSA 50.77, +0.55, +1.1%): rising back to its 50-day moving average (50.67).
Omnicom Group (OMC 76.63, +1.09, +1.4%): best performer in the sector, rallying back above its 200-day moving average (75.61). |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3952
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Votes: 0 (Vote!) | | Posted on Friday, January 21, 2022 - 12:17 pm: |
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Netflix crashes on lower-than-expected streaming paid net adds in Q4 and lackluster Q1 guidance (384.18 -124.07)
Netflix (NFLX -24%) is crashing today after the TV and movie streaming company missed its global streaming paid net adds guidance for Q4. The company added just +8.28 mln in the quarter, below its +8.50 mln forecast, marking its worst net adds in any fourth quarter since 2017. Furthermore, the company guided to a paltry +2.5 mln net adds for Q1. As a result, many investors are calling curtains on the FAANG stock.
In Q4, NFLX smashed earnings estimates, posting earnings of $1.33 per share. The beat included a sizable unrealized gain from FX remeasurement, which slightly dampens it. However, operating margins of 8.2% easily topped NFLX's prior guidance of 6.5%, so even without the FX gain, NFLX appears to have still beaten on EPS. As was the case last quarter, revenue was virtually in-line with consensus, jumping 16% yr/yr to $7.71 bln.
Due to FX and content release fluctuations, EPS and revs are not scrutinized the same way as NFLX's other metrics. Thus, even though NFLX expects EPS of just $2.86 and revs growth of only 10.3% yr/yr to $7.90 bln in Q1, both of which are below consensus, we think subscriber growth, both domestically and abroad, primarily moves the stock.
As a result, for NFLX's +8.28 mln paid net additions in Q4 to come in below its expectations by about 2.6% was enough to spook investors, especially when coupled with NFLX's disappointing net adds guidance of just +2.50 mln for Q1.
NFLX did not do much to put water on the fire either, noting that it is tough to pinpoint why its net adds are not bouncing back to pre-pandemic levels. The company did quell concerns that fierce competition from Disney (DIS) through its Hulu offering and Amazon (AMZN) could be stealing subscribers by commenting that its sustained engagement and retention numbers do not point to a material competitive impact. In fact, NFLX stated that growth by competitive services only validates the positive trends seen in streaming over the years.
It was encouraging to see that the EMEA region led net additions in Q4 at +3.54 mln. Also, the UCAN (US and Canada) region's +1.19 mln net adds were NFLX's largest since 2Q20. Average revenue per user (ARPU) also continued to climb in UCAN, going to $14.78, a jump of 9.4% yr/yr and 0.7% sequentially.
However, a rough patch stemmed from India, which is included in the company's APAC region, where ARPU fell yr/yr and sequentially. While NFLX is raising its membership prices about 11% globally, it is lowering its price in India, sparking concerns that the company may be hitting the ceiling on its ability to attract more subscribers. NFLX does have to compete with a radically lower price for pay-TV in the area (Indians pay roughly $3/month), which could be fueling the price drop.
Bottom line, the pronounced slowdown in global streaming paid net additions, both as realized in Q4 and as expected in Q1, is a significant letdown for the streaming giant. Matters are not helped by NFLX's relatively rich valuation of 35x FY22 earnings. Although the massive drop in share price today makes the valuation more attractive than the 39x multiple at which it traded yesterday, it still looks rather steep. Even though NFLX's rivals DIS and AMZN do not trade at much better valuations at 34x and 57x FY22 earnings, respectively, the companies are also more diversified in their revenue streams.
Nevertheless, NFLX has established itself as a household name worldwide. Therefore, even though we think it may be better to remain on the sidelines given the current environment, where high multiple tech names continue to experience a correction as investors weigh multiple interest rate hikes this year, a further drop would make NFLX attractive for buy-and-hold investors. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3951
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Friday, January 21, 2022 - 9:47 am: |
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ChartTrader: Morning Notes
Yesterday morning, I said the market is behaving in "bear market mode" right now. That certainly played out in the afternoon with a cascading dive that will likely have consequences for how willing people are to speculate on the long side. Sentiment has soured relatively dramatically, with several measures now signaling real pessimism in the mix.
As a trading psychology note: just because you see big moves doesn't mean you have to trade aggressively. Stay patient and selective. Let easy setups come to you. A directional bias is not the same thing as a quality setup. Both are independent but necessary elements in catching high-conviction winning trades.
Crude finally succumbed to some risk-off pressure, but it is handling the pullback well. MS came out with a $100+ oil target this morning, jumping on the bandwagon. I continue to sit long in USO from the 47 area. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3950
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Friday, January 21, 2022 - 9:11 am: |
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Wake-Up Call Briefing
S&P 500 futures 0.3% below fair value; Nasdaq 100 futures 0.8% below fair value; DJIA futures in-line with fair value
Early drivers of sentiment:
Near 20% decline in NFLX after company disappointed with Q1 global streaming paid net adds and operating margin guidance
Sense of caution following yesterday's sharp reversal (Nasdaq swung 3.4% between early high and late low)
Geopolitical angst as tension over Russia-Ukraine posturing thickens (Secretary of State Blinken meeting Russian counterpart today to discuss)
Sizable losses in cryptocurrencies feeding into risk-off mindset
PTON on the rebound after providing in-line Q2 revenue guidance and saying yesterday's report about halting production was not accurate
INTC to invest $20 bln for two new factories in Ohio
CSX beats Q4 earnings and revenue expectations, but stock slips anyway
PPG beats Q4 expectations, but Q1 guidance below consensus with higher costs weighing
Crude oil futures down 3.1% to $84.22/bbl
10-yr note yield drops five bps to 1.78% on some safe-haven positioning
Notable research calls:
Upgrades: BYND, BCC, COTY, ISRG, LLY, MRNA, PTON, and UAA
Downgrades: DVN, ECL, FUL, and TRV
Econ Data: December Leading Economic Index at 10:00 a.m. ET |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3949
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Friday, January 21, 2022 - 9:11 am: |
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Overnight Summary -- World markets succumbing to pressure
The global equity markets are mostly lower. S&P Futures are hovering around the neutral zone around 4474. Poor results from Netflix initially added pressure to the futures in the after hours. The market found some stable ground around the 4430 area. The low print was established at 4429.50. Since then, the market has postured for a rebound to claw its way back to near break-even over the course of the night. Spoos are sitting just off the high of 4477.75.
In Asia, both China and Japan seemed to slide in tandem with the decline seen in the US on Thursday. The Shanghai saw steady selling throughout the session to close down nearly 1% by day's end. In Japan, stocks suffered a similar fate with the Nikkei dropping close to 1%. Semiconductors were among the weakest sectors with the likes of Tokyo Electron, Advantest and Screen Holdings falling 4-6%.
In Europe, the major bourses are mimicking the tone seen during yesterday's afternoon on Wall Street. Macro-related data was light, but weaker than expected retail sales in the UK did nothing to help sentiment. The December reading saw a decline of 3.7% compared to the forecast of -0.6%. Chip names are also weak in Europe with names such as STMicroelectronics and Infineon Technologies down 3%. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3948
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Thursday, January 20, 2022 - 5:02 pm: |
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Market Briefing: Selling into strength (again)
The stock market started today on a strong note in a very scripted way. The S&P 500 peaked its head above 4600, but it has been getting a haircut since doing so. The S&P 500 is up 0.5% for the session, but that is well off its session high. The same can be said for the other major indices. The Nasdaq Composite, for instance, had been up as much as 2.1% but is now up 0.6%.
Those would be categorized as solid gains in the 2021 market, but in the 2022 market they are looked at nervously since they are reminders that it is proving difficult to sustain any buy-the-dip momentum. The inclination to sell into strength, particularly after a period of sharp losses, is not the characteristic of a bull market.
That's not to say we are in a bear market, but it's a statement of fact that the bullish bias has been reined in by rising interest rates and fear of a more aggressive Fed. It is also being reined in by the price action itself, which continues to leave many participants on edge about the prospect of further corrective activity.
To this end, the earlier news from CNBC that Peloton (PTON 25.59, -6.25, -19.7%) is temporarily halting production of its bike and treadmill due to waning demand served to take some rebound momentum out of the market as that was another reminder of how carried away some stories -- and story stocks -- got last year.
The hit Peloton took following the news, however, underscored that bad fundamental news can still leave a lot of momentum stocks at risk of further downside, even after they have already experienced material markdowns related more to macro worries than company-specific shortcomings that could soon possibly be exposed as we move deeper into the Q4 earnings reporting period.
The Russell 2000 is up 0.7% and the Dow Jones Industrial Average is up 0.4%. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3947
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Thursday, January 20, 2022 - 2:28 pm: |
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can the Fed get inflation down when bond yields are falling"
I have seen a couple questions like this in feedback over recent days. I think it is asking the question: "If the yield on the 10-yr T-note tops out because of [reason, like maybe foreign rate spreads] and starts to go back down, but the Fed has said it needs to raise rates to stop inflation, then isn't there a big problem?"
In reality, when the Fed talks about rates, it isn't talking about the yield on the 10-yr T-note. It's talking about the fed funds rate and borrowing rates at the short end of the yield curve. The Fed controls the short end of the curve (just look at the 13-week T-bill chart over the last three weeks). The market controls the long end of the curve.
If the Fed raises rates at the short end and rates go down slightly at the long end in response, that would actually be a vote of confidence from the market in the Fed's ability to get inflation under control through its tightening process -- inflation is one of the most important drivers of higher rates at the long end of the curve. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3946
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Thursday, January 20, 2022 - 2:14 pm: |
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Sector Briefing: Technology (162.38 +2.86)
All eleven sectors display early gains with top-weighted technology (+1.8%) holding the lead while six other groups are also up at least 1.0%.
Key factors driving today's performance include:
Leadership from growth stocks, as they rebound from recent weakness despite higher Treasury yields. While yields on most tenors are slightly higher on the day, they are holding below yesterday's highs, inviting speculation that the bond market is also looking to bounce.
Underperformance among chipmakers. The PHLX Semiconductor Index is up 1.1%, narrowing this week's loss to 6.4% versus a 2.1% week-to-date loss in the tech sector and a 1.5% week-to-date loss in the S&P 500 (+1.4%).
Notable movers:
Enphase Energy (ENPH 142.69, +8.11, +6.0%): best performer in the sector, bouncing off its lowest level since early June. Company said that the demand for its products has been growing in Washington state.
F5 Networks (FFIV 233.07, +10.27, +4.6%): rallying back above its 50-day moving average (232.95).
PayPal (PYPL 179.59, +6.04, +3.5%): bouncing off its lowest level since late September.
Accenture (ACN 355.36, +11.62, +3.4%): bouncing off its lowest level since late October.
Mastercard (MA 372.26, +11.53, +3.2%): bouncing off its 200-day moving average (360.77).
Adobe (ADBE 529.43, +12.85, +2.5%): revisiting yesterday's intraday high. Company director reported selling about $2 mln worth of stock.
Microsoft (MSFT 310.65, +7.32, +2.4%): rising into the top half of yesterday's range.
Apple (AAPL 169.54, +3.31, +2.0%): rallying off a five-week low back above its 50-day moving average (168.17).
NVIDIA (NVDA 255.72, +5.05, +2.0%): bouncing off its lowest level since late October.
Oracle (ORCL 84.47, +1.09, +1.3%): bouncing off its lowest level since early July.
Qualcomm (QCOM 174.65, +2.18, +1.3%): bouncing off its lowest level since mid-November.
Intel (INTC 54.06, +0.44, +0.8%): bouncing off a ten-day low toward its 200-day moving average (54.42).
Micron (MU 89.98, -0.02, unch): fell toward its 50-day moving average (86.92) before narrowing its loss.
AMD (AMD 127.73, -0.54, -0.4%): weakest performer in the sector, touched its lowest level since early November before narrowing its loss. Piper Sandler downgraded the stock to Neutral from Overweight with a $130 target. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3945
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Thursday, January 20, 2022 - 2:14 pm: |
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Market Briefing: Sticking to the rebound script
Everything is going according to script so far. The futures market signaled there would be a rebound effort in the cash market today and that is exactly what has transpired in early action. It is a broad-based rebound effort, too.
All 11 S&P 500 sectors are trading higher with gains ranging from 0.4% (consumer staples) to 1.8% (information technology)
Gains have been registered across all market-cap sizes, from micro-cap to mega-cap
Growth stocks are up and so are value stocks, although growth stocks have the rebound edge since they have been hit the hardest
25 of 30 Dow components are trading higher (11 are up at least 1.0%)
Advancers lead decliners by a 3-to-1 margin at the NYSE and the Nasdaq
Travelers (TRV 168.15, +8.08, +5.1%) is the biggest percentage gainer in the Dow following its better than expected earnings results, yet UnitedHealth (UNH 469.52, +7.00, +1.5%), Goldman Sachs (GS 356.18, +8.86, +2.6%), and Microsoft (MSFT 310.48, +7.15, +2.4%) are having the most impact for the price-weighted average.
Microsoft is among several mega-cap stocks pacing the recovery effort that has the Nasdaq Composite out in front of the pack.
The Treasury market isn't getting in the way of today's rebound effort either. The 10-yr note yield is up just a basis point to 1.83%. The CBOE Volatility Index is down 7.2% to 22.13.
The Nasdaq Composite is up 2.0%; the Russell 2000 is up 1.5%; the S&P 500 is up 1.4%; and the Dow Jones Industrial Average is up 1.2%. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3944
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Thursday, January 20, 2022 - 2:14 pm: |
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Alcoa rolling higher as strong aluminum market leads to EPS blowout (62.90 +3.27)
Backed by a red-hot aluminum market that has seen prices of the commodity shoot higher by about 50% yr/yr, Alcoa (AA) posted one of its strongest earnings reports in recent history last night. With the stock having rallied by 35% since early December, an impressive showing was needed to meet the sky-high expectations. The company met that challenge, reporting quarterly records for adjusted net income and adjusted EBITDA, with revenue jumping by 38% yr/yr -- AA's highest growth rate in over five years.
The good news doesn't end there. Based on AA's strong, upside guidance, which calls for 1Q22 adjusted net income to roughly match 4Q21 levels, it's clear that the company expects the robust market conditions to persist. Inflationary pressures, especially surrounding energy and raw materials, are expected to continue into FY22, but AA believes that high metal prices will largely offset those headwinds. Furthermore, AA's recent actions to shore up its production portfolio through plant shutdowns and facility divestitures have better positioned it to weather the rising costs.
Below is a closer look at the company-specific and macroeconomic catalysts that fueled AA's quarterly performance:
Since implementing a multi-year review of its operating assets in October 2019, AA has achieved ~75% of its 1.5 mln metric ton goal in its smelting portfolio assessment. Resulting actions include the closing of AA's facility at Wenatchee Works in Washington and a two-year curtailment for the San Ciprián aluminum smelter in Spain.
The closure or idling of less efficient plants has generated over $1.0 bln in capital over the past few years, enabling AA to pay down debt, reinstate its dividend, and authorize a $500 mln share repurchase program.
Global demand for aluminum products is quite healthy, driven by strong construction and housing markets, rising new vehicle production (especially for electric vehicles), and government sponsored infrastructure projects.
On the supply side, aluminum inventories have crept higher lately, but they remain at historically low levels. China plays a major role in the more limited supply because it has cut back production to reduce carbon emissions.
The main takeaway is that the same bullish dynamics that drove AA's resurgence early in 2021 bolstered its results in Q4, leading to a blowout on the bottom line. Buoyed by a favorable supply and demand environment, the outlook is bright for AA, although geopolitical and monetary policy risks are threatening in the background. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3943
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Thursday, January 20, 2022 - 9:43 am: |
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Initial jobless claims spike to highest level since October
Initial claims for the week ending January 15 increased by 55,000 to 286,000 (Briefing.com consensus 211,000) while continuing claims for the week ending January 8 increased by 84,000 to 1.635 million.
The key takeaway from the report is that it is apt to be construed as a sign of the negative impact the Omicron variant is having on the labor market since it is the highest initial claims number since October; moreover, this report includes the week in which the survey for the January employment report was conducted, so the higher print could dial down expectations for the gain in January nonfarm payrolls.
The four-week moving average for initial claims increased by 20,000 to 231,000.
The four-week moving average for continuing claims decreased by 55,250 to 1,664,250.
The total number of continued weeks claimed for benefits in all programs for the week ending January 1 was 2,128,752, an increase of 180,114 from the previous week. In the same week a year ago, there were 16,946,982 weekly claims filed for benefits in all programs. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3942
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Thursday, January 20, 2022 - 9:42 am: |
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ScalpTrader Morning Notes
I continue to take a disciplined approach of scaling into select names that meet my criteria of offering attractive absolute value or relative value.
Despite the official Nasdaq correction, valuations remain rich in my opinion, so most new positions fall into the relative value category.
As an example of this approach, yesterday I initiated a Swing position in VRM. My position size was 1/4 of a full position allocation vs my usual initial entry of 1/3 to 1/2 size. The smaller size reflects my recognition that the market for growth stocks remains slippery and is struggling to find its footing.
It would be easy to ignore these stocks during such a violet downdraft, but time and again we've seen violet rallies that have resulted in rapid 40-100% gains in the types of stocks I've been buying. Plus, I didn't start buying until after the stocks had already lost considerable value.
With respect to VRM, the stock is trading up 6% in pre-mkt to $7.80 after Keybank upgraded to Overweight from Sector Weight with a $13 price target.
The firm is also making a Relative Value argument, pointing out that VRM trades at a steep discount to CVNA and thinks the United Auto Credit acquisition will expand VRM's addressable market.
Some of the other team members are doing a fantastic job identifying Shorts. This is not an area that I excel, so want to make sure people are paying attention to their work if looking to play both sides of the market. I'm certainly capable of generating Short ideas and have done so for many years, but when I look at long-term performance, Shorting has not been an effective use of my mental bandwidth. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3941
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Thursday, January 20, 2022 - 9:42 am: |
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Futures market points to another rebound try at the open
Factors underpinning the positive bias:
Belief market is in oversold condition and due for a bounce (Nasdaq down 10.7% from November closing high)
PBOC cut 1-yr loan prime rate 10 bps to 3.70% and 5-yr rate 5 bps to 4.60%
A burgeoning belief that the wave of Omicron infections in the U.S. has peaked
President Biden concurs Fed needs to make policy moves to help rein in inflation
President Biden not ready to lift import tariffs for China and thinks smaller parts of Build Back Better can still pass
UAL and AAL report Q4 results. Both beat expectations but reaction to reports is mixed.
Dow component TRV up 3.8% after topping Q4 EPS expectation by large margin
Germany's December PPI +5.0% m/m and +24.2% yr/yr
10-yr note yield unchanged at 1.83%; 2-yr note yield up 3 bps to 1.04%
WTI crude futures down 0.5% to $86.50/bbl; gold futures down 0.2% to $1839.50/troy oz.
Ratings changes of note:
Upgrades: CME, ETSY, SEE, THC, UPS, and VRTX
Downgrades: AMD, ASH, BLL, BURL, CVNA, F, IP, NXPI, USB, and WMT
Econ data: Initial Claims and Philadelphia Fed Index at 08:30 ET; Existing Home Sales at 10:00 a.m. E |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3940
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Thursday, January 20, 2022 - 9:41 am: |
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World markets giving mixed signals
The global equity markets are mixed with US futures off to strong starts. S&P Futures are up about 20 points to around the 4544 area. The market tested the key support area of 4520 early in the session. While the low print was established at 4514.50, buyers successfully defended the zone. Spoos put in the high of 4553.50 at the tail end of the Asian trade. The S&P has settled back into the current level since.
In Asia, China slipped 0.1% while Japan gained over 1%. The Shanghai was unable to hold gains despite getting off to a hot start after China cut both its one-year loan prime rate (LPR) and its five-year LPR, with the latter being the first reduction since April 2020. The five-year LPR acts as China's reference rate for mortgages and helped property stocks. This had a greater impact on Hong Kong where the Hang Seng advanced over 3%. In Japan, stocks were in rebound mode. This is particularly true for some of the worst performing sectors from the prior session. Gaming stocks such as Konami and Sony took back 6%. Meanwhile, Toyota managed a 2% rise following its weakness on Wednesday.
In Europe, the major bourses are in an early slump. The release of Germany's PPI dampened spirits right out of the gate. The December print rose 5.0%, far exceeding the forecast of 0.8%. Puma is up 2% and among the standouts after the sportswear maker posted better than expected earnings on record sales. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3939
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Wednesday, January 19, 2022 - 4:22 pm: |
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Market Briefing: Disappointing action
The stock market continues to struggle to muster a concerted rebound effort. The confounding aspect today is that bond yields are down, yet stocks aren't responding favorably to that move. Currently, the major indices are at, or near, their lows for the day.
Recall that yesterday's sell-off -- and the weakness seen since the start of the year -- has been blamed on rising long-term rates and concerns about a more aggressive Fed. The 10-yr note yield is down four basis points today to 1.83% (its low yield for the day), with strong demand at the 20-yr bond auction helping matters, but it hasn't made a difference for the stock market.
In fact, a second rebound effort by stocks today faltered after the bond auction. Just not a lot of risk appetite at the moment given the lackluster response to earnings news, the geopolitical angst looming in the background, and the specter of a more aggressive Fed hanging over the stock market.
On a related note, the FOMC is holding its policy meeting January 25-26 and Fed Chair Powell will conduct his press conference on January 26 following the conclusion of that meeting. It is reasonable to expect continued volatility in front of that meeting (and perhaps after it).
Today's losses are more modest in scope, but disappointing nonetheless considering (a) they are coming on top of previous losses and (b) they are being led by the cyclical sectors. The financial (-1.2%) and consumer discretionary (-1.2%) sectors are pacing the downside action.
The S&P 500 and Nasdaq Composite are down 0.4%; the Dow Jones Industrial Average is down 0.5%; and the Russell 2000 is down 0.8%. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3938
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Wednesday, January 19, 2022 - 4:21 pm: |
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Metals exhibiting strength in today's market (171.99 +2.60)
Stocks have had a roller-coaster session, yet there has been some steady strength in the metals market today. Gold ($1840.60, +28.20, +1.6%), silver ($24.16, +0.66, +2.8%), platinum ($1033.60, +54.10, +5.5%), and copper ($4.47, +0.09, +2.0%) futures are all higher.
There isn't a pinpoint factor for today's strength, yet there are myriad proximate causes for the relative strength:
A weaker dollar, which makes dollar-denominated commodity prices more affordable for foreign buyers
Underlying geopolitical angst contributing to some defensive positioning in hard assets
The UAE has promised retaliation for a Houthi attack on an oil facility earlier this week
Russia-Ukraine tension continues to simmer
Weakness seen in the stock market and the bond market to begin 2022 has shifted attention to other asset classes perceived as providing relative value (gold, silver and platinum all registered declines in 2021)
Interest in commodities as an inflation hedge
Some budding momentum in a trade that is working outside the volatility of the stock and bond markets
Related ETFs: iShares Silver Trust (SLV 22.32, +0.63, +2.9%); SPDR Gold Shares (GLD 171.99, +2.60, +1.5%); iShares Gold Trust (IAU 35.00, +0.50, +1.5%); Aberdeen Standard Physical Platinum Shares (PPLT 96.37, +4.84, +5.3%) |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3937
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Wednesday, January 19, 2022 - 4:21 pm: |
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Sector Briefing: Technology (160.90 -0.88)
The major averages have backed down from their opening highs with six sectors now trading in negative territory, including top-weighted technology (-0.5%).
Key factors driving today's performance include:
Strong showing from second-largest component Microsoft (MSFT 307.03, +4.38, +1.5%) and gains among roughly half of the sector's members preventing the sector from showing a wider loss.
Underperformance among chipmakers despite strong quarterly results and guidance from ASML (ASML 705.11, -10.12, -1.4%). The PHLX Semiconductor Index is down 2.4%, widening this week's loss to 6.7% versus a 3.0% week-to-date loss in the tech sector.
Notable movers:
Intuit (INTU 549.72, +11.90, +2.2%): best performer in the sector, bouncing off its 200-day moving average (535.17).
Xilinx (XLNX 191.63, +3.83, +2.0%): best performer among chipmakers, rising into the top half of yesterday's range.
Citrix Systems (CTXS 103.57, +2.57, +2.5%): rising toward its 200-day moving average (106.74).
Akamai Tech (AKAM 114.22, +2.14, +1.9%) rallying past its 50-day moving average (113.18) to a two-week high. KeyBanc Capital Markets upgraded the stock to Overweight from Sector Weight with a $140 target.
Microsoft (MSFT 307.03, +4.38, +1.5%): rising into the top half of yesterday's range.
Adobe (ADBE 517.77, +4.43, +0.9%): trading near yesterday's intraday high.
Salesforce (CRM 227.71, +1.65, +0.7%): trading near yesterday's intraday high.
PayPal (PYPL 173.61, -0.85, -0.5%): slipping to its lowest level since September 2020.
Mastercard (MA 362.56, -3.74, -1.0%): slipping to its 200-day moving average (360.78).
Intel (INTC 53.96, -0.80, -1.5%): falling back below its 200-day moving average (54.48). Company announced that it ordered advanced equipment from ASML.
Cisco Systems (CSCO 58.78, -0.95, -1.6%): hit a one-month low before rising back above its 50-day moving average (58.91). Goldman Sachs downgraded the stock to Neutral from Buy.
NVIDIA (NVDA 254.18, -4.84, -1.9%): slipping to its lowest level since early November.
Lam Research (LRCX 661.51, -17.50, -2.6%): falling back below its 50-day moving average (675.20).
Skyworks (SWKS 147.18, -4.47, -3.0%): weakest performer in the sector, falling toward its December low (142.00). |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3936
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Wednesday, January 19, 2022 - 4:20 pm: |
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Blue Chip Trader - - First Hour/Morning Notes and Portfolio Holdings
Markets pulling back in despite what looked like a strong start to rally back after its recent sell off. I still like the prospects of the market rallying after recent extremes in the cumulative A/D lines yesterday, but will take small losses where necessary to keep risk under control.
The VIX is rising around 22/23 which has me favoring more of a "scale in" approach to all of my trades given the increasing volatility. It also has me being a little more lenient with support and resistance levels, making sure I give stocks enough room to wiggle.
As I mentioned yesterday, current market conditions are favorable for "two-sided trading." So, it's not about "being right," as the increased volatility and skittishness is giving both Longs AND Shorts opportunities to make money. Opinions about going higher or lower don't matter... The key is having the discipline to lock in partial profits and keep losses to a minimum.
Due diligence is also required on your part during "fast and loose" market conditions. I post a risk parameter with all of my trades that I adhere to. I never adjust my risk. I just take the loss as planned. It is quite possible I am too busy or not on the desk when my risk parameter is met and cannot get a timely exit posted to the site. You need to still stick to the plan to minimize your losses.
Longs: IGV, LCID, GLD, SBUX, DDOG, COP, QQQ
Shorts: IWM, SPY, XLV, PTLO, META
OUTS: Recent losses taken in DE and GM (yesterday). |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3935
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Wednesday, January 19, 2022 - 4:20 pm: |
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Morgan Stanley's more diversified business model produces better-than-feared Q4 results (95.44 +1.43)
In the aftermath of disappointing earnings reports from Goldman Sachs (GS), JPMorgan Chase (JPM), and Citigroup (C), expectations had been reset lower ahead of Morgan Stanley's (MS) 4Q21 results. It was clear that a steep decline in trading activity, especially on the fixed income side, would heavily weigh on this quarter. As widely anticipated, that scenario unfolded and created a potent headwind, but MS still managed to edge past the EPS consensus estimate while its revenue came up just shy of analysts' expectations. Relative to most of MS's banking peers, its Q4 results look a little more balanced.
Areas of weakness are evident -- including the 31% plunge in fixed income trading revenue -- and MS's mixed headline numbers represent a major step back from recent performances. However, there are also several key positives from the report that illuminate MS's outperformance during the quarter, such as:
With the more volatile trading business cooling off in Q4, MS's strategy to become a leader in three distinct financial markets (institutional securities, investment management, wealth management) worked in its favor. At the core of this strategy is the company's recent acquisitions of E*TRADE (completed Oct. 2, 2020) and Eaton Vance (completed March 1, 2021), which diversified its customer base and added a consistent fee-generating business.
In the Wealth Management segment, which houses E*TRADE, net revenue grew by a healthy 10% yr/yr to $6.25 bln. This is the first time that MS lapped a quarter in which E*TRADE was included in its results.
Results in the Investment Management segment are still impacted by the Eaton Vance acquisition, explaining how net revenue surged by 59% yr/yr to $1.75 bln. Higher performance fees also contributed to the strong growth.
The jump in compensation expense has been another main storyline for the banking industry this earnings season. For instance, GS's and JPM's compensation expenses climbed by 31% and 14%, respectively. MS kept a much tighter lid on these costs, though, as its compensation expense was up just 1% yr/yr. That allowed MS to generate yr/yr EPS growth of 11% while GS's EPS fell by 11%.
Equity trading was a relative bright spot; net revenue increased by 13% to $2.86 bln. Although the growth wasn't enough to offset weakness in fixed income trading, which drove total trading revenue lower by 26%, MS outperformed GS in this space.
Like GS and JPM, MS also capitalized on the robust M&A market: advisory revenue rose by 30% to $1.07 bln. The strength in advisory eclipsed a slowdown in equity underwriting (-15% yr/yr) as secondary offerings and IPO activity decelerated. Overall, MS's investment banking revenue increased by 6% from a year ago.
Heading into MS's report, most of the bad news was already priced into the stock. With expectations suppressed, the company's modest earnings beat is viewed as "better-than-feared". MS, in addition to hurdling over a lowered bar, also stood out through its more balanced performance, driven by its diversified business model. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3934
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Wednesday, January 19, 2022 - 4:20 pm: |
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Housing starts up, but homebuilding stocks down (76.81 +0.18)
The SPDR S&P Homebuilders ETF (XHB 76.81, +0.18, +0.2%) is a bit of a misnomer, because it isn't a pure-play ETF for homebuilders. To wit, its largest holding is Floor & Decor Holdings (FND 104.68, +1.57, +1.5%).
Carrier Global (CARR 49.82, +0.17, +0.3%), Johnson Controls (JCI 74.52, -0.22, -0.3%), Home Depot (HD 364.68, -2.04, -0.6%), and Lowe's (LOW 238.26, -0.15, -0.1%) are also among the top 10 holdings. In fact, only three of the top 10 holdings are actual homebuilding stocks: Lennar Corp. (LEN 100.56, -0.75, -0.7%), NVR, Inc. (NVR 5490.12, -6.71, -0.1%), and D.R. Horton (DHI 92.61, -0.78, -0.8%).
The XHB is up today, but the homebuilders themselves are down. The catalysts for their underperformance include:
KeyBanc downgrading D.R. Horton (DHI 92.61, -0.78, -0.8%) to Sector Weight from Underweight and Lennar (LEN 100.56, -0.75, -0.7%), KB Home (KBH 44.41, -0.79, -1.8%), and Toll Brothers (TOL 61.86, -1.49, -2.4%) to Underweight from Sector Weight.
Misgivings about a slowdown in demand due to higher costs for buyers, which are stemming from higher material costs for builders and rising mortgage rates.
A recognition that the increase in December housing starts (+1.4%) was driven by multi-unit dwellings. Single-unit starts were down 2.3% month-over-month. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3933
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Tuesday, January 18, 2022 - 2:43 pm: |
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Market Briefing: De-risking action hits far and wide
The major indices are off their lows, but not by much in what has been a general de-risking effort attributed to angst over rising interest rates and potential earnings disappointments linked to higher expenses, particularly for compensation.
The energy sector (-0.3%), which was up as much as 1.6% earlier, has fallen back into red figures, making it a clean sweep of all 11 sectors trading in negative territory.
The financial sector (-2.3%), pressured by disappointing earnings results from Goldman Sachs (GS 353.71, -27.23, -7.1%), is the biggest loser followed by information technology (-2.2%). The real estate sector (-0.9%) is the only sector, other than energy, that isn't down at least 1.2%.
The de-risking action has manifested itself across all market-cap sizes and various investment factors. Growth stocks remains the weakest factor, but value isn't faring all that well today either. To wit, the Russell 3000 Growth Index is down 2.2% and the Russell 3000 Value Index is down 1.7%.
The S&P 500 has dropped further below its 50-day moving average (4679) and the Nasdaq Composite has dropped below its 200-day moving average (14730) in today's action. It remains to be seen if that produces a technically-oriented rally cry to recover some ground, but it just might if long-term rates can settle down. Currently, the 10-yr note yield is at its highs for the day (1.86%).
The Dow Jones Industrial Average is down 1.4%; the S&P 500 is down 1.7%; the Nasdaq Composite is down 2.3%; and the Russell 2000 is down 2.7%. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3932
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Tuesday, January 18, 2022 - 2:43 pm: |
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Rate-hike expectations ratcheting up
There was a time last year when it was thought the target range for the fed funds rate might not be raised at all in 2022 or perhaps just one time by the end of the year. Those expectations have been wiped out with the persistent inflation pressures and the Fed's own acknowledgment that it will likely need to do more in 2022 to remove some of its policy accommodation to tamp down the inflation pressures.
The Summary of Economic Projections from the December FOMC meeting showed a median estimate of three rate hikes in 2022, but that was still seen by some as a close call between two and three rate hikes in 2022. It isn't any longer.
According to the CME's FedWatch Tool, the fed funds futures market is now pricing in the probability of four rate hikes in 2022. There has even been some market chatter of late that the Fed could raise the target range for the fed funds rate by 50 basis points at its March meeting to regain some inflation-fighting credibility.
That isn't a consensus view, but it is now widely believed that the first rate hike will happen at the March 15-16 FOMC meeting. Per the CME FedWatch Tool:
There is a 100% probability of a rate hike of at least 25 basis points in March to 0.25-0.50%.
There is a 93.4% probability of a rate hike to 0.50-0.75% in June.
There is an 80.2% probability of a rate hike to 0.75-1.00% in September.
There is a 74.9% probability of a rate hike to 1.00-1.25% in December.
The 2-yr note yield, which has risen 31 basis points already this year to 1.04%, is reflecting the shift in rate-hike expectations. That shift has happened rapidly. A month ago, there was less than a 50% probability placed on a rate hike in March and only a 59.7% probability that there would be a third rate hike in December 2022.
With CPI running at 7.0% yr/yr (highest since 1982), oil prices topping $85/bbl, and companies starting to discuss compensation expenses as a crimp on profit growth, it is no wonder that rate-hike expectations are ratcheting up. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3931
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Tuesday, January 18, 2022 - 2:42 pm: |
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Sector Briefing: Technology (162.95 -2.81)
Ten out of eleven sectors trade in the red, including the top-weighted technology sector (-1.7%), which trades near the bottom of today's leaderboard.
Key factors driving today's performance include:
Continued pressure on growth stocks as Treasury yields rise to their highest levels in two years.
Relative weakness among chipmakers. The PHLX Semiconductor Index is down 3.0% with all of its components trading in the red. Even with today's underperformance, the SOX index remains ahead of the tech sector on the January leaderboard, showing a month-to-date loss of 4.1% versus a 6.4% January loss in the tech sector.
Notable movers:
Applied Materials (AMAT 158.35, -8.65, -5.2%): weakest performer in the sector, falling into the lower half of its range from Friday.
Microchip (MCHP 80.06, -4.23, -5.0%): falling to its lowest level since late November with its 200-day moving average (77.71) looming below.
KLA Corp (KLAC 424.14, -20.86, -4.7%): falling into the lower half of its range from Friday with its 50-day moving average (416.11) looming below.
Lam Research (LRCX 697.01, -32.81, -4.5%): falling into the lower half of its range from Friday.
Cadence Design (CDNS 155.15, -6.60, -4.1%): falling to its 200-day moving average (154.14).
NVIDIA (NVDA 262.10, -7.32, -2.7%): slipping toward its January low (256.44).
Cisco Systems (CSCO 59.96, -1.40, -2.3%): falling toward its 50-day moving average (58.87).
Broadcom (AVGO 583.46, -12.91, -2.2%): falling to its lowest level since early December.
Skyworks (SWKS 152.44, -3.21, -2.1%): approached its January low (149.36) before narrowing its loss.
Oracle (ORCL 86.38, -1.31, -1.5%): falling below its 200-day moving average (87.06) toward its January low (85.55). Company announced that Xerox (XRX 23.67, -0.15, -0.6%) selected Oracle Cloud to support the launch of new businesses aiming to solve some of the world's most pressing problems at massive scale.
Accenture (ACN 348.18, -5.18, -1.5%): falling for the third consecutive day to its lowest level since late October.
Microsoft (MSFT 305.56, -4.64, -1.5%): slipping to a level not seen since mid-October. Company agreed to acquire Activision Blizzard (ATVI 83.64, +18.25, +27.9%) for $68.7 bln in cash.
Mastercard (MA 367.14, -5.01, -1.3%): falling into the lower half of Friday's range. Company partnered with Coinbase (COIN 221.60, -8.43, -3.7%) to allow broader purchases of NFTs.
Apple (AAPL 170.69, -2.38, -1.4%): slipping toward its January low (168.17) with its 50-day moving average (167.51) looming below. Reuters reported that Ericsson (ERIC 11.35, -0.01, -0.1%) filed a lawsuit against Apple over 5G patents.
Intel (INTC 55.24. -0.46. -0.8%): slipping toward its 200-day moving average (54.54) after reclaiming that level last week. Citigroup added the stock to its positive catalyst watch list and raised its target to $58 from $52.
Citrix Systems (CTXS 101.07, +5.27, +5.5%): best performer in the sector, hovering near Friday's intraday high. Bloomberg reported that the company may be acquired by a private equity firm. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3930
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Tuesday, January 18, 2022 - 2:42 pm: |
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Market Briefing: Undercut by rate-hike angst and disappointing earnings
The major indices are struggling to begin the shortened week and it isn't simply because of weakness in the mega-cap stocks and growth stocks. Today's weakness is wide ranging and has been catalyzed by worries about rising interest rates and disappointing Q4 earnings results from Dow component Goldman Sachs (GS 351.23, -29.71, -7.8%).
Goldman's profit growth was constrained by higher than expected expenses, which was due largely to higher than expected compensation expenses. That understanding is feeding concerns that other companies will share a similar narrative; hence, today's early selling interest is cutting across both value and growth stocks and is affecting nearly every sector.
The lone winner on the sector front is the energy sector (+1.1%), which continues its outperformance as oil prices ($85.30, +1.48, +1.8%) continue to rise. Exxon Mobil (XOM 73.47, +1.60, +2.2%), which shared a goal today to have net zero carbon emissions by 2050, is a standout in the space.
The move in oil prices is fueling concerns that inflation will be higher and more persistent than Fed officials previously expected. The inflation-sensitive 10-yr note yield has jumped eight basis points to 1.85%; meanwhile, the 2-yr note yield, which is more sensitive to changes in the fed funds rate, has jumped seven basis points to 1.03% -- its highest level since February 2020.
A lot of attention has been paid to the market pricing in the prospect of four rate hikes in 2022, on top of quantitative tightening measures, to help rein in inflation. There is even some chatter that the Fed might feel compelled to raise the fed funds rate by 50 basis points at its March FOMC meeting to regain some inflation-fighting credibility.
In a separate development, Microsoft (MSFT 308.41, -1.79, -0.6%) announced a $68.7 billion, or $95.00 per share, cash acquisition of entertainment software company Activision Blizzard (ATVI 83.75, +18.36, +28.1%). That news, however, has failed to alter the broader market's interest rate angst.
The Russell 2000 is down 1.3%; the S&P 500 and Nasdaq Composite are down 1.4%; and the Dow Jones Industrial Average is down 1.5%. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3929
Registered: 05-2011
Posted From: 94.140.11.40
Rating: N/A
Votes: 0 (Vote!) | | Posted on Saturday, January 15, 2022 - 7:24 pm: |
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Expect the best, prepare for the worst, be ready for the surprise |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3928
Registered: 05-2011
Posted From: 94.140.11.40
Rating: N/A
Votes: 0 (Vote!) | | Posted on Saturday, January 15, 2022 - 3:06 pm: |
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Entrepreneur:Next week on global Wall Street:
APAC
1. BOK Bank of Korea rate decision
2. TSMC Earnings
3. Economic Data Dump- China Trade Data, Australia Retail Sales, South Korea Employment Data, Japan PPI, India Inflation and Trade Ratings.
EMEA
1. Geopolitics in focus - Russia/ Kasakhstan, Nato Meetings Russia/Ukraine
2. Natural Gas Prices
3. Germany's new central bank chief - Joachim Nagal
AMERICAS
1. Consumer Price Index - 7.1 expected
2. Senate Banking Committee Hearings - Tuesday - Powell and Thursday Lail Brainerd
3. Earnings Season Kicks off - Delta, Black Rock, JP Morgan etc
APAC
1 China GDP
2. Data Dump
3. Policy and Production
EMEA
1. Euro group Meeting
2. Corporate Earnings
3. Central Bank Decisions
4. Partygate Fall Out
U.S
1. Earnings Season
2. Big Bank Reports
3. Corporate Numbers |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3927
Registered: 05-2011
Posted From: 94.140.11.45
Rating: N/A
Votes: 0 (Vote!) | | Posted on Friday, January 14, 2022 - 9:57 am: |
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The Big Three- Under early pressure
The slip in bank earnings and weak retail sales number have us under early pressure. Given the break in technicals, I would be more interested in leaning on bounces.
S&P- We tried to short this on a break of the 50-sma (4672) but got bounced out. The index left town without me as it slips below that key support. The poor retail sales numbers will not do us any favors. We are looking at some near term pressure in financials. I would look to lean on bounces.
Nasdaq- A fresh 3-month low as it extends below those December lows. I pointed to the 200-sma (14957) and feel like we need a flush to that level before we see buyers step in with some confidence. I will look to lean on bounces until this condition is met. That does not mean we will see a clean run down there today. The ideal short would be a rally back toward 15500 that peters out quickly and then rolls over.
Dow- I expect to see its 50-sma broken in early trade (35715). I would look to lean on a bounce. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3926
Registered: 05-2011
Posted From: 94.140.11.45
Rating: N/A
Votes: 0 (Vote!) | | Posted on Friday, January 14, 2022 - 9:57 am: |
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Economic Review: Retail sales fall in December
Total retail sales were down 1.9% month-over-month in December (Briefing.com consensus 0.0%) while retail sales, excluding autos, decreased 2.3% (Briefing.com consensus 0.2%). On a year-over-year basis, total retail sales were up 16.9% and up 18.8% excluding autos.
The key takeaway from the report is that total retail sales, which are not adjusted for inflation, contracted at their fastest pace since last February in the face of broadly higher prices. This suggests that inflation is weighing down consumer spending.
Motor vehicle and parts dealers sales decreased 0.4% after increasing 0.2% in November.
Gasoline station sales decreased 0.7% after increasing 2.2% in November.
Building material and garden equipment and supplies dealers sales increased 0.9% after increasing 2.2% in November.
General merchandise store sales decreased 1.5% after decreasing 1.2% in November.
Food services and drinking places sales decreased 0.8% after increasing 0.6% in November. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3925
Registered: 05-2011
Posted From: 94.140.11.45
Rating: N/A
Votes: 0 (Vote!) | | Posted on Friday, January 14, 2022 - 9:56 am: |
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Selling pressure resumes in the futures market
Big banks kick off Q4 earnings-reporting season
JPM, BLK, C trade lower in response while WFC and FRC trade higher
SHW and SAM provide downside guidance
Interest rates tick higher but 10-yr yield is off overnight highs
Ratings changes for DIS, F, DPX, CMB, PLAY, NTAP
Retail sales data on tap |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3924
Registered: 05-2011
Posted From: 94.140.11.45
Rating: N/A
Votes: 0 (Vote!) | | Posted on Friday, January 14, 2022 - 9:56 am: |
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US futures attempting to stabilize
The global equity markets are mostly lower. S&P Futures are trading higher, however, about eight points better to trade around the 4655 area. The market saw modest weakness during the Asian session which took it down to 4638.00. Buyers stepped in shortly after and have managed to take the spoos back to current levels. The high print was set earlier in the European session at 4667.00.
In Asia, both China and Japan closed the day down in the neighborhood of 1%. The Shanghai struggled despite better than expected Export data out of China. The December Trade Balance revealed exports rose 20.9%, topping consensus of 20.0%. Imports slowed to 19.5%, missing the forecast of 26.3% and down from November's reading of 31.7%. In Japan, the Nikkei followed the trend the US displayed yesterday with its more than 1% decline on Friday. Fast Retailing stood out with a gain of over 8% after reporting better than expected holiday results.
In Europe, the major bourses are under pressure. Auto makers continue to show relative strength with the likes of Volkswagen, Renault and BMW up 1-2%. Luxury goods have fallen out of favor with names such as Kering, Hermes and L'Oreal down 2-4%. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3922
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Thursday, January 13, 2022 - 5:40 pm: |
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Closing Stock Market Summary
The S&P 500 fell 1.4% on Thursday, as the growth stocks succumbed to renewed selling interest in spite of lower interest rates. The Nasdaq Composite fell 2.5% while the Dow Jones Industrial Average (-0.5%) and Russell 2000 (-0.8%) declined more modestly.
The information technology (-2.7%), consumer discretionary (-2.1%), and communication services (-1.4%) sectors -- which contain the mega-caps -- underperformed along with the health care sector (-1.6%). The utilities (+0.5%), industrials (+0.2%), and consumer staples (+0.2%) sectors were the only sectors that closed higher.
The retreat in growth stocks started shortly after the open, even as the Treasury market remained calm and the 10-yr yield declined by one basis point to 1.71%. Some surmised that the recent rebound in growth stocks presented a good opportunity to take profits on the belief that growth will underperform value this year.
The latter stems from the Fed's plans to tighten policy, possibly starting in March, to help keep inflation in check. On a related note, Fed Vice Chair nominee Lael Brainard told the Senate Banking Committee in her confirmation hearing that the Fed's most important task is to rein in inflation while sustaining an inclusive recovery.
Investors received more inflation data today in the Producer Price Index for December. The index for final demand increased just 0.2% m/m (Briefing.com consensus 0.4%) amid a sharp decline in oil prices, but it's important to note that oil prices have since reclaimed those losses.
WTI crude futures decreased 0.7%, or $0.55, to $81.96/bbl today. The 2-yr yield, meanwhile, was unchanged at 0.89%. The U.S. Dollar Index decreased 0.1% to 94.87.
In earnings news, Taiwan Semi (TSM 139.19, +6.96, +5.3%), Delta Air Lines (DAL 41.47, +0.86, +2.1%), and KB Home (KBH 49.38, +7.00, +16.5%) each beat EPS estimates, with TSM also guiding Q1 revenue above consensus. As a reminder, several big banks will report earnings prior to Friday's open.
Delta's earnings report catalyzed the gains in the airline space, evident in the 2% increase in the U.S. Global Jets ETF (JETS 22.55, +0.49, +2.2%). While TSM jumped 5%, the Philadelphia Semiconductor Index still dropped 2.3% as the chip stocks followed the other growth stocks lower.
As an aside, the S&P 500 fell below its 50-day moving average (4681) on a closing basis.
Reviewing Thursday's economic data:
The December Producer Price Index showed that the index for final demand increased 0.2% month-over-month (Briefing.com consensus 0.4%) while the index for final demand, less foods and energy, increased 0.5% (Briefing.com consensus 0.4%). That left the year-over-year increases on an unadjusted basis at 9.7% and 8.3%, respectively.
The key takeaway from the report is that most categories that saw decreases in December were due to a sharp drop in the price of oil at the end of November. That drop was reversed entirely in December and early January, so these savings will prove to be temporary.
Initial claims for the week ending January 8 increased by 23,000 to 230,000 (Briefing.com consensus 202,000) from last week's unrevised level while continuing claims decreased by 194,000 to 1.559 million from last week's revised level of 1.753 mln (from 1.754 mln).
The key takeaway from the report is that roughly half of last week's increase in claims was owed to higher claims in states like New York, Pennsylvania, Connecticut, Washington, and Michigan. These increases took place as new coronavirus cases in these areas reached record highs.
Looking ahead, investors will receive Retail Sales for December, the preliminary University of Michigan Index of Consumer Sentiment for January, Industrial Production and Capacity Utilization for December, and Import and Export Prices for December on Friday.
Dow Jones Industrial Average -0.6% YTD
S&P 500 -2.3% YTD
Russell 2000 -3.8% YTD
Nasdaq Composite -5.4% YTD |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3921
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Thursday, January 13, 2022 - 5:39 pm: |
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Elastic losses expand after announcing unexpected shakeup at the top (98.84 -15.26)
Enterprise search and cybersecurity company Elastic (ESTC) is stretching lower after announcing a leadership shakeup and raising its outlook for Q3. With the stock selling off sharply today, it's apparent that the moves, including the promotion of Ashutosh Kulkarni to CEO, have caught investors off-guard. Preceding the CEO transition, which sends co-founder Shay Banon back to his former CTO role, shares of ESTC had tumbled by nearly 45% since mid-November. Whether the stock's recent demise has anything to do with this development is uncertain, but we'd argue that the weakness is mainly a function of a broader-based retreat from growth stocks, rather than any negative fundamental change at the company.
Providing support to that assertion, ESTC now expects to exceed its prior outlook for Q3 revenue, non-GAAP operating margin, and non-GAAP net loss per share. This update indicates that quarterly revenue and EPS will surpass $209 mln and ($0.20), respectively, essentially equating to upside guidance.
Given this bullish revision to ESTC's forecast, it seems surprising that the stock is diving lower. However, there are a few potential explanations for the weakness, including:
ESTC has a track record of providing conservative guidance and then easily topping it when it reports earnings. In fact, that scenario has played out in at least the past three quarters. Therefore, the company is widely expected to exceed its guidance once again when it reports Q3 earnings in February, removing the surprise factor from last night's update.
That puts the focus back on the leadership changes, which some investors may view as unsettling. Although the stock's recent performance doesn't reflect it, ESTC has been performing quite well, as illustrated by its steady 40-50% quarterly revenue growth and its impressive track record of upside earnings reports. On that note, ESTC has beaten analysts' top and bottom-line estimates in every quarter since it went public in October of 2018.
Kulkarni is relatively new to ESTC, coming on board as its Chief Product Officer last year. That's not to suggest that he's not qualified for the role. Indeed, his prior management positions at McAfee (MCFE) and Akamia Technologies (AKAM) should make him well-suited to adjust to the promotion. The concern, though, is that a change of this magnitude could be disruptive from a sales, customer/partner relationship, and execution standpoint as the transition plays out over the coming months.
Adding to the concern, ESTC's President of Worldwide Field Operations, Paul Appleby, is departing the company, with no explanation provided.
With high growth tech stocks already out-of-favor, the sell-off resulting from ESTC's leadership shakeup is being amplified. Based on the company's strong growth and solid results, it seems that its trying to fix something that's not necessarily broken, which may be creating some angst among investors today. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3920
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Thursday, January 13, 2022 - 5:39 pm: |
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Taiwan Semi had a fabulous end to FY21; expects 5G and HPC to be central to a strong FY22 (142.28 +9.77)
Taiwan Semi (TSM +7%) had a "fab"-ulous end to FY21, as its revenue growth reached over 20% yr/yr in Q4, a return to growth rates not seen since 3Q20. Growth for the chip makers' bottom line was also strong; earnings rose 16% yr/yr to NT 6.41 per share, topping estimates by double digits.
Being the world's most valuable and largest semiconductor manufacturer, TSM paints a good picture of the overall semiconductor industry through its earnings report. As such, one of the most notable comments from TSM during its Q4 earnings call is that it expects capacity to remain tight throughout 2022 as many end markets, such as automotive, PC, data center, and mobile, are creating products with higher silicon content. Despite this tight capacity, TSM predicts that the foundry industry should grow close to 20% for the year. TSM is optimistic that it will outperform this expected industry growth.
Another takeaway from Q4 is that operating margins grew by 50 bps yr/yr, slightly ahead of TSM's guidance, to 41.7%. Even more remarkably, the company expects margins to continue to improve in FY22, forecasting a range of 42-44%.
The low-to-mid percentage growth across most of TSM's business units contributed to the decent margin improvement in the quarter. One highlight came on the automotive side, where revs jumped 10% yr/yr. Although automotive only accounts for 4% of total Q4 revs, the jump is significant as it shows that the automotive industry is continuing on its path of recovery. Not only is the growth much higher than the minor 5% jump last quarter, but it also builds upon a leap of 27% already achieved in the year-ago period.
Looking ahead, we think a big contributor to the stock's movement today, along with the company's expectations for continued margin expansion in FY22, is TSM's Q1 revenue guidance. The company expects revenues of $16.6-17.2 bln for the quarter, smashing estimates. High-performance computing (HPC) is expected to be the driver behind sales growth, coupled with further recovery in automotive. Both should more than offset TSM's forecast of a milder smartphone season compared to recent years.
Lastly, TSM predicts that 5G and HPC applications will be major themes over the long term. Both industries should ignite a further jolt in the smartphone, automotive, and internet-of-things markets, given the enhanced capabilities 5G and HPC enable. TSM is thus guiding to long-term revenue (in USD) between 15-20% over the next several years.
Overall, TSM's Q4 results point to increasing demand for chips in many additional applications moving forward. We also like seeing that the automotive industry is continuing to recover. Although we were slightly concerned about TSM's efforts to seemingly stockpile chips in the previous quarter, given that a downturn could result in substantial losses, the company is continuing to secure prepayment from its customers, reducing this risk in the process.
Bottom line, we believe the 5G and HPC themes should play out nicely in FY22, setting up TSM for a strong year ahead. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3919
Registered: 05-2011
Posted From: 179.48.248.30
Rating: N/A
Votes: 0 (Vote!) | | Posted on Thursday, January 13, 2022 - 8:22 am: |
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Krishna Memani
Where is Robert Burgess when you need him?
Robert, to his credit, has created a meme in Bloomberg news, the primary source for my financial news (WSJ, eat your heart out) about numbers that matter. If I were him, I would say the most important number of the week is 7%, or whatever.
The point is INFLATION is all consuming at the moment.
What that means is that for any rational investor, their expectations have to be driven by things that agents will do to make this issue go away.
Rightly or wrongly, that is principal component 1. And any investment outlook has to be driven by that....and only that core issue.
Everything else is second order.
So, what does that mean?
It means that we are asking the Fed to undo a lot of what the covid has wrought on this poor world...including fiscal stimulus, skew in labor participation, supply chain issues, car prices...in other words everything.
In the old days, the Fed had one tool available at its disposal...the policy rate.
But the world has changed. It has a few more tools available....policy rate, IOER, QE/QT.... but, unfortunately, they are directed to the same end and to the same effect...tightening financial conditions.
The working assumption has to be that, given that the Fed are on the backfoot, and are therefore left holding both the fiscal and monetary bag, they will do everything in their framework to make it someone else's problem. In their mind they were coconspirators but not the primary perpetrators, but they are left to clean up.
In hindsight, we shouldn't have done the second stimulus. May be it was not warranted. But its a done deal. And, the politicians are not going to ask for their money back. Nor are the Covid related labor labor participation issues getting resolved in a hurry.
So, the Fed finds itself in a position to solve the world's problems.
Once you set it up like that, the answer becomes self evident...They are not that data dependent.. How Can they be?....And they will use every tool available to them to get out of the mess....
So, four hikes, balance sheet run off concurrently with end of the taper, earlier end of the taper...everything has to be on the table.
This is where the 7% number places us.
The question one has to ask oneself is what sort of risk allocation does one want to own when one sees the worlds' central bank in that sort of a pickle and the markets devoid of any significant risk premium.
I, for one, think the answer is self evident. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3918
Registered: 05-2011
Posted From: 179.48.248.30
Rating: N/A
Votes: 0 (Vote!) | | Posted on Thursday, January 13, 2022 - 8:04 am: |
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World markets struggle to find direction
The global equity markets are mixed, however US futures and European indices are little changed. S&P Futures are up about three points to trade around the 4720 area. The market saw modest weakness early on. The 4705 area stood strong as support with several tests of the area. The ultimate low print of 4702.50 was established early in the Asian session. Spoos are currently sitting just off the high of 4722.25.
In Asia, both China and Japan closed the day down about 1%. The sentiment in the Shanghai shifted to a negative tone with the state mulling further lock downs ahead of the Olympics next month. In Japan, the Nikkei gave back half the prior day's gains. Metals and mining names were stand outs on Thursday. This sector touted stocks such as Nippon Steel, JFE Holdings and Pacific Metals gaining 4-6%.
In Europe, the major bourses are doing little in the early stage of trading. Auto makers are showing relative strength with the likes of Renault, Stellantis and BMW up 1-3%. Semiconductors are also among the best sectors with chip makers such as STMicroelectronics and Infineon up 2-3%. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3917
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Wednesday, January 12, 2022 - 5:35 pm: |
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Closing Stock Market Summary
The large-cap indices eked out gains on Wednesday, as investors lacked conviction following another hot Consumer Price Index (CPI) report for December. The S&P 500 (+0.3%), Nasdaq Composite (+0.2%), and Dow Jones Industrial Average (+0.1%) rose between 0.1-0.3% while the Russell 2000 fell 0.8%.
Ten of the 11 S&P 500 sectors did close in positive territory, but the lightly-weighted materials sector (+1.0%) was the only sector that rose at least 1.0%. The health care sector (-0.3%) was the lone holdout with a modest decline. Declining issues outpaced advancing issues at the Nasdaq.
Specifying the data, total CPI rose 0.5% m/m in December (Briefing.com consensus 0.4%) and was up 7.0% yr/yr, which was the sharpest 12-month increase since June 1982. Core CPI, which excludes food and energy, rose 0.6% m/m (Briefing.com consensus 0.5%) and was up 5.5% yr/yr.
The 10-yr yield went from 1.74% to 1.71% in the wake of the report, signaling that inflation-rate expectations could be peaking with the Fed planning to tighten policy this year. This immediate decline in long-term rates was cited as early boost for the stock market, particularly the growth stocks.
The S&P 500 was up 0.8% shortly after the open, but as the 10-yr yield stabilized, so did the rebound bias in growth stocks. The Russell 3000 Growth Index, for example, increased just 0.2% after being up 1.2% intraday.
Fortunately for the large-cap indices, the mega-caps did okay. The Vanguard Mega Cap Growth ETF (MGK 252.32, +1.53, +0.6%) advanced 0.6%, which was better than the 0.1% gain in the Invesco S&P 500 Equal Weight ETF (RSP 162.61, +0.13, +0.1%).
In the afternoon, the Fed's Beige Book for January noted that economic activity in the U.S. expanded at a modest pace in the last weeks of 2021 and that some districts observed a deceleration in the robust price increases from the previous months. The report was a nonevent for the market.
The 10-yr yield settled the session down two basis points to 1.73%, and the 2-yr yield decreased one basis point to 0.89%. The U.S. Dollar Index fell 0.7% to 94.95. WTI crude futures rose 1.7%, or $1.38, to $82.52/bbl amid bullish inventory data.
Separately, shares of Biogen (BIIB 225.34, -16.18, -6.7%) dropped nearly 7.0% after Medicare officials proposed to limit coverage of the company's Alzheimer's treatment to only those patients that participated in approved clinical trials.
Reviewing Wednesday's economic data:
Total CPI rose 0.5% month-over-month in December (Briefing.com consensus 0.4%) and was up 7.0% year-over-year. This represented the sharpest 12-month increase since June 1982. Core CPI, which excludes food and energy, rose 0.6% month-over-month (Briefing.com consensus 0.5%) and was up 5.5% year-over-year. This was the sharpest 12-month increase since February 1991.
The key takeaway from the report is that while some categories, like the energy index, showed a decrease in December, the continuation of the overall trend resulted in another acceleration of the year-over-year inflation rate at the headline and core levels.
The Treasury Budget showed a $21.3 bln deficit in December versus a $143.6 bln deficit in the same period a year ago. The budget data is not seasonally adjusted, so the December deficit cannot be compared to the November deficit of $191.3 bln. December marked the 27th consecutive month that the Treasury has seen a budget deficit.
The budget deficit over the last 12 months is $2.58 trln versus a deficit of $2.70 trln in November.
The weekly MBA Mortgage Applications Index increased 1.4% following a 5.6% decline in the prior week.
Weekly EIA crude oil inventories decreased by 4.55 mln barrels after decreasing by 2.14 mln barrels during the previous week.
Looking ahead, investors will receive the Producer Price Index for December and the weekly MBA Mortgage Applications Index on Thursday.
Dow Jones Industrial Average -0.1% YTD
S&P 500 -0.8% YTD
Nasdaq Composite -2.9% YTD
Russell 2000 -3.1% YTD |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3916
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Wednesday, January 12, 2022 - 5:35 pm: |
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Economic Review: Treasury budget remains in deficit in December
The Treasury Budget showed a $21.3 bln deficit in December versus a $143.6 bln deficit in the same period a year ago. The budget data is not seasonally adjusted, so the December deficit cannot be compared to the November deficit of $191.3 bln. December marked the 27th consecutive month that the Treasury has seen a budget deficit.
The budget deficit over the last 12 months is $2.58 trln versus a deficit of $2.70 trln in November.
Total receipts of $486.7 bln were $140.6 bln more than the same period last year. Individual income taxes were the largest source of receipts at $253.3 bln, followed by Social Insurance and Retirement at $116.9 bln, and corporate income taxes at $83.3 bln.
Total outlays of $508.0 bln were $18.4 bln more than the same period last year. Spending was led by $134.9 bln for the Department of Health and Human Services, $105.3 bln for the Social Security Administration, $98.0 bln for interest payments, and 70.9 bln for defense. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3915
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Wednesday, January 12, 2022 - 5:35 pm: |
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Midday Market Summary: Mega-caps lift market as 10-yr yield declines despite hot CPI data
The S&P 500 was up 0.8% earlier today following the release of hotter-than-expected consumer inflation data, but the benchmark index has pared those gains and is now up just 0.3%. The Nasdaq Composite (+0.5%) and Dow Jones Industrial Average (+0.1%) are also trading off session highs.
The biggest support in the S&P 500 is the top-weighted information technology sector, which is up a sector-best 0.7%. Four sectors trade lower, including energy (-0.2%) and health care (-0.4%) at the bottom of the standings.
Specifying the data, the Consumer Price Index rose 0.5% m/m in December (Briefing.com consensus 0.4%) while the core index, which excludes food and energy, rose 0.6% (Briefing.com consensus 0.5%). On a year-over-year basis, they were up 7.0% and 5.5%, respectively.
The report has stirred inflation concerns, but the reaction in the Treasury market is suggesting that inflation-rate expectations could be peaking because of the Fed's plans to tighten policy more aggressively. The inflation-sensitive 10-yr yield is down four basis points to 1.71% while the 2-yr yield trades flat at 0.90%.
The decline in the 10-yr yield has provided a lift for the mega-caps, which are outweighing the softness in the broader market. The Vanguard Mega Cap Growth ETF (MGK 252.62, +1.83, +0.7%) trades higher by 0.7% while the Invesco S&P 500 Equal Weight ETF (RSP 162.49, +0.01, unch) trades flat.
In corporate news, shares of Biogen (BIIB 223.87, -17.64, -7.3%) are down 7% after Medicare officials proposed to limit coverage of the company's Alzheimer's treatment to only those patients that participated in approved clinical trials. Jefferies (JEF 36.74, -4.69, -11.3%) is down 11% following its mixed earnings report.
Elsewhere, oil prices are trading above $83 per barrel ($83.01, +1.79, +2.2%) after the EIA reported a larger-than-expected draw in weekly crude inventories (4.55 mln barrels). That was the seventh straight weekly draw, pointing to healthy demand despite the Omicron variant.
Reviewing today's economic data:
Total CPI rose 0.5% month-over-month in December (Briefing.com consensus 0.4%) and was up 7.0% year-over-year. This represented the sharpest 12-month increase since June 1982. Core CPI, which excludes food and energy, rose 0.6% month-over-month (Briefing.com consensus 0.5%) and was up 5.5% year-over-year. This was the sharpest 12-month increase since February 1991.
The key takeaway from the report is that while some categories, like the energy index, showed a decrease in December, the continuation of the overall trend resulted in another acceleration of the year-over-year inflation rate at the headline and core levels.
The weekly MBA Mortgage Applications Index increased 1.4% following a 5.6% decline in the prior week.
As a reminder, the Fed's Beige Book for January and the Treasury Budget for December will be released at 2:00 p.m. ET. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3914
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Wednesday, January 12, 2022 - 5:34 pm: |
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Sector Briefing: Technology (168.92 +0.97)
Seven sectors display gains with the top-weighted technology sector (+0.6%) trading just behind real estate (+0.6%).
Key factors driving today's performance include:
Positive start in top components like Apple (AAPL 175.99, +0.91, +0.5%), Microsoft (MSFT 319.77, +4.79, +1.5%), and NVIDIA (NVDA 280.47, +2.30, +0.8%) and gains in roughly half of the remaining sector components helping the top-weighted group extend this week's gain to 1.8%.
Good showing from chipmakers. The PHLX Semiconductor Index is up 0.4% with all but eight of its components trading higher.
Notable movers:
Applied Materials (AMAT 155.92, +3.47, +2.3%): best performer in the sector, rallied to a one-week high before narrowing its gain.
KLA Corp (KLAC 435.36, +9.75, +2.3%): rising toward its December high (442.44).
Microsoft (MSFT 319.77, +4.79, +1.5%): rising to a one-week high. The U.K.'s CMA announced a March 9 deadline for phase 1 decision in the investigation of Microsoft's acquisition of Nuance (NUAN 55.37, +0.13, +0.2%).
Accenture (ACN 379.37, +5.23, +1.4%): rising back above its 50-day moving average (378.45). Stock went ex-dividend today.
Salesforce (CRM 237.71, +2.87, +1.2%): rising to a one-week high.
Lam Research (LRCX 679.29, +6.08, +0.9%): returning to levels from Friday.
Visa (V 216.26, +1.88, +0.9%): rising above Friday's low.
NVIDIA (NVDA 280.47, +2.30, +0.8%): seeking its third consecutive gain.
Mastercard (MA 369.02, +2.73, +0.7%): hit a fresh high for the week before narrowing its gain.
Qualcomm (QCOM 186.47, +1.07, +0.6%): touched a one-week high before narrowing its gain.
Texas Instruments (TXN 185.70, +1.06, +0.6%): trading near yesterday's high.
Apple (AAPL 175.99, +0.91, +0.5%): seeking its third consecutive gain.
Cisco (CSCO 62.25, -0.12, -0.2%): on track for its first loss in a week.
Oracle (ORCL 88.03, -0.45, -0.5%): slipping back toward its 200-day moving average (86.83).
Intel (INTC 55.52, -0.38, -0.7%): touched its best level since late July before turning negative.
PayPal (PYPL 187.60, -3.92, -2.1%): slipping into the lower half of yesterday's range. Jefferies downgraded the stock to Hold from Buy with a $200 target.
Paycom Software (PAYC 357.02, -10.18, -2.8%): weakest performer in the sector, slipping to the midpoint of its range from Monday. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3913
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Tuesday, January 11, 2022 - 1:28 pm: |
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Midday Market Summary: Nasdaq takes the lead in rebound bid
The stock market is extending yesterday's dip-buying efforts, with the Nasdaq Composite up 1.0% today and up 3.9% since yesterday's low. The S&P 500 is currently up 0.4% while the Dow Jones Industrial Average trades higher by 0.2%.
The major indices were holding modest losses this morning during Fed Chair Powell's confirmation hearing before the Senate. Mr. Powell didn't say anything particularly new, confirming that he thinks the Fed will end asset purchases in March, hike rates over the course of the year, and allow the balance sheet to run off later in the year.
The Treasury market has been subdued, which appears to be giving the stock market the green light in its rebound bid. The S&P 500 energy (+2.6%), consumer discretionary (+1.0%), and information technology (+0.8%) sectors are leading the benchmark index higher.
Conversely, the defensive-oriented utilities (-1.1%), real estate (-0.6%), and consumer staples (-0.7%) sectors underperform in negative territory. IBM (IBM 131.47, -3.57, -2.6%) is an individual laggard after the stock was downgraded to Sell from Neutral at UBS.
Shares of Illumina (ILMN 407.55, +45.27, +12.5%) are rallying 12.5% after the biotechnology company guided Q4 and FY22 revenue above consensus. CVS Health (CVS 106.17, +1.11, +1.1%) raised its FY21 EPS guidance above consensus.
In the Treasury market, the 10-yr yield is down one basis point to 1.76% while the 2-yr yield is unchanged at 0.90% after touching 0.94% prior to Fed Chair Powell's confirmation hearing.
Elsewhere, WTI crude futures are rising 4.0% to $81.32 per barrel to trade at its highest level since November, as the market anticipates oil demand to pick up as the Omicron variant hopefully nears a peak in daily cases.
Today's economic data was limited to the NFIB Small Business Optimism Index, which December increased to 98.9 in December from 98.4 in November. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3912
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Tuesday, January 11, 2022 - 11:56 am: |
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ector Briefing: Energy (62.06 +0.91)
Six sectors continue trading below their flat lines while energy (+1.5%) holds the lead.
Key factors driving today's performance include:
Support from a higher price of oil. WTI crude is up $2.53, or 3.2%, at $80.76/bbl, overtaking last week's high (80.47).
Strong leadership from top component Exxon Mobil (XOM 69.93, +1.46, +2.1%) and gains in all but three of the remaining components resulting in a continuation of a strong start to the year. The sector has gained 11.9% so far in January versus a 1.8% month-to-date loss in the S&P 500 (+0.2%).
Notable movers:
APA (APA 30.64, +1.22, +4.2%): best performer in the sector, approaching its high from November (31.14).
Occidental Petroleum (OXY 33.63, +1.25, +3.9%): returning to last week's high (33.82).
Baker Hughes (BKR 26.81, +0.74, +2.8%): approaching its October high (27.66).
Phillips 66 (PSX 86.01, +2.15, +2.6%): rising for the fourth consecutive day to its best level since early July.
NOV (NOV 15.56, +0.35, +2.3%): nearing its October high (15.85).
Valero (VLO 82.84, +1.81, +2.2%): revisiting its October high (83.12).
Schlumberger (SLB 35.89, +0.77, +2.2%): rising to its best level since mid-June.
Exxon Mobil (XOM 69.93, +1.46, +2.1%): rising to its best level in nearly two years. Company acquired a 49.9% stake in Biojet AS.
Marathon Petroleum (MPC 71.91, +1.46, +2.1%): rising to its best level since October 2018.
EOG Resources (EOG 99.13, +1.07, +1.1%): rising to its best level since April 2019.
Chevron (CVX 126.38, +1.27, +1.0%): rising to its best level since July 2019.
TechnipFMC (FTI 6.64, -0.14, -2.0%): weakest performer in the sector, falling back to its 50-day moving average (6.46). Company sold a 9 mln share stake in Technip Energies for EUR13.15/share. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3911
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Tuesday, January 11, 2022 - 11:56 am: |
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Shaky start to 2022 continues
The stock market opened today's session on a mixed note, making for a continuation of a shaky start to 2022. The S&P 500 (-0.5%) holds a modest loss while the Nasdaq (-0.4%) spent some time just above its flat line before rejoining the S&P 500 in negative territory.
Like stocks, Treasuries started the day in mixed fashion, with longer tenors rebounding from their recent losses while shorter tenors are seeing more selling pressure. The 10-yr yield is currently down one basis point at 1.77% while the 2-yr yield is up two basis points at 0.92%.
Ten out of eleven sectors display early losses with countercyclical real estate (-1.3%), consumer staples (-1.1%), and utilities (-0.9%) showing relative weakness while the energy sector (+1.1%) outperforms comfortably as the price of oil returns toward last week's high (80.47).
Fed Chairman Powell is currently testifying before the Senate Banking Committee in Washington as part of his re-nomination to another term as Chairman. Mr. Powell said that the economy no longer needs highly accommodative policies and that steps to reduce the balance sheet will be taken later in the year. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3910
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Tuesday, January 11, 2022 - 11:55 am: |
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Shake Shack gets some much needed sizzle with upside Q4 guidance (77.34 +9.09)
Shake Shack (SHAK +13%) is tasting pretty delicious today as the company appears to have closed out 2021 on a strong note. The pricey burger chain provided robust guidance for Q4. Its results perhaps support the case that comfort food remains appealing to a lot of people as the pandemic continues.
SHAK expects Q4 revenue to come in around $203.3 mln, nicely ahead of prior guidance for revenues of $193.5-200.0 mln. Even more impressively, it expects Q4 Same-Shack sales to increase +20.8%, well ahead of prior guidance for an increase in the mid-to-high teens. SHAK was lapping some easy comps from the prior-year quarter, 4Q20, but comps still grew a respectable +2.2% vs 2019, improving from -7.3% in Q3, due to strength in both urban and suburban markets.
Shack-level operating profit margin is expected to be approximately 16% in Q4 — only a slight improvement from 15.8% in Q3, but nevertheless a welcome one. SHAK has been facing higher costs for commodities like beef and chicken as well as for wages, so any margin improvement is positive news.
The stock has been in a downward trend; it has been cut nearly in half since mid-February, when it was trading in the $130 area. SHAK was one of the worst-hit quick-service restaurant chains in connection with COVID-19. Its high prices, lack of drive-thrus, and high exposure to areas hit by the pandemic have weighed on results. SHAK has over 40% exposure to New York City and northern New Jersey. To counter those pressures to sentiment around the stock, investors needed this boost of good news.
SHAK is stepping on the gas in terms of expansion. It opened 36 new company-operated Shacks in 2021. Unit development is targeted to accelerate to 45-50 openings in 2022.
One criticism of SHAK centers on its lack of drive-thru locations. The age of COVID has made drive-thru capabilities more attractive, and missing the ability to offer drive-thru service may have resulted in lost sales for SHAK. However, SHAK is now dipping its toe in the water, as it just opened its first-ever drive-thru locations. One is Maple Grove, MN and the other in Lee's Summit, MO. Early results for those two Shacks are encouraging, and SHAK expects to expand its drive-thru footprint in the years to come.
In less positive news, SHAK saw its operating hours drop in the last week of FY21 and the first two weeks of FY22 as a sharp increase in COVID cases had an impact on its ability to staff and keep all restaurants fully open. However, this seems like it will have more of an impact in Q1 rather than Q4. The company should provide more color on this when it reports full Q4 results in late February.
Overall, this strong guidance, especially the robust comp guidance, is welcome news for investors. The price of this burger chain's shares has been walloped over the past year. It is particularly discouraging because McDonald's (MCD) has performed very well. We think SHAK's higher price point is hurting it during shaky economic times, and its lack of drive-thru locations may be taking a toll during COVID. We would remain cautious buying down here. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3909
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Tuesday, January 11, 2022 - 9:45 am: |
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The aggressive shift in market sentiment has caused me to transition my approach.
Instead of looking for relative value and short-term oversold bounce opportunities, I'm now looking for deep value and distressed opportunities. Further declines in the market benefit this strategy, as do margin calls and lost hope.
This is where I prefer to play and where I've historically made the most money, so I'm optimistic about what lies ahead.
Fortunately, we have a great mix of talent on the platform, which allows me to focus on where I do my best work. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3908
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Tuesday, January 11, 2022 - 8:28 am: |
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Positive bias carries over from yesterday's comeback effort
Long-term interest rates remain calm
Fed Chair Powell confirmation hearing starts at 10:00 a.m. ET
CVS, ILMN upside guidance; ANF, BIG downside guidance
Rating changes for IBM, VZ, INTC, TMUS, AAL |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3907
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Tuesday, January 11, 2022 - 8:27 am: |
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World markets rally into Fed Chair Powell's confirmation
The global equity markets are extending Monday's late day rebound. S&P Futures are up about 22 points to trade around the 4684 area. The market traded in a tight range during the Asian hours, putting in the low print of 4653.25 toward the end of the session. European markets sparked a leg higher, pushing the Spoos to trade just off the high print of 4688.25.
In Asia, both China and Japan closed lower. The Shanghai slipped with COVID-19 cases rising within the region. This is troubling ahead of the Olympics starting next month. In Japan, traders came back from an extended weekend to see the Nikkei fall nearly 1%. The yen's strength in the prior session led to weakness in equities.
In Europe, the major bourses are rising. A portion of the move can be attributed to the bounce off Monday's lows in the US after these markets were closed. Crude oil's 1.5% gain this morning is helping energy names, BP and Royal Dutch Shell, witness gains of around 1%. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3906
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Monday, January 10, 2022 - 3:08 pm: |
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Crocs is looking out of style today after providing Q4 and FY22 guidance (117.61 -8.09)
Perhaps more than any other company, the old adage that "beauty is in the eye of the beholder" aptly applies to casual footwear company Crox (CROX). Like the resin-based shoes that it sells, the financial guidance issued by CROX this morning can be viewed as appealing or as off-putting, depending on the vantage point. For fans of the stock, the company's upside Q4 revenue guidance, which calls for strong yr/yr growth of 42%, is validation that its resurgence in popularity is here to stay. On the other end of the spectrum, bears are pointing to the expected sharp slowdown in expected sales growth for FY22 (to ~20%+ from ~67%) and the rising pressure on margins due to higher costs.
With shares down sharply today, control still rests with the bears as the stock continues a downward spiral that began in mid-November. While the rotation out of growth stocks partially explains the stock's 34% plunge during this span, there are also company-specific fundamental reasons for the slide, including:
The shift towards casual wear that accelerated during the pandemic greatly benefited CROX as comfort trumped style. However, with more people returning to office settings and with social activities increasing, the trend should swing back towards more dressy apparel and footwear.
At the same time, CROX will be lapping much more difficult yr/yr comparisons next quarter and beyond. In 1Q21, net sales jumped by 57%, followed by growth of 64% and 93% in Q2 and Q3, respectively.
CROX's acquisition of Italian casual footwear company HEYDUDE has not gone over well with investors. Although the acquisition is expected to be immediately accretive to operating margin and earnings, the sheer size of the $2.50 bln deal has raised some integration concerns. Taking on a major risk in an environment in which investors are shunning higher-risk assets isn't working in CROX's favor, especially since little is known about HEYDUDE's financials.
Rising commodity and freight costs are still an issue. In today's press release, CROX estimated that air freight costs will negatively impact gross margin by $75 mln in FY22. Relatedly, the company is anticipating non-GAAP operating margin to slip to 26%, inclusive of HEYDUDE, compared to the forecasted 30% for FY21.
The main takeaway is that CROX's strong Q4 guidance indicates that its momentum carried into the holiday shopping season, but there's angst that the best days of its revival are now behind it. In a change of strategy, CROX is turning to M&A to stoke future growth, signaling that its organic growth opportunities may be losing some steam. Combined with escalating margin pressures, these growth concerns continue to weigh on the stock. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3905
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Monday, January 10, 2022 - 3:07 pm: |
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Investors remain averse to risk assets
The major indices are down between 1.3% (Dow Jones Industrial Average) and 2.2% (Nasdaq Composite) amid a weakening technical posture, which has the Nasdaq below its 200-day moving average (14689) and the S&P 500 (-1.6%) below its 50-day moving average (4675).
Primary concerns remain rising rates and the Fed's potentially aggressive plans for policy normalization, which have been exacerbated by the downside momentum. The 10-yr yield, however, is currently unchanged at 1.77% after touching 1.81% intraday.
All 11 S&P 500 sectors are trading lower, led by the information technology (-2.2%) and consumer discretionary (-2.6%) sectors with losses over 2.0% amid weakness in the mega-caps. The health care sector (-0.1%) outperforms on a relative basis with a 0.1% decline.
It's important to note that value/cyclical stocks are heading lower, too, as investors de-risk amid expectations for further downside. The Russell 3000 Value Index is down 1.1%. The CBOE Volatility Index has risen 18.3% to 22.20, reflecting increased hedging interest.
Other negative factors include downside Q4 revenue guidance from lululemon athletica (LULU 333.03, -22.18, -6.2%) and a report from the Washington Post indicating that Senator Manchin (D-WV) is no longer interested in passing any legislation resembling the Build Back Better Act.
The LULU price action is serving as a reminder that growth stocks still have further downside risk if they don't live up to earnings expectations. That's partially what Piper Sandler was thinking when it downgraded Airbnb (ABNB 156.03, -10.08, -6.1%) to Neutral from Overweight today.
Take-Two Interactive (TTWO 139.72, -24.88, -15.2%) is tumbling 15% on concerns that the company is overpaying for its acquisition of Zynga (ZYNG 8.55, +2.55, +42.5%). The deal gives Zynga a total enterprise value of approximately $12.7 billion.
Efforts to buy the dip have been sparse, but some analysts on Wall Street are expecting a change of fortune due to a view that the market is looking oversold on a short-term basis. The Nasdaq is down 7.7% in less than five sessions.
Today's economic data was limited to Wholesale Inventories, which increased 1.4% m/m in November (Briefing.com consensus 1.2%) following a revised 2.5% increase (from 1.2%) in October. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3904
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Monday, January 10, 2022 - 12:39 pm: |
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Sector Briefing: Consumer Discretionary (195.03 -4.45)
All eleven sectors display early losses with the consumer discretionary sector (-2.3%) sitting at the bottom of today's leaderboard.
Key factors driving today's performance include:
Broad-based weakness as Treasury yields continue rising. The 10-yr yield is up two basis points at 1.79% today and up 28 bps since the end of last year.
Continuation of a weak start to the year. The sector is down 4.8% so far in January versus a 3.4% month-to-date loss in the S&P 500 (-1.6%).
Notable movers:
Las Vegas Sands (LVS 35.72, -2.18, -5.8%): weakest performer in the sector, falling to a three-week low after finding resistance at its 50-day moving average (96.97). BofA Securities downgraded the stock to Underperform from Neutral with a $40 target.
Tapestry (TPR 37.12, -2.21, -5.6%): falling to a three-month low.
Ulta Beauty (ULTA 375.96, -21.14, -5.3%): falling below its 50-day moving average (394.38) to its lowest level in nearly three weeks.
Gap (GPS 17.20, -0.92, -5.1%): falling to a three-week low.
NIKE (NKE 149.72, -7.25, -4.6%): falling for the fourth consecutive day past its 200-day moving average (154.15). HSBC downgraded the stock to Hold from Buy with a $182 target.
TJX Companies (TJX 71.04, -3.34, -4.5%): falling below its 50-day moving average (71.94) to its lowest level since the start of December.
Chipotle Mexican Grill (CMG 1532.07, -65.74, -4.1%): falling to its lowest level since mid-2021.
Lowe's (LOW 242.31, -8.78, -3.5%): falling below its 50-day moving average (247.74) to its lowest level in nearly two months.
Ford (F 23.62, -0.82, -3.4%): trading near Thursday's low.
Amazon (AMZN 3163.58, -87.49, -2.7%): falling to its lowest level since mid-May.
Home Depot (HD 383.73, -9.88, -2.5%): falling for the fourth consecutive day to its lowest level in nearly three weeks.
Booking Holdings (BKNG 2386.28, -48.30, -2.0%): falling toward its 50-day moving average (2344.88).
McDonald's (MCD 262.89, -4.17, -1.6%): falling to its lowest level in nearly three weeks.
Tesla (TSLA 1022.50, -4.46, -0.4%): hit its lowest level in nearly three weeks before narrowing its loss. Price of full sell driving package will increase to $12,000 next week.
NVR (NVR 5428.00, -10.88, -0.2%): best performer in the sector, hit its lowest level in five weeks before narrowing its loss. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3903
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Monday, January 10, 2022 - 10:41 am: |
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Stocks and Treasuries on the defensive
The stock market started the new week on an underwhelming note. The S&P 500 trades lower by 1.8% with all eleven sectors showing early losses while the Nasdaq (-2.5%) underperforms after lagging last week.
The early broad-based weakness comes as continued selling in the Treasury market lifts yields to fresh highs for the year. The continued weakness reflects the belief that the Fed will be more aggressive with its tightening plans. To that point, Goldman Sachs forecast that the Fed will begin reducing its balance sheet in July while the previous forecast expected that balance sheet reduction would begin in December. The 10-yr yield is up three basis points at 1.80% today and up 29 bps since the end of 2021.
All eleven sectors display early losses with last week's laggards remaining at the forefront of the selling. The consumer discretionary sector (-2.7%) is the weakest performer, trading just behind technology (-2.4%) and communication services (-2.3%). Countercyclical utilities (-0.3%) and health care (-0.3%) trade ahead of the remaining groups, but they also sit in the red.
Economic data released today was limited to the November Wholesale Inventories report (actual 1.4%; Briefing.com consensus 1.2%). Later this week, the market will receive December CPI, December Retail Sales, and December Industrial Production. |
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Kurra Bewarse
Username: Entrepreneur
Post Number: 3902
Registered: 05-2011
Posted From: 24.164.46.35
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Votes: 0 (Vote!) | | Posted on Monday, January 10, 2022 - 10:25 am: |
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Blue Chip Trader - - VIX on the rise above 22 as First Hour Distribution continues...
No surprise to see volatility on the rise with this morning's selling pressures expanding ranges wider off the open.
The VIX is climbing to fresh 2-week highs over the 22-mark, which means traders need to make the necessary adjustments to managing risk.
You've probably noticed that I quickly favored "scaling into" fairly wide price zones on my trades this morning. As these "fast and loose" conditions arise, I cut back my position size and give more leeway to the support/resistance zones in play. Approaching this market with "hard" stops and full size is extremely difficult to do if you lack the trading software and/or the discipline to do so. Most of us are better off erring on the side of caution by reducing size and focusing on wider zones.
A Short/Hedge probably wouldn't hurt either. (I'm carrying a very small Swing Short balance in the IWM from 224's and trailing a Swing Short balance in PTLO from 37's). |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3901
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Monday, January 10, 2022 - 10:25 am: |
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Growth stocks remain under pressure as interest rates continue to move higher.
Ultimately, this selloff will create some tremendous opportunities, so I'm staying patient and being disciplined.
Swing Portfolio holding FUBO guided Q4 results higher this morning. After an initial pop, stock has ticked back into the red, weighed down by general Growth stock weakness.
For the qtr, FUBO is guiding revs to $215-220 mln vs $211.56 mln consensus.
Paid subscribers at year-end are expected to exceed 1.10 mln, up 100% yr/yr and vs prior guidance of 1.06-1.07 mln.
FUBO shares currently trading at $13.90 in pre-mkt, down 1%.
I'll be looking for scalping opptys this morning and attractive spots to add onto swing long positions. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3900
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Monday, January 10, 2022 - 9:06 am: |
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Susquehanna upgraded Infosys (INFY) to Positive from Neutral with a price target of $29, up from $22. The firm notes the company has the right mix to do well in this environment, and its core human resource excellence to recruit, train and retain should be a differentiator. The firm increased estimates for Infosys to reflect good demand for IT services. Interpreting IT budget forecasts in the Fortune 1,000, the firm would look for broad-based strength in core verticals.
Piper Sandler downgraded Airbnb (ABNB) to Neutral from Overweight with a price target of $169, down from $215. While omicron headlines have clouded the picture, the firm notes the longer-duration trajectory remains one of steady recovery. The firm expects travel in the U.S. in 2022 to look much closer to 219 levels than it did in 2020 and 2021. While Airbnb remains a top-tier asset, the firm believes the stock's setup looks less favorable into 2022. The firm cites "elevated" Street expectations, valuation and its alternatives pure-play focus, which may be less desirable as travel normalizes, for the downgrade.
New Street initiated coverage of Micron Technology (MU) with a Buy rating and $135 price target. The firm notes Micron is set to benefit from a strong secular and cyclical setup for DRAM, with two years of good revenue growth and material margin expansion. The firm expects earnings per share above $14.00 in fiscal 2023, which is well above current expectations. The firm believes this would justify a $120-150 range for the stock price. The firm also likes the stock for the long run, saying Micron will benefit from strong secular growth and will benefit over the years from improving profitability in NAND. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3899
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Monday, January 10, 2022 - 9:04 am: |
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World markets off to a start to the week
The global equity markets are little changed to start the week. S&P Futures are down about two points to trade around the 4666 area. The market saw a quick dip down to the ultimate low of 4650.00 shortly after the open. This was bought and culminated with a high of 4681.75 just before Europe opened. Spoos have settled back to the neutral zone since then.
In Asia, China rose 0.4%. The Shanghai saw support after the Securities Regulatory Commission pledged to take measures to keep volatility in check. In Japan, the Nikkei was closed for public holiday.
In Europe, the major bourses are subdued. The markets appear to be searching for direction as the week gets underway. Energy stocks continue to push higher. BP and Royal Dutch Shell are up 0.5% with crude over $79. BMW is trading well over 2% higher after Goldman upgraded the stock. |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3898
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Monday, January 10, 2022 - 9:04 am: |
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Week 2 of 2022
Jan 10th to Jan 14th 2022 Updates |
Entrepreneur
Kurra Bewarse
Username: Entrepreneur
Post Number: 3897
Registered: 05-2011
Posted From: 24.164.46.35
Rating: N/A
Votes: 0 (Vote!) | | Posted on Monday, January 10, 2022 - 9:03 am: |
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Next week on global Wall Street:
APAC
1. BOK Bank of Korea rate decision
2. TSMC Earnings
3. Economic Data Dump- China Trade Data, Australia Retail Sales, South Korea Employment Data, Japan PPI, India Inflation and Trade Ratings.
EMEA
1. Geopolitics in focus - Russia/ Kasakhstan, Nato Meetings Russia/Ukraine
2. Natural Gas Prices
3. Germany's new central bank chief - Joachim Nagal
AMERICAS
1. Consumer Price Index - 7.1 expected
2. Senate Banking Committee Hearings - Tuesday - Powell and Thursday Lail Brainerd
3. Earnings Season Kicks off - Delta, Black Rock, JP Morgan etc |
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Finance & Investment - Stocks, Real Estate, et. al