symbol
stringlengths 1
9
| title
stringlengths 1
701
| text
stringlengths 1
140k
|
|---|---|---|
MS | Morgan Stanley to boost junior banker pay by up to 25 percent Bloomberg | Reuters Morgan Stanley N MS is planning to raise salaries for junior bankers by as much as 25 percent and offer them quicker promotions Bloomberg reported citing people familiar with the matter The 20 percent to 25 percent pay raise for investment banking associates will be the first in almost four years and may differ by region Bloomberg reported Analysts will be promoted to associate in two years rather than three the report said citing a memo sent to staff This version of the story has been refiled to add source in headline |
MS | Bank of England appoints financial analyst Van Steenis as advisor | LONDON Reuters The Bank of England has named former Schroders and Morgan Stanley banking analyst Huw van Steenis as a senior adviser on the future of the British financial system During the appointment which the BoE said was likely to last six to nine months Van Steenis will help BoE staff study new financial technology emerging market capital flows and the transition to a low carbon economy Huw van Steenis s vast experience of both the asset management and banking industry together with his track record of taking the long term view on the major structural forces driving the economy will be invaluable BoE Governor Mark Carney said
Van Steenis was global head of strategy at British fund management company Schroders L SDR from late 2016 until February this year before which he spent many years as a senior financial services analyst at U S investment bank Morgan Stanley N MS |
JPM | ECB Official Considers Stable Coins More Promising Than Bitcoins | Bloomberg Go inside the global economy with Stephanie Flanders in her new podcast Stephanomics Subscribe via Pocket Cast or iTunes
European Central Bank policy maker Francois Villeroy de Galhau said not all cryptocurrencies are created equal
While ECB President Mario Draghi lambasted them last week for not being real money De Galhau said on Tuesday he saw a role for stable coins digital tokens tied to assets like the dollar in the financial system
The Bank of France is observing with great interest initiatives in the private sector which aim at developing networks within which stable coins would be used in transactions involving tokenized securities or goods and services Villeroy said in Paris on Tuesday These are quite different from speculative assets like bitcoins and more promising
JPMorgan Chase Co NYSE JPM has developed a stable coin to speed up payments between corporate customers and Facebook Inc NASDAQ FB is exploring further uses inside the social network s WhatsApp messenger
Tokenization meantime involves the transformation of real world assets like debt or real estate into digital contracts that use blockchain technology One French bank Societe Generale PA SOGN SA recently issued 100 million euros 112 million of bonds to itself in the form of digital tokens to test a more efficient process for bond issuance |
JPM | Mexico s rising oil nationalism faces debt rating crisis | By Stefanie Eschenbacher and David Alire Garcia MEXICO CITY Reuters Mexican President Andres Manuel Lopez Obrador took office in December vowing to revive state owned energy company Pemex and put the brakes on foreign investment to give the public a bigger cut of the country s oil wealth The leftist oil nationalist s ambitions include building a new 8 billion refinery refurbishing existing refineries and reversing a steady decline in crude production The problem is that such expensive plans for the world s most indebted oil company have alarmed credit rating agencies which are threatening to downgrade Pemex bonds to junk status A downgrade could cripple the president s bold energy agenda along with his plans to use new oil revenue to help finance social welfare programs It could also imperil Mexico s sovereign creditworthiness With 106 billion in financial debt Pemex would likely see borrowing costs soar as many investors dump its bonds After Brazilian state oil firm Petrobras had 41 billion of its bonds classified as junk in 2015 its financing costs jumped from 1 6 billion to 8 8 billion in one year Mexico s options are limited Avoiding a debt downgrade would require slashing Pemex s tax bill forming more partnerships with private firms to develop oil and gas fields and canceling the new refinery according to Reuters interviews with investors from a dozen of the world s largest asset managers along with former Pemex executives and finance ministry officials On Monday the government unveiled measures to lighten the company s load including a gradual tax cut 2 5 billion in debt refinancing and the extension of an existing line of credit with three banks The announcement trumpeted by Lopez Obrador and other top officials did little to convince doubters There are still big question marks over the long term viability of Pemex s business plan said Aaron Gifford an emerging market analyst with asset manager T Rowe Price Associates a major holder of Pemex bonds GRAPHIC Pemex and its mounting debts Lopez Obrador s election halted a liberalization of the energy market that had for the first time given foreign and private oil firms the right to develop fields on their own and in joint ventures with Pemex Last week the president announced Pemex would build the new refinery planned for his home state of Tabasco because private sector contractors could not meet his proposed budget or three year timeline Rating agency Moody s on Monday attacked the refinery decision saying it would probably take longer and could cost 50 more than planned The consequences for Mexico s credit profile will depend in part on whether it continues to undermine market confidence further dampening already depressed investment and weighing on Mexico s economic prospects Moody s said in a statement TROUBLED REFINERIES The government intends to start building the refinery next month and finish by May 2022 Lopez Obrador also wants to overhaul the firm s six existing refineries which are accident prone operate at 40 capacity and have hemorrhaged money for years Some industry experts say Pemex s finances will not support the president s plans The new refinery will have to be canceled to avoid a downgrade said one former Pemex executive speaking on condition of anonymity and echoing the views of others Another former Pemex executive told Reuters the state owned firm should be trying to raise more money by partnering like crazy with private oil companies Lopez Obrador has generally been skeptical of private energy investment especially from foreign firms even while promising to expand Pemex s production and refining capacity He contends he can save the company money through a crackdown on corruption and fuel theft and raise output by tapping fields with easily recoverable oil Some cabinet members however have acknowledged that Mexico could use outside investment to help revive its oil production The government can t do it alone Energy Minister Rocio Nahle told a gathering of mostly international oil executives in an April 30 speech Still Nahle urged rating agencies to be responsible in evaluating Pemex s debt She argued the firm is meeting its obligations despite picking up the tab for what she characterized as previous mismanagement Pemex s financial debt surged by 75 percent under the last government and the company s total obligations including pensions today exceed its assets by more than 70 billion Nahle said Pemex had started turning around operations and stopped taking on more debt under the new government We re investing in production and exploration and we re investing to produce more gasoline and added value she said CHAIN OF HORRORS Critics of Lopez Obrador s plans such as Juan Carlos Romero Hicks a leader of the opposition center right National Action Party in Congress say he should have stayed on the path set by former president Enrique Pena Nieto and continued opening up energy development to private capital Instead Lopez Obrador has piled new risks onto Pemex Romero Hicks said It s a chain of horrors and horrors that make a mess of public finances in a strategic industry he said Rating agencies Fitch and Standard Poor s have this year cut Pemex s standalone assessment and put it on negative outlook inching the firm closer to a financial cliff Fitch now rates Pemex s long term foreign debt at BBB while Moody s puts it at Baa3 both one level above a junk rating Standard Poor s said on March 1 that Mexico faced a one in three chance of a sovereign debt rating downgrade within 12 months identifying Pemex as a key risk factor If two of the three main agencies classify Pemex as junk bond holders whose investment criteria prohibits carrying such assets would be forced to sell A research note published in February by investment bank JPMorgan NYSE JPM estimated that 16 billion of Pemex s 83 billion in bonds would have to be dumped in such an event That would make the company the world s biggest so called fallen angel the ignominious distinction for a borrower that descends from investment grade to junk CRIPPLING TAX BILL A key factor in Pemex s financial weakness is its heavy tax burden averaging more than 80 of its earnings before interest tax depreciation and amortization Ratings agencies say the company s financial position will deteriorate if the burden remains so high Lopez Obrador in February gave Pemex a nearly 4 billion one off cash injection after an additional 3 4 billion for the company s 2019 capital budget raising it to 14 billion Juan Carlos Zepeda a former head of Mexico s oil regulator said Pemex needs far more about 20 billion annually for exploration and production to reach Lopez Obrador s goal of raising crude output some 50 to 2 5 million barrels per day by 2024 The president said Monday that Pemex s tax bill would drop by 30 billion pesos 1 56 billion without giving a time frame for the reduction The company paid the equivalent of 27 billion in taxes last year A bigger cut to Pemex s tax bill would blow a hole in the federal budget about 15 of which comes from the oil firm The government is also considering raiding a budget stabilization fund intended for emergencies to help prop up the oil firm s finances which has never been done before But that would provide only a short term fix in the absence of substantial tax breaks said Dorthe Nielsen an emerging market debt fund manager with GAM Investments which until recently held Pemex bonds This is just pushing out the problem until next year she added |
JPM | Exclusive UniCredit advances towards bid for Germany s Commerzbank sources | By Arno Schuetze and Pamela Barbaglia FRANKFURT LONDON Reuters UniCredit has stepped up preparations for a potential bid for Germany s Commerzbank DE CBKG by hiring investment bankers including a former top German official three people familiar with the matter said The Italian lender had engaged Lazard and its banker Joerg Asmussen the former German deputy finance minister along with JP Morgan for a possible takeover the sources said raising the prospect of a deal that could allow UniCredit to pivot away from its struggling domestic market Although it is unclear whether and when a bid could be made UniCredit has long been interested in expanding in Germany said several sources familiar with management s thinking It already owns HVB a large German lender based in Munich But the Italian bank which has been concentrating on its own turnaround plan had been waiting on the outcome of merger talks between Commerzbank and its larger Frankfurt neighbor Deutsche Bank DE DBKGn Those talks unraveled in recent weeks placing Commerzbank back on the agenda for UniCredit Chief Executive Jean Pierre Mustier who will be running the rule over a target worth about 9 3 billion euros 10 4 billion compared with UniCredit s market capitalization of 24 4 billion euros Commerzbank shares rose on the news climbing 4 7 by 1400 GMT with UniCredit shares down 2 4 UniCredit s advances come as Dutch bank ING Groep AS INGA has also shown interest in Commerzbank sources familiar with the matter said One person with knowledge of those informal talks described them as intensive Mustier has hired Lazard in the hope that Asmussen can lobby for the deal with finance minister Olaf Scholz Both have roots in the German Social Democrat Party Asmussen who studied business administration at Milan s Bocconi University has previously served on the executive board of the European Central Bank ECB and as state secretary at the Federal Ministry of labor and social affairs UniCredit JPMorgan NYSE JPM Lazard Commerzbank and Germany s finance ministry declined to comment while Asmussen did not immediately respond to a request for comment ING also declined to comment JOB FEARS The success of any approach will hinge in part on the German government which owns a 15 percent stake in Commerzbank stemming from a bailout during the financial crisis Some officials had hoped to keep Commerzbank in German hands which is why they pushed for a deal with Deutsche Bank One German official said the government would be open to a merger between Commerzbank and a foreign European rival such as UniCredit But a deal that would tie one of Germany s biggest banks to debt laden Italy could ultimately prove hard to sell in Berlin If a takeover does emerge it would be one of the largest deals involving banks across European borders since the financial crisis Such mergers are still hard to pull off because laws and regulations still vary from country to country despite the single market bankers say However any initiation of talks is sure to ruffle feathers at Commerzbank where employees fearful for their jobs had overwhelmingly opposed a tie up with Deutsche Bank Unions had forecast as many as 30 000 lost jobs Analysts at Citi said that any tie up with UniCredit could make it cheaper for the bank to refinance its operations and trigger other cost savings UniCredit last week announced that it was reducing its exposure to Italy to boost its financial strength with measures including cuts to its portfolio of Italian government bonds That move could strengthen prospects for an acquisition in Germany where UniCredit s high exposure to Italy is seen as a barrier to a deal several bankers said UniCredit had 54 billion euros of Italian government bonds at the end of March Italian UniCredit shareholders are in favor of any deal that can boost its market value but some want the bank to retain its Italian identity a person close to the matter said
Mustier last week said that the bank was very proud of being listed and headquartered in the euro zone s third biggest economy |
JPM | JPMorgan Chase will invest 125 million in programs to encourage people to save money | By Elizabeth Dilts NEW YORK Reuters JPMorgan Chase Co NYSE JPM will provide 125 million over the next five years to nonprofit groups in the United States and abroad that help people save pay down debt and improve their credit scores the bank said on Wednesday The goal is to aid the expansion of nonprofits that help people become more financially secure and better able to weather financial hardships The bank has committed more than 800 million in grants donations and loans to promote urban renewal in cities including Paris Detroit Chicago and others efforts that need financially stable citizens to succeed We see financial health as a cornerstone of inclusive growth in cities Colleen Briggs head of community innovation at JPMorgan Chase s corporate responsibility office said in an interview Families who have even a small amount of emergency savings between 250 and 749 depending on where they live are less likely to be evicted miss housing or utility payments or receive government benefits after a health issue or job loss according to a 2016 report by the Urban Institute JPMorgan is initially giving seven grants worth between 300 000 and 1 million to nonprofits operating in Miami London San Diego and Boston including some like Mission Asset Fund which the bank has worked with before Briggs said the investments aim to help organizations build out technology or complete other steps needed to scale their services in their communities or nationwide The main theme is really understanding how do we actually improve people s financial health moving beyond knowing how to save more to actually saving more Briggs said Mission Asset Fund provides no interest loans to help immigrants and small business owners establish credit scores Starting a few years ago the bank s corporate responsibility office provided financial assistance to help MAF expand to 60 cities and will give it another 1 million as part of this initiative Alice Rodriguez head of community and business development for Chase said working with nonprofits has contributed to the bank launching low cost products like a no overdraft fee checking account called Chase Secure But where those products cannot help low income customers the bank can refer them to these nonprofits To the extent that we can t help a client with our own services we are investing in these other nonprofits so that they can continue to provide that counseling at an ever greater scale Rodriguez said |
JPM | Australia Unemployment Rises Boosting Odds of Interest Rate Cut | Bloomberg Australian unemployment unexpectedly climbed as more people sought work underscoring extensive slack in the labor market and increasing the chances of an interest rate cut
The jobless rate advanced to 5 2 in April from an upwardly revised 5 1 in March the statistics bureau said in Sydney Thursday The participation rate climbed to a record and underutilization jumped 0 4 percentage point to 13 7 highlighting the spare capacity in the labor market cited by the central bank
Even if the unemployment rate hadn t moved steady job growth and a static unemployment rate is not enough said Kerry Craig global market strategist at JPMorgan NYSE JPM Asset Management Holdings Inc Job growth needs to be fast enough to push the unemployment rate lower to keep the RBA from cutting rates According to the RBA s own estimates a 5 unemployment rate won t see inflation return to the target range and prevent a cut to interest rates
Reserve Bank chief Philip Lowe resisted pressure to ease earlier this month citing the persistent strength of employment while also signaling that only a tightening labor market would prevent him from doing so in the coming months Traders see a better than 50 chance of a cut in June and two reductions this year that would take the cash rate to a fresh record low of 1
The Australian dollar slid after the release and bought 69 18 U S cents at 12 50 p m in Sydney It has fallen 3 6 in the past month
Today s data showed employment actually advanced in April gaining by a better than expected 28 400 though it was exclusively down to part time roles again highlighting slack Still the labor market has managed to buck the slowdown in other areas in the second half of last year GDP rose an annualized 1 the weakest performance since the depths of the global financial crisis in the second half of 2008
Australia s economy has been weighed down by a retrenchment in household spending as property prices slump and slash personal wealth Outside jobs business investment has remained reasonable while exports have boomed in response to strong commodity prices
The government has been a key supporter of the economy with increased investment in infrastructure and other programs including a disability program that has boosted hiring An election Saturday is likely to see the opposition Labor party win power and lift spending further
Thursday s data showed the biggest job gain was in New South Wales the nation s most populous state and the epicenter of the property boom from 2012 2017 It added 25 100 positions In contrast Victoria which has similarly enjoyed strong economic and population growth shed 7 600 roles
The RBA is now almost completely boxed in on a rate cut not least following the renewed trade tensions between the U S and China the latter the source of so much of Australia s prosperity since the turn of the century
The RBA s real challenge is communication said Craig By opting to highlight jobs growth and the direction of the unemployment rate the market is now focusing on a lagging indicator of economic activity rather than a forward looking one But also one that is not devoid of noise |
JPM | Big Banks Kick Off Earnings Season Today s Trending Stocks LULU ACB | On today s episode of Free Lunch Ryan McQueeney discusses weak economic data from China as well as news involving Lululemon and Aurora Cannabis He also recaps Citigroup s earnings results and previews the upcoming reports of JPMorgan and Wells Fargo NYSE WFC
Want more video content from Zacks Subscribe to now
Free Lunch is presented by Zacks Investment Research It is streamed live four times per week and features breaking news and analysis from Zacks strategists Free Lunch is available on YouTube Twitter and other major streaming platforms
Stocks were down in morning trading Monday as Wall Street interpreted weak economic data from China as another sign of slowing global economic conditions and the adverse effects of trade wars China s latest reads on import and export activity were well below estimates and near three year lows on both figures
Investors today also saw the financial effects of the recent California wildfires as Pacific Gas Electric announced that it is pursuing bankruptcy protection thanks to 30 billion in potential liability costs from the natural disasters While some have suggested PG E is still hoping for a bailout from the state of California others have argued that there is simply no way out for the company other than Chapter 11
There were some positives to discuss on Monday morning however For instance trendy athletic retailer Lululemon NASDAQ LULU raised its guidance for Q4 revenue and earnings citing strong customer engagement and product offerings as key reasons for its holiday outperformance The news comes in contrast to sluggish guidance from mall based retailers posted last week
Meanwhile cannabis investors reacted positively to the news that Canadian producer Aurora Cannabis NYSE C is planning to buy Whistler Medical Marijuana Corp an exporter of medical cannabis derivatives and the country s first organic certified marijuana company The deal underscores the international growth potential of these cannabis upstarts
Wall Street also has plenty of things to think about now that Q4 earnings season is officially underway Citigroup NYSE C kicked off the festivities this morning posting mixed results on the back of market wide volatility during its latest quarter
Still the stock moved higher in morning trading after investors liked what they hear on the company s conference call Does this spell good news for JPMorgan NYSE JPM and Wells Fargo NYSE C the big banks reporting earnings tomorrow
To answer this question Ryan digs into the latest earnings estimates estimate revision trends share price movements and earnings surprise histories of each financial behemoth Make sure to check out the show to hear more
Today s Stocks from Zacks Hottest Strategies
It s hard to believe even for us at Zacks But while the market gained 21 9 in 2017 our top stock picking screens have returned 115 0 109 3 104 9 98 6 and 67 1
And this outperformance has not just been a recent phenomenon Over the years it has been remarkably consistent From 2000 2017 the composite yearly average gain for these strategies has beaten the market more than 19X over Maybe even more remarkable is the fact that we re willing to share their latest stocks with you without cost or obligation |
MS | Cyber security firm Avast targets 4 5 billion valuation in IPO | LONDON Reuters Private equity backed cyber security firm Avast is targeting a market capitalization of between 2 5 billion and 3 2 billion pounds 3 5 4 5 billion in its initial public offering IPO potentially the biggest London listing since July The bookrunner announced a price range of between 250 pence and 320 pence a share on Thursday aiming to sell around 25 percent of the company and raise about 200 million in proceeds from the issue of new shares The market admission will take place on May 10 the bookrunner said The London Stock Exchange is working to attract more technology IPOs usually more drawn to New York Sophos is the only other cyber security firm listed in Britain In 2017 Avast s adjusted revenue was 780 million and adjusted cash earnings before interest tax depreciation and amortization EBITDA was 451 million With net debt of around 1 35 billion the enterprise value of the company could be up to 5 9 billion after the offering Avast is 46 percent owned by its founders Czech entrepreneurs Pavel Baudis and Eduard Kucera CVC Capital Partners CVC UL has a 29 percent stake with Summit Partners holding 7 percent Morgan Stanley NYSE MS and UBS are global coordinators for the offering The listing is expected to be the biggest by market capitalization in London since July when the floatation of Russian gold company Polyus gave it a 6 3 billion pound market value
1 0 7193 pounds |
MS | Tax Cut Both A Boon And Bain For Stock Market | Investing com The Trump tax cut package may be good for the stock market in the short term but it may also accentuate its decline later in the economic cycle That s the thinking of Morgan Stanley NYSE MS which outlined its concern in a note to clients The problem with tax cuts at this stage of the economic cycle is that they rob policy makers of a fiscal stimulus tool they might need at a later date which will compound stock market declines Morgan Stanley says most of the tax cut package s fiscal stimulus is already priced into stock prices with the bulk of the benefit seen in higher corporate profits That too is a concern because if earnings expectations are too high it increases the chance that companies will fail to meet them which will magnify investor disappointment and stock price declines In a previous note Morgan Stanley said rising volatility and declining investor sentiment will make it difficult for stocks to eclipse their January peak |
MS | All The Things China Market Analysts Got Wrong This Year | Bloomberg Anyone who shorted Chinese stocks went long the yuan and loaded up on the country s government debt has unexpectedly won big in 2018
Strategists across the board have been blindsided by China s financial markets this year where extreme moves mean the nation has hosted both the world s best and worst performing assets all at once The Shanghai Composite Index is now 16 percent below December s year end targets the 10 year bond yields 108 basis points less than forecast and the currency is already stronger than almost all analysts had predicted
Concern that a trade spat with the U S will hurt China s already slowing economy has accelerated a flight to safety since late January spurring investors to dump stocks that were trading at the loftiest valuations since 2015 Receding inflation risks and worse than expected data helped make bonds a relative haven vindicating contrarians like Jean Charles Sambor who has been bullish on China s debt since yields peaked in November
Investors got wrong footed on China given they were expecting strong growth inflationary pressures and an aggressive deleveraging combined with potential monetary tightening said Sambor who helps manage 3 7 billion at BNP Paribas PA BNPP Asset Management s deputy head of emerging market debt in London Clearly none of these materialized
There have been tentative signs this week that market behavior could be shifting in China But while equity investors on Tuesday applauded signs that the Communist Party is willing to ease its tightening campaign stocks have since given back most of those gains The yuan isn t far off the highest level since its 2015 devaluation even as policymakers on Wednesday allowed more capital to flow out of the country And although 10 year yields are up this week they ve still heading for their biggest monthly decline in almost two years
One way bets are a common sighting in China especially for stocks where crowded trades tend to unravel as quickly as they gather For longer term investors with a high threshold for risk wading through the noise is a challenge that s become all too familiar
Volatility is a function of China its markets typically exaggerate moves one way or another said Howard Wang who oversees JPMorgan NYSE JPM Asset Management s Greater China fund in Hong Kong You need to look through this and find companies which are doing really well We think the right level for A shares is up a healthy double digits year to date
That s a tall order for the mainland s main equity benchmarks the Shanghai Composite the CSI 300 Index and the FTSE A50 Index are all down at least 6 5 percent for the year The losses as well as softening economic growth prompted Morgan Stanley NYSE MS strategists to trim their index targets for China s earlier this month
Adding to the unease is the wall of institutional money that may be preparing to rotate out of equities and into safer assets like bonds as China pushes ahead with its clampdown on leverage according to Morgan Stanley strategists Although delayed new rules that will govern the country s 16 trillion asset management products industry will focus on curbing risk and have probably caused some preemptive withdrawals the strategists say
It s hard to say just how much these recent movements in equity and bond prices reflect economic fundamentals and how much they reflect regulatory changes said Jonathan Garner Morgan Stanley s chief Asia and emerging market strategist in Hong Kong A clear set of April data will tell us where the economy is really heading |
MS | Wall Street much quicker to applaud Facebook than criticize it | By Savio D Souza Reuters A month of darkening sentiment around Facebook Inc O FB among analysts was washed away in an instant when the social media s earnings report blew through even the most optimistic earnings estimates The response was classic Wall Street where the traditional tendency has been to be far quicker with praise than with criticism Less than 24 hours after the earnings release late on Wednesday roughly a quarter of the 45 analysts covering the stock had by Thursday raised their price targets including at least five brokerages that cut their views after the Cambridge Analytica data scandal broke last month Facebook s shares meanwhile surged 9 1 percent on Thursday to 174 16 their highest in a month The stock still had nearly 6 percent to climb to erase all its losses related to the matter With the ebullient reaction the average price target on Facebook shares rose 2 21 on Thursday to 218 27 according to Thomson Reuters data its highest in three weeks and about 20 percent above the latest price By contrast it took three weeks for the mean price target to drop from its pre scandal high of 222 81 as the same number of analysts cut their targets one or two at a time as it slowly sunk in that the imbroglio would not pass quickly Notably even as analysts trimmed their estimates for how high the shares could rise while the Cambridge Analytica story dominated the news for weeks most held firm in their overall positive opinion of the stock The mean rating on Facebook s shares has stayed buy with 41 analysts rating the stock strong buy or buy two hold and 2 sell or strong sell Morgan Stanley NYSE MS was among those raising its target on the stock on Thursday to 210 from 200 Three weeks earlier it had cut it from 230 The brokerage said Facebook was investing to improve not only its core ad business but also its safety and security measures These investments plant the seeds for Facebook to continue to grow its user base engagement and monetization for the next 3 5 years said Brian Nowak who rates the stock overweight But not all analysts who soured on the stock recently found enough cheer in the results to alter their forecast on the stock s trajectory Among them was Pivotal Research Group s Brian Wieser the top rated Facebook analyst for his recommendation accuracy according to Thomson Reuters StarMine
Broader concerns about the business and stock remain and we maintain our 138 price target along with our Sell recommendation on the stock |
MS | Japan s top power utilities see power sales decline | By Osamu Tsukimori TOKYO Reuters Two out of Japan s three big power utilities projected a decline in electricity sales in the new business year as new entrants continue to grab market share following liberalization of the 8 trillion yen 73 billion retail power market two years ago Japan s former 10 power monopolies have barely recovered from the 2011 Fukushima nuclear disaster the resultant high fuel costs after most reactors were shut and costly safety upgrades They now face an exodus of customers with Japan s retail market thrown open to hundreds of firms Tokyo Electric Power Tepco T 9501 Kansai Electric Power T 9503 and Chubu Electric Power T 9503 have lost some 5 7 million retail power customers who have switched to new electricity providers since the sector was fully liberalised in April 2016 Though the power utilitiies are trying to offset the losses by winning new customers outside their home turf they are having a hard time halting the decline in overall power sales Top ranked Tepco projected group power sales to fall 2 9 percent in 2018 19 after posting a 1 4 percent drop in the year ended March 31 The competition in the Tokyo Metropolitan area is very severe Tepco Holdings President Tomoaki Kobayakawa told reporters when asked about the decline in power sales Kansai Electric posted a steep 5 1 percent decline in power sales in 2017 18 but did not make projections for the new year Chubu Electric was the only one among the top three power utilities to post a 0 9 percent gain in group power sales in 2017 18 but projected a 1 8 percent decline in the new business year The three utilities this week posted higher recurring profits in the year ended March 31 due to higher energy prices but the decline in power sales has been weighing on profit Reiji Ogino senior analyst at Mitsubishi UFJ Morgan Stanley NYSE MS Securities has said that though the power utilities do not report details about the adverse impact on earnings from the customer losses the impact should not be minimal To offset declining power sales many of Japanese power utilities have entered the 2 4 trillion yen retail city gas market that were opened up for competition a year ago and selling power outside their home turfs 1 109 3300 yen |
MS | Sanctions to limit room for Russia s rate cuts economic growth | By Zlata Garasyuta and Andrey Ostroukh MOSCOW Reuters The latest round of U S sanctions against Moscow will limit scope for rate cuts in Russia as well as room for economic recovery a Reuters monthly poll of 23 analysts and economists suggested The new round of sanctions imposed on Russia by the United States in April was a game changer for the central bank dashing its imminent plans to proceed with rate cuts that are designed to prop up sluggish economic growth The sanctions which targeted a number of Russian individuals and companies hit the Russian market hard sending the rouble to its weakest level since 2016 Taking into account the central bank s signal that it will not cut the key rate as low as previously thought 11 out of 20 analysts and economists who gave their rate forecasts said they expected the bank to lower the rate to 7 00 percent at its next board meeting in June from 7 25 percent at present The rate level by the end of 2018 is now seen at 6 75 percent versus 6 50 percent predicted by the previous poll a month ago There is a chance the central bank could trim rates in June but that will depend on whether the rouble recovers further given that it is still some 10 percent weaker versus the dollar than it was at the end of March said Christopher Shiells an analyst at Informa Global Markets Still inflation is seen steadily low at 3 4 percent this year below the central bank s target of 4 0 percent the poll showed The latest poll also indicated the consensus forecast for 2018 gross domestic product growth lowered to 1 7 percent from 1 8 percent one month earlier Forecasts for 2018 economic growth ranged from 1 0 percent to 2 5 percent We found the general consensus to be that the new sanctions would not destabilize the macroeconomic situation Morgan Stanley NYSE MS analysts said However we see some downside risks to our 2 3 percent growth forecast given that sanctions would affect business confidence and reduce private sector investment increase the cost of funding and turn the central bank more cautious they said The lower growth rate is seen as a consequence of the sanctions that sent shares in four publicly listed companies with links to those sanctioned individuals plummeting both in Russia and elsewhere Rusal HK 0486 EN Group GAZ group MM GAZA and Polyus MM PLZL Sanctions have a direct impact on reduction of production at Rusal factories reduction in electricity production said Kirill Tremasov a former economy ministry official and now head of research at Loko Invest The introduction of sanctions drastically raised uncertainty for the business environment in the Russian economy Threats of counter measures also contribute to this said Tremasov The rouble rate is also on track to feel pressure from sanctions In a year from now the rouble is seen at 60 30 against the dollar versus a level of 57 35 per dollar predicted a month ago
On Saturday a rare working day for the Moscow Exchange the rouble traded at 62 22 versus the dollar |
MS | Morgan Stanley Research Defined Regulations Main Factor For Crypto Exchanges When Choosing Country | Thanks to its well defined regulatory framework Malta now accounts for the largest share of cryptocurrency trading volume in the world Business Insider reports Sunday Apr 29 citing a recent research done by the Morgan Stanley NYSE MS bank
A team of Morgan Stanley researchers led by analyst Sheena Shah has conducted a study on the distribution of cryptocurrency exchanges and crypto trading volume across all countries based on volume data from Coinmarketcap and company registration info listed on the websites of the respective exchanges |
JPM | Global Stock Losses Hit 2 1 Trillion Ahead of Tariff Deadline | Bloomberg We are hours away from additional tariffs getting slapped on Chinese goods with the U S and China in pivotal trade negotiations Fear has gripped markets and the level of sensitivity to any trade headline is extremely high
A tweet that Donald Trump Steven Mnuchin and Robert Lighthizer were in a meeting to discuss progress completely erased early declines in U S stock index futures and contracts are now up on the day U S stocks also pared Thursday morning declines right after Trump said he received a letter from Chinese President Xi Jinping and that the two may speak on the phone Though benchmarks still closed lower
Still stock markets across the world have been in thrall to Trump this week and the MSCI AC World Index has lost 2 1 trillion in value Japan s Topix index has erased more than half of its 2019 rally The S P 500 Index is poised for its worst week since before Christmas after falling for a fourth straight session Foreigners are dumping Chinese stocks before the tariff deadline they ve net sold an average of 4 4 billion yuan 640 million of mainland shares a day through trading links with Hong Kong this week
Fear gauges have spiked The VIX Index Nikkei Volatility Index and HSI Volatility Index are all hovering at levels not seen since January Major banks and money managers have been weighing on the chance of the a trade deal the impact on stock markets and how investors should play any scenario
Pimco s Manny Roman joined the 80 club both Roman and JPMorgan NYSE JPM CEO Jamie Dimon see an 80 chance of a U S China trade agreement
Goldman s Alec Phillips saw a 60 chance that higher tariffs will go into effect and added that he didn t expect talks to devolve much further
Wells Fargo NYSE WFC equity derivatives strategist Pravit Chintawongvanich recommends using the two largest ETFs tracking U S and China markets Sell protective puts on IWM while buying them on FXI
Pictet Asset Management published a report yesterday that said its tactical strategy has moved to reduce equities The firm is now more cautious toward Chinese and Hong Kong shares
There s a plethora of investment suggestions out there Today s lunch break for most of Asia may be one where no one takes a break at all |
JPM | RBA Slashes Near Term Growth Outlook as Jobs Key to Rate Cut | Bloomberg Australia s central bank slashed its near term economic growth outlook and is relying on persistent hiring strength to cushion a property driven downturn in household spending
The economy is expected to expand 1 75 in the year through June versus 2 5 seen three months earlier and is then forecast to lift to 2 75 its estimated speed limit for the rest of the forecast period the Reserve Bank said in Sydney Friday It made swingeing cuts to the outlook for consumption and dwelling investment even after incorporating current market expectations of two interest rate cuts in its forecasts
Growth in the Australian economy has slowed and inflation remains low the RBA said in its quarterly Statement on Monetary Policy Subdued growth in household income and the adjustment in the housing market are affecting consumer spending and residential construction Despite this the labor market is performing reasonably well with the unemployment rate steady
The central bank opted against easing policy Tuesday as it waits to see whether the persistenthiring strength of the past two years is maintained It signaled full employment is likely lower than in the past saying the jobless rate can fall further than the current 5 without setting off consumer price growth The message unemployment needs to fall to avert an easing
At its recent meeting the board focused on the implications of the low inflation outcomes for the economic outlook the RBA said Core inflation is expected to remain low in coming quarters largely because the weakness in housing related items is expected to persist for a while
The Australian dollar was little changed after the release overshadowed by cautious optimism over the outlook for U S China trade talks
Sally Auld a senior strategist for interest rates at JPMorgan Chase Co NYSE JPM in Sydney said the statement makes clear that looser monetary policy is a question of when not if
The RBA has chosen to make downgrades to its forecasts that preserve the narrative of trend growth and a gradual return to target consistent inflation despite mounting evidence that growth is tracking below trend and the rate of core inflation has decelerated over the past year she said What makes the forecast set a little easier to swallow is the fact that the forecasts are based on current market pricing that is 50 basis points of easing
The RBA offered some prospect of improvement for the financial position of households noting cash rebates from the government are in the pipeline While the opposition Labor party is leading in opinion polls ahead of next weekend s election it s offering similar stimulus to lower income earners
Household disposable income growth is also expected to be supported by lower net interest payable owing to the lower cash rate assumption it said Australians could do with a boost given they re laboring under record debt with stagnant real wage growth
The central bank has kept its cash rate at a record low 1 5 since August 2016 and noted in today s release that money markets are pricing in quarter point cuts this year and next
In its statement the RBA lowered its household spending forecast in the year through June to 1 6 from 2 2 it predicted dwelling investment would slump 6 in the period versus a 1 7 drop seen three months ago Household spending accounts for 60 of GDP and the bank noted that uncertainty around its outlook is a key risk to the economy
Offshore the bank highlighted trade tensions between the U S and China which is also Australia s biggest trading partner
The global growth outlook has been revised slightly lower and the risks remain tilted to the downside the RBA said
The outlook for China continues to be an important source of uncertainty for the external environment facing Australia s economy The Chinese authorities face significant policy trade offs and it is unclear how various policy changes will play out it said |
JPM | Fed Seen as More Likely to Cut Rates After Trump Boosts Tariffs | Bloomberg The Federal Reserve probably will be more inclined to cut interest rates now that President Donald Trump has followed through on his threat to increase tariffs on U S imports from China But it won t rush into doing so
While the higher levies will put upward pressure on inflation by raising import prices the central bank will likely be more attentive to the potential drag they ll exert on the economy by depressing consumer and business spending Fed watchers said
We would expect the Fed to initially focus on the growth implication and look past the inflation impact Michael Feroli chief U S economist at JPMorgan Chase Co NYSE JPM in New York said in a May 7 note to clients
Fed funds futures on Friday showed traders are fully pricing in a cut within the first few months of next year That s several months earlier than it was indicating a week ago before Trump s weekend tweets on tariffs Meanwhile a key part of the Treasury yield curve that many see as a recession sign briefly went negative on Thursday
On its own the increase in import levies to 25 from 10 on 200 billion of Chinese goods shouldn t have that much of an impact on U S gross domestic product Feroli reckoned that the direct hit to growth would be about 0 2 percentage point
What will be critical for the economy and the Fed is how the financial markets react to the heightened trade tensions and how that response and the uncertainty surrounding the issue affects business confidence and investment according to Deutsche Bank DE DBKGn Securities chief economist Peter Hooper
Equity markets slumped this week as investors hopes for a trade deal dimmed Overall financial conditions though remain supportive of growth albeit less so than they were a week ago
Krishna Guha head of central bank strategy at Evercore ISI cautioned investors against expecting a quick rate reduction by the central bank s Federal Open Market Committee in the wake of Trump s tariff increase
We do not see the Fed as inclined to take out immediate insurance against market growth weakness associated with trade escalation with the committee starting from a position in which it has just reaffirmed that it is not close to cutting rates he said in a May 9 note to clients
What Bloomberg s Economists Say
Assuming there s no speedy resolution and higher tariffs remain in place forecasts for global growth will be shaded down with the main blow landing on China and its Asian neighbors Tom Orlik chief economist at Bloomberg EconomicsFor the full note click here
Fed Chairman Jerome Powell and his colleagues left interest rates unchanged last week defying Trump s call for a cut and said they would be patient in deciding what action to take going forward
We don t see a strong case to move rates in either direction Fed Vice Chairman Richard Clarida told Bloomberg Television on Tuesday echoing a comment made last week by Powell
Clarida said that the trade conflicts had only had a very modest effect on the economy last year
He added though that the central bank will certainly take trade developments into account in setting policy in the future |
JPM | Nigeria says ex president and his oil minister took bribes court filing | By Libby George ABUJA Reuters The Nigerian government has accused former President Goodluck Jonathan and his then oil minister of accepting bribes and breaking the country s laws to broker a 1 3 billion oil deal eight years ago a London court filing shows The deal in which Anglo Dutch company Royal Dutch Shell LON RDSa and Italian peer Eni jointly acquired the rights to the OPL 245 offshore oilfield has spawned legal cases spanning several countries In papers advancing a London commercial court suit against Shell and Eni lawyers for the Nigerian government said Jonathan and former oil minister Diezani Alison Madueke conspired to receive bribes and make a secret profit keeping the government from getting what it was owed from the deal Bribes were paid the filing reviewed by Reuters states It says the receipt of those bribes and the participation in the scheme of said officials was in breach of their fiduciary duties and Nigerian criminal law A spokesman for Jonathan declined to comment and said the former president was in South Africa as part of an election monitoring team A London based lawyer for Madueke did not immediately respond to a request for comment Nigerian attorney general Abubakar Malami did not immediately respond to a request for comment The 2011 deal is also the subject of a corruption trial in Milan in which two middlemen have been convicted and former and current Shell and Eni officials are also on trial An Eni spokesman said the Italian firm was assessing whether UK courts had jurisdiction on a case of such duplication to the Milan proceedings and repeated its view on the correctness and compliance of every aspect of the transaction Shell did not immediately comment but has repeatedly denied any wrongdoing in relation to OPL 245 The London lawsuit relates to payments that Shell and Eni made to acquire the license The companies transferred more than 1 billion to the Nigerian government according to the filing Milan prosecutors have argued in their case that the bulk of that money was sent on to Malabu Oil and Gas which was controlled by another former oil minister Dan Etete Eni and Shell retain the rights to develop the field which has yet to enter production but is one of the biggest untapped oil resources in Africa with reserves estimated at 9 billion barrels In the London court filing the Nigerian government said it only received a 209 million signature bonus in relation to the deal and that it estimates the value of the oilfield to have been at least 3 5 billion It said it would seek to calculate damages on that basis The Nigerian government has also filed a London case against U S bank JPMorgan NYSE JPM for its role in transferring over 800 million of government funds to Etete who has been convicted of money laundering JPMorgan has denied any wrongdoing Dutch prosecutors are also preparing criminal charges against Shell Despite the international cases only Nigerian officials can rescind the rights to the block Oil minister Emmanuel Ibe Kachikwu has said the case should not hinder development of the field His office did not immediately reply to a further request for comment Nigeria s Economic and Financial Crimes Commission is pursuing a criminal case against other former officials in relation to OPL 245 President Muhammadu Buhari was re elected in February campaigning on the same anti corruption message that helped him defeat Jonathan in 2015 But opinions within the cabinet differ over how to handle OPL 245
Some have cited what they view as a lack of evidence while others point to concerns that taking away the rights could hinder the field s development in a nation where oil accounts for around 90 percent of foreign exchange earnings |
JPM | U S China trade setback stokes recession fears stocks slide | By Thyagaraju Adinarayan LONDON Reuters Global equities fell on Monday after their worst week of 2019 as hopes of an imminent U S China trade deal were crushed raising fears of a fresh round of tit for tat tariffs The impasse left investors bracing for retaliation by China for Washington s increase on Friday of tariffs on 200 billion worth of Chinese goods The move followed accusations by U S President Donald Trump that Beijing had reneged on earlier commitments Trump on Monday warned China not to retaliate against an increase in tariffs he imposed last week Escalation could tip the U S economy into recession a risk flagged by the inversion in U S Treasury bond yield curve between three month and 10 year rates for the second time in under a week The U S curve has inverted before each recession in the past 50 years It gave a false signal just once Overall in the short term the chances of recession have increased so equity markets will be priced on the back of that said Justin Oneukwusi portfolio manager at Legal General Investment Management The pan European Stoxx 600 slipped 0 5 S P 500 futures shed 1 3 Chinese shares tumbled The benchmark Shanghai Composite and the blue chip CSI 300 indices shed 1 2 and 1 8 respectively The offshore Chinese yuan fell to its lowest in more than four months 6 88 to the dollar Trade talks as Washington demanded promises of concrete changes to Chinese law and Beijing said it would not swallow any bitter fruit that harmed its interests How far this escalates is what the market is really worried about The important thing is what s the impact on growth and that s what the market is really fearing Oneukwusi said White House economic adviser Larry Kudlow told Fox News that China needed to agree to very strong enforcement provisions to secure a deal He said the sticking point was Beijing s reluctance to put into law changes that had been agreed Kudlow said U S tariffs would remain in place while negotiations continued and Trump was likely to meet Chinese President Xi Jinping at a G20 summit in Japan in late June The risk of a full blown trade war has materially increased even though both sides seem to still want a trade deal and talks are expected to continue UBS economist Tao Wang said Washington said it was preparing to raise tariffs on all remaining imports from China worth about 300 billion Our base case is for limited progress and Chinese retaliation said Michael Hanson head of global macro strategy at TD Securities Major currencies were relatively calm The euro was steady at 1 1234 and the dollar little changed against a basket of currencies at 97 270 We ve seen pretty restrained moves among currencies despite some severe rhetoric between the U S and China so far However cause for concern remains a weaker yuan which should be a warning sign for risk assets said Marc Andr Fongern of MAF Global Forex Emerging market stocks were down 0 9 percent hovering near January lows JPMorgan NYSE JPM said it had reduced its emerging markets risk for the second time in as many months on Monday following the set back in U S China trade talks In commodities oil futures jumped on growing concern about supply disruptions in the Middle East Brent crude futures rose 1 8 to 71 90 a barrel and U S West Texas Intermediate futures were up 1 5 at 62 56 per barrel In digital currencies Bitcoin hovered above 7 000 on Monday close to nine month highs as the biggest cryptocurrency s 2019 rally gathered steam |
JPM | JPMorgan Falls 3 | Investing com JPMorgan NYSE JPM fell by 3 03 to trade at 109 11 by 15 37 19 37 GMT on Monday on the NYSE exchange
The volume of JPMorgan shares traded since the start of the session was 10 25M JPMorgan has traded in a range of 109 09 to 110 41 on the day
The stock has traded at 116 6800 at its highest and 109 0600 at its lowest during the past seven days |
MS | 2 Small Stocks 1 Giant Mystery | Weight Watchers International Inc NYSE WTW is bulking up
Vitamin Shoppe Inc NYSE VSI needs a vitamin blast
Divergences can be profitable
I ve got a bit of a strange anomaly to report
Weight Watchers Intl is enjoying a banner year
Shares are up 211 year to date
Subscribership is up a whopping 16 in the latest quarter to 3 6 million
The result of such vertical growth has swung EPS from a loss of 0 18 to a profit of 0 20
Management just raised earnings guidance for the rest of the year too
OK So we have a company thriving in the healthy lifestyle niche of the market
Meanwhile
Vitamin Shoppe Inc is getting its butt kicked
Shares are in free fall down 54 so far this year
Margins have plummeted to 28
Cash flow is dwindling to worrisome levels And as malls get less and less traffic the company s customer base is disappearing
Wait what Isn t Vitamin Shoppe in the same healthy lifestyle niche as Weight Watchers International
In the biz we call such a phenomenon a divergence
Divergences can be profitably traded by using a pairs trading strategy
The idea behind pairs trading suggests that Weight Watchers International and Vitamin Shoppe should trade in a reasonably similar pattern That is since they exist within the same niche
Small fortunes supposedly await those who play the imbalance between the two stocks
But does pairs trading truly work
I asked my senior analyst Martin Hutchinson to take a peek under the hood
His full report on pairs trading is below
If two stocks are highly correlated and then you look when one of them has been much weaker and you buy that and you sell the stronger one under the assumption that they ll move back together
High correlation is calculated by something called the correlation coefficient which goes between minus one and plus one and pairs traders usually look for correlations of 0 8 or more
The idea behind pairs trading is that this eliminates market risk and industry risk because you re short one stock and long another stock that s similar And that reduces this to an arbitrage between the two stocks
It s one of a collection of arbitrage strategies It was one of the first quantitative techniques developed by investment bankers in the 1980s
Inevitably however as the number of hedge funds has increased the profitability of pairs trading like other quant techniques has declined
Morgan Stanley NYSE MS made 50 million from this in 1987 but then lost it all back again in the next two years and disbanded the pairs trading group So much for that
Today obviously the individual investor has the data and the technology to be able to do this and you could look for events that trigger a weakness in the correlation to cause one stock to drop
For example big insider sales mergers information about a new product legal or regulatory issues or a big accident or disaster affecting a product Those would make one stock go either down or up against another closely related one
The problem is that pairs trading assumes that the correlation will re establish itself
In the real world highly correlated stocks often diverge
One may be better managed one may have a reputational problem one may have a product that goes obsolete or one may suffer a revolution in one of its major operating centers so it has to shut that operation down There are all sorts of reasons why closely correlated stocks can diverge
My conclusion is that this is not a very smart strategy for individual investors
In particular the correlations may be random due to data mining which is where you compare 5 000 stocks over the last 30 years There are bound to be some correlations that don t mean anything at all In that case they re bound to diverge again if they re random
It s an area in which the individual investor has a real disadvantage and even the professional investors like hedge funds don t do too great either |
MS | Snap Shares Break Even Lower Will The Slump Stop Soon | Shares of Snap Inc NYSE SNAP are moving lower on Tuesday breaking below the 15 per share mark for the first time since its historic market debut a few months ago
The 15 threshold was another hopeful bottom for the stock which is already resting comfortably below its IPO price and with the company s lock up period set to expire soon the end of this slump may be further away than once anticipated
Check out SNAP s five day chart for a glimpse at its recent weakness
Last week I that the 15 20 line would be the next test for Snap Even in its worst moments last week which included a downgrade from Morgan Stanley NYSE MS and a concerning opinion from an advertising mogul Snap found a bottom right above this 15 20 mark
At the time it appeared as if the next true test for that support line would be the expiration of the lock up period but alas that support did not even hold until then
Snap s lock up period which was notably longer than most IPO lock ups is set to expire on July 30 with the first day of affected trading being July 31 At that time company employees who hold shares will finally be able to sell their stock on the open market This means new shares of SNAP could potentially flood Wall Street very soon sending the stock even lower
The last time I attempted to call a possible support line for this stock I was proved wrong For that reason I won t speculate again
However I will say this much holding SNAP over the next few weeks will not be an activity that I recommend for the faint of heart There is even more volatility on the horizon and if you re an investor that likes to avoid risk this Zacks Rank 4 Sell stock is probably not your best bet
Want more stock market analysis from this author Make sure to follow on Twitter
5 Trades Could Profit Big League from Trump Policies
If the stocks above spark your interest wait until you look into companies primed to make substantial gains from Washington s changing course
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals tariffs lower taxes higher interest rates and spending surges in defense and infrastructure |
JPM | Major Banks To Release Q4 Earnings Next Week | Pre market futures this morning are down again although when we ve woken up to red indexes ahead of the opening bell in past days this week we ve managed to finish in the green each time The markets are currently riding a 5 day winning streak as astutely pointed out by Zacks Exec VP Kevin Matras this morning It s quite the run frankly considering the lack of major economic data this week a downturn in retail sales expectations when Q4 earnings are reported and the partial government shutdown now three full weeks old with no light yet at the end of the tunnel We ll see a heavier rate of Q4 earnings reports hit the tape starting early next week including the all important big banks including JPMorgan NYSE JPM Citigroup NYSE C was and Wells Fargo NYSE WFC For an analysis on what to expect from this sector check out Tracey Ryniec s latest Earnings All Starts presentation I say lack of economic data but we do see one important report this morning Consumer Price Index CPI for December Headline reads were in line with analyst estimates with 0 1 matching projections and no revision to the previous month s 0 0 The ex food energy core reached 0 2 also in line with expectations Year over year we see 1 9 on the headline and 2 2 core again results as expected Where we get into some modest surprises in on things like December earnings which rose 1 2 weekly and 1 1 hourly notably better than the 0 6 weekly in November and 0 8 hourly We also saw a 7 1 2 drop in gas prices last month although we expect this to evaporate on future reads based on oil prices having gained over the past couple weeks Softness in airline fares down 2 4 in November and 1 5 in December speak to lowered guidance from companies like American Airlines NASDAQ AAL Commodities overall were down 0 7 last month and prescription drugs 0 4 We don t expect any market depression based on these figures and we certainly don t see a noteworthy increase in the rate of inflation If anything we can take away that tariffs have not yet come home to roost domestically which is good news The longer our economy can absorb these challenges without seeing a spike in data points the better |
JPM | Each Word of Trump s Tariff Tweets Wiped 13 Billion Off Stocks | Bloomberg It was a total of 102 words that erased about 1 36 trillion from global stocks this week
Equity markets across the world were roiled by President Donald Trump s tweets Sunday that he would boost tariffs on Chinese goods Not only did they spark losses but volatility came roaring back with a vengeance with the Cboe Volatility Index rising 50 percent in two days to breach 20 for the first time since January
Risks surrounding U S China trade relations which were not on investors radar as late as last week came flooding back Markets had been lulled into a state of complacency in recent weeks as confidence grew the trade discussions were going well major central banks were dovish and U S corporate earnings were coming in better than expected
The latest shift adds a new dimension of uncertainty to what most market participants were assuming was a done deal said Eleanor Creagh Sydney based Australia market strategist at Saxo Capital Markets Something shifted over the weekend and it could be wishful thinking to keep drinking from the glass half full
All 102 words that shook global markets
Depending on who you talk to the events of the last two days are only a speed bump that gave back a fraction of this year s market rally or have raised a valid question of whether the bull market can continue
Kerry Craig a global market strategist at JPMorgan NYSE JPM Asset Management still believes a trade deal can be reached but it could take longer than expected The pull back in markets was due given how hard global equities had rallied and investors may have been looking for an excuse to take some profits he said
Given the slump in shares it s clear some investors are repositioning
My feeling is that investors are lightening their portfolios as a precaution said Jeffrey Halley senior market analyst at Oanda Asia Pacific
Halley sees a middle path for markets with an underlying sentiment that a deal will get done And sparks of activity could lift growth and earnings expectations I wouldn t abandon the equity markets said JPMorgan s Craig
Furthermore the dovish central bank pivot means its a different market now than last year when both the U S and China were tightening policy according to Alex Wong Hong Kong based director of asset management at Ample Capital Ltd
Even if no deal could be reached the impact won t be that severe Wong said in a telephone interview I m not that worried
Everything now depends on what happens this Thursday and Friday when negotiations between two of the world s largest economies meet in Washington
This sets us up for a potentially very emotional week Oanda s Halley said |
JPM | Tariff War Renewed How the U S China Talks Could Play Out | Bloomberg Go inside the global economy with Stephanie Flanders in her new podcast Stephanomics Subscribe via Pocket Cast or iTunes
President Donald Trump s latest trade gamble has set the stage for a tense round of negotiations this week between the U S and China that will have markets on edge
Data released in Beijing Wednesday underscored what s at stake An unexpected fall in China s exports and an equally unforeseen rise in imports show that the world s second largest economy continues a tentative recovery even as global demand weakens
Whether the world s two largest economies will sink deeper into their trade conflict and drag the global economy in the process may depend on negotiations Thursday and Friday when a Chinese delegation led by Vice Premier Liu He will visit Washington
Trump s unpredictability was on full display on Sunday when he took to Twitter to abruptly announce he was increasing tariffs on Chinese goods The U S says that threat was prompted by Beijing reneging over the past week on some key commitments it made during the talks
The hawkish turn by the U S has forced investors many of whom were expecting a deal soon to adjust their expectations The S P 500 Index has fallen more than 2 percent since Trump s tweet U S equity index futures and European stocks were steady on Wednesday shrugging off declines across Asia
A trade deal had been priced into markets and now we are living through the fallout of altered expectations so it wouldn t be surprising to see continued volatility said Kristina Hooper chief global market strategist for Invesco Ltd We re going to see both sides playing a game of chicken
Here are some of the possible outcomes from this week s negotiations
Tariffs Rise Talks Continue
U S Trade Representative Robert Lighthizer said tariffs on 200 billion in Chinese imports will increase to 25 percent from 10 percent at 12 01 a m on Friday He also indicated the U S wants to keep talking
The Chinese are preparing their own retaliatory duties on U S imports should Trump carry out his threat according to people familiar on the matter But they too are staying at the table
It s an awkward equilibrium but it may just hold Neither country wants a long bruising trade war that undermines growth The incentive to reach a deal grows stronger by the day for Trump who s seeking re election in November 2020
Both sides would walk away angry if tariffs escalate this week said Clark Packard trade policy counsel at the R Street Institute a think tank in Washington But these two countries are the largest economies in the world After a cooling off period they ll come back to the table
A spokesman for China s foreign ministry on Wednesday said the latest tariff warnings weren t the first time such threats have been made and said China s position hadn t changed
The negotiation is by nature a process of discussion and it s only natural to have differences foreign ministry spokesman Geng Shuang told a briefing in Beijing We hope the U S will work along with China and embrace each other half way on the basis of mutual respect
Tariffs Rise Talks Collapse
The stakes are arguably higher than ever as both countries prepare to slap more tariffs on each other
In an all out trade war scenario annual gross domestic product may shrink by as much as 0 6 percent in the U S and by 1 5 percent in China according to the International Monetary Fund
My most likely scenario is that there s no final resolution not for some time said Chris Rupkey chief financial economist at MUFG Union Bank NA They re talking about changing the way another country is doing business It s like another country telling the U S to stop being capitalist
Tariffs Delayed
Tariffs have been on hold since Dec 1 when Trump and President Xi Jinping agreed to a truce to give their officials time to work out an agreement Before then the two nations had imposed duties on 360 billion of each other s products
The truce as well as a dovish shift by central banks has driven a surge in U S stocks Trump will be reluctant to see the rally end If talks take a promising turn he may still hold off on a tariff hike
This is something you have to take week by week said Ed Mills managing director of Washington policy at Raymond James Associates Inc Our base case for this week is that they find a way to delay the tariffs
Deal In Principle
Before threatening to hike tariffs Trump expressed optimism about the prospect of a deal A preliminary agreement could come together quickly if Trump chooses to endorse it perhaps after speaking by phone with his Chinese counterpart
The outlines of a deal have been apparent for months It would likely feature a major increase in Chinese purchases of American goods such as soybeans and aircraft Beijing would probably commit to shoring up protection for U S intellectual property and refraining from devaluing its currency All but certain both sides will tout any pact as a victory The biggest question left unanswered is whether the existing tariffs will stay in place
JPMorgan Chase Co NYSE JPM Chief Executive Officer Jamie Dimon put the odds of a deal at 80 percent sounding a note of optimism even after the rising specter of tariffs roiled global markets
But any preliminary accord would probably require final approval by Trump and Xi at a face to face summit Even after a deal is signed it could take years to see it succeed in correcting the trade imbalance The threat of renewed hostilities won t soon fade
The larger question is can you get a deal and can that deal stick That s where we ve always been skeptical said Mills of Raymond James
Adds April Chinese trade data in second paragraph updates markets in fifth adds foreign ministry comments in 12th and Jamie Dimon in third from final paragraph |
JPM | StanChart faces potential investor revolt over CEO pay | By Iain Withers and Lawrence White LONDON Reuters Standard Chartered LON STAN could face a shareholder rebellion on Wednesday over the bank s pay plans for senior executives the latest in a series of potential revolts over bosses pension payouts at top British firms Investor advisory firms ISS and Glass Lewis have advised shareholders to vote against increases in Chief Executive Bill Winters s pension payouts as part of a wider campaign against so called stealth pay increases that see executives pensions boosted more than ordinary workers Shareholders are set to vote on StanChart s 2019 pay policy at the lender s annual shareholder meeting in London The bank this year is planning to award Winters 474 000 pounds 618 522 60 in pension allowance up from 460 000 pounds the year before and on top of a fixed salary in cash and shares of 2 4 million pounds Glass Lewis advised voting against the bank s pay plans because it has failed to cap pension contributions as a percentage of base salary instead calculating against a bigger total salary base and that payouts to executives are in any case at risk of being excessive StanChart rival Barclays LON BARC last week saw nearly 30 percent of votes cast against its executive pay plans at its annual shareholder meeting and other firms including Ocado LON OCDO Group and Hammerson Plc LON HMSO have seen similar revolts While StanChart s shares have rallied this year they are down 33 percent since Winters took over on June 10 2015 as the former JPMorgan NYSE JPM banker s restructuring efforts took a toll on revenues |
JPM | JPMorgan shareholders advised to vote against executive compensation by ISS | By Elizabeth Dilts NEW YORK Reuters Proxy advisory group ISS has advised JPMorgan Chase Co NYSE JPM shareholders to vote against the bank s executive compensation at its upcoming annual shareholder meeting according to a report the firm published this week that was seen by Reuters This is the third time the group has advocated voting against JPMorgan s executive compensation since the Dodd Frank law mandated shareholders be given a say on pay in 2010 Each time ISS has cited discretionary compensation as a concern JPMorgan the largest U S bank by assets did not immediately provide comment on the ISS view The bank s board of directors recommended in its proxy filing that shareholders vote to approve executive compensation at its shareholder meeting next week in Chicago based on the company s strong business results risk controls and conduct customer and stakeholder focus and leadership in 2018 The influential proxy advisory firm said that although JPMorgan s compensation committee uses performance assessments to guide the amount of discretionary compensation awarded certain factors assessed were described only vaguely and appear subjective Investors increasingly prefer an incentive program structure that constrains discretion in favor of emphasis on objective and transparent determinations that are more compatible with pay for performance ISS wrote ISS said it was also concerned about the vesting of one part of the pay plans described as performance share units ISS previously advised voting against executive pay in 2015 because it objected to a discretionary cash bonus and in 2011 because it said the chief executive pay was significantly above median and the discretionary components reduced the focus on performance JPMorgan Chief Executive Jamie Dimon who has led the bank since 2005 received a total of 31 million in compensation for the year 2018 1 5 million more than in 2017 His compensation included an annual base salary of more than 1 5 million and performance based incentives of 29 5 million The shareholder vote on executive compensation next week is ultimately nonbinding However the bank s board said in its 2019 proxy statement that it will consider the results of the vote when making future compensation arrangements In Britain Standard Chartered LON STAN faced investor criticism at its annual shareholder meeting on Wednesday after roughly a third of votes were cast against its executive compensation plans
Standard Chartered s pay plans differ significantly from U S banks ISS and another advisory firm Glass Lewis had advised shareholders to vote against the plans |
MS | Morgan Stanley Snaps The Neck On SNAP s Share | Snap Inc NYSE NYSE SNAP
In an event rarely seen on Wall Street Morgan Stanley the lead underwriter of the Snap Inc IPO downgraded shares of Snap on Tuesday July 11th 2017 In the process of doing the lead underwriting Morgan Stanley earned 26 million dollars in fees The analyst that downgraded the stock lowered his rating from overweight to equal weight and assigned a 16 price target
Shares closed the day at 15 47 which was down 1 52 or 8 95 The IPO price of the shares was 17 per share just so the reader has a reference point This is in stark contrast with his price target and expected price appreciation of 40 per share shortly after the shares went public
Shares which opened at 17 popped hard hitting a record high on the first day of trading up 44 and closed at 29 44 the day after It has never seen that 29 44 sense It is the largest IPO since Facebook NASDAQ FB of 2012 and it s technology industry
One interesting note of importance is that by the end of July some 60 711 million shares of the outstanding shares will be available to be sold from the IPO lockout rules
From past history this tends to put an exorbitant amount of pressure on the share s price Many traders who follow the social media stocks will be watching this one closely to see if it finds any price support or bottom fisher s looking for a short term rally
Morgan But Why
The analyst Brian Nowak cited a few different areas of Snap s business model which he feels are affecting the share price and forward looking earnings The main issue is their return on investment through their ads It seems that their ad revenue is lower than Facebook s Instagram
In this area Facebook has been eating Snap s lunch This begets the problem of advertisers not wanting to spend additional revenues at Snap And to add insult to injury some outside surveying companies have come back with data that show that user growth is currently stagnant One such source is
Analyst Comments
Morgan Stanley NYSE MS analyst Brian Nowak had this to say in his written notes
Snap s ad product is not evolving improving as quickly as we expected
We have been wrong about Snap s ability to innovate and improve its ad product this year and user monetization as it works to move beyond experimental ad budgets into larger branded and direct response ad allocations
Investors com
SNAP Price Charts
The above price chart clearly shows the intraday down price action on Tuesday July 11th 2017
The above price chart shows the daily price history going back to March of 2017 On it you will see the downward price trend line and the earnings down which it suffered in the beginning of May
Company Profile
Snap Inc operates as a camera company It offers Snapchat a camera application that helps people to communicate through short videos and images The company also provides a suite of content tools for partners to build edit and publish snaps and attachments based on editorial content and Spectacles which are sunglasses that capture video from a human perspective
The company was formerly known as Snapchat Inc and changed its name to Snap Inc in September 2016 Snap Inc was founded in 2010 and is headquartered in Venice California |
MS | Analyst S P 500 SPY 66 Higher Than It Should Be | A prominent former Morgan Stanley NYSE MS broker just penned a scathing piece on the historically high valuation of the U S stock market arguing that stock prices aren t pricing growing risks adequately
Thomas H Kee Jr says that liquidity risks abound both at home and abroad right now brought about by monetary tightening by central bankers The combination of higher rates and a reduction of the Fed s balance sheet he writes could be enough to pop the asset bubble he sees in equities
Kee also notes that the S P 500 is trading at an extremely high earnings multiple around 25 versus the historical norm of 14 5 Here s his conclusion from a recent MarketWatch piece
The risks in the market today are extremely high for buy and hold investors because the liquidity picture is changing for the worse and that is fundamental in nature But longer term technical observations point toward serious risks as well
My longer term macroeconomic analysis The Investment Rate is offering warnings that this market is 66 higher than it should be Given the changes in liquidity and technical observations happening now those risk warnings should be heard with an acute ear
The SPDR S P 500 ETF Trust AX SPY NYSE SPY was trading at 243 89 per share on Wednesday afternoon up 1 7 0 70 Year to date SPY has gained 9 11
SPY currently has an ETF Daily News SMART Grade of A Strong Buy and is ranked 1 of 114 ETFs in the Large Cap Blend ETFs category |
JPM | Much Ado About Trade Talks With China | Tuesday January 8 2019We awake today with pre markets back strongly in the green including a 200 plus climb on the blue chip Dow Jones index Obviously we re still a ways off from the heady days of last summer fall when major U S indexes were hitting all time highs of robust labor strong consumer confidence and trade war headwinds that had yet to reach our shores However when we look for reasons why market sentiment is up again this morning there s not much to see Certainly a rebound in oil prices is playing its part complete with a new tightening initiative from OPEC helping buoy the West Texas Intermediate WTI price per barrel to the high 40s and the Brent Crude benchmark to the high 50s U S production however continues to keep the market awash in black gold producing more than or according to one oil consultant significantly above 12 million barrels per day foiling much of the attempts of foreign producers to hike oil prices Oil prices like the market indexes are finding higher levels of equilibrium partly because of such deep sell offs in late 2018 which have brought value traders to the table and other investors making plays out of cash following tax related selling in December The Brent index had lost a third of its value at near term lows and the WTI had been down 38 Saudi Arabia is eyeballing 80 barrel prices on the horizon but we re not seeing a straight route there based mostly on the huge North American production presently Economic data is light today and for most of this week partly due to the normal calendar and partly due to the government shutdown which is delaying International Trade numbers for November This adds to a growing number of unreported econ figures as the partial shutdown of the U S government grows longer currently at 2 1 2 weeks without much hope for a resolution in sight Much Ado About Trade TalksSpeaking of resolutions we don t have a clear one regarding trade talks between the U S and China but rhetoric on the subject has retained a sunny tone by President Trump and others Both sides appear to be hopeful a meeting of the minds will result in new fair terms of trade between the top two economies on earth although the shadow of trepidation will likely be over investors shoulder until a deal is finally inked This may be days or weeks from now or it could be months or years Thus it s tough to consider this recent happy talk on China U S trade to be justified but at least it s better than the alternative Perhaps it s wise to just sit back and enjoy the near term rally For now consider this a filling of the gap from oversold territory for many of your favorite stocks Otherwise Q4 earnings results is where we ll see concrete numbers determining the health of the market overall And although the big banks like JPMorgan NYSE JPM and Citigroup NYSE C don t report until next week we shall see a few choice reports coming in the next few days Mark VickerySenior Editor
The Hottest Tech Mega Trend of All
Last year it generated 8 billion in global revenues By 2020 it s predicted to blast through the roof to 47 billion Famed investor Mark Cuban says it will produce the world s first trillionaires but that should still leave plenty of money for regular investors who make the right trades early |
JPM | Trade Talks And Oil Price Rebound To Boost Wall Street | We awake today with pre markets back strongly in the green including a 200 plus climb on the blue chip Dow Jones index Obviously we re still a ways off from the heady days of last summer fall when major U S indexes were hitting all time highs of robust labor strong consumer confidence and trade war headwinds that had yet to reach our shores However when we look for reasons why market sentiment is up again this morning there s not much to see Certainly a rebound in oil prices is playing its part complete with a new tightening initiative from OPEC helping buoy the West Texas Intermediate WTI price per barrel to the high 40s and the Brent Crude benchmark to the high 50s U S production however continues to keep the market awash in black gold producing more than or according to one oil consultant significantly above 12 million barrels per day foiling much of the attempts of foreign producers to hike oil prices Oil prices like the market indexes are finding higher levels of equilibrium partly because of such deep sell offs in late 2018 which have brought value traders to the table and other investors making plays out of cash following tax related selling in December The Brent index had lost a third of its value at near term lows and the WTI had been down 38 Saudi Arabia is eyeballing 80 barrel prices on the horizon but we re not seeing a straight route there based mostly on the huge North American production presently Economic data is light today and for most of this week partly due to the normal calendar and partly due to the government shutdown which is delaying International Trade numbers for November This adds to a growing number of unreported econ figures as the partial shutdown of the U S government grows longer currently at 2 1 2 weeks without much hope for a resolution in sight Much Ado About Trade TalksSpeaking of resolutions we don t have a clear one regarding trade talks between the U S and China but rhetoric on the subject has retained a sunny tone by President Trump and others Both sides appear to be hopeful a meeting of the minds will result in new fair terms of trade between the top two economies on earth although the shadow of trepidation will likely be over investors shoulder until a deal is finally inked This may be days or weeks from now or it could be months or years Thus it s tough to consider this recent happy talk on China U S trade to be justified but at least it s better than the alternative Perhaps it s wise to just sit back and enjoy the near term rally For now consider this a filling of the gap from oversold territory for many of your favorite stocks Otherwise Q4 earnings results is where we ll see concrete numbers determining the health of the market overall And although the big banks like JPMorgan NYSE JPM and Citigroup NYSE C don t report until next week we shall see a few choice reports coming in the next few days |
JPM | JPMorgan Chase JPM Earnings Expected To Grow Should You Buy | Wall Street expects a year over year increase in earnings on higher revenues when JPMorgan Chase JPM reports results for the quarter ended December 2018 While this widely known consensus outlook is important in gauging the company s earnings picture a powerful factor that could impact its near term stock price is how the actual results compare to these estimates
The earnings report which is expected to be released on January 15 2019 might help the stock move higher if these key numbers are better than expectations On the other hand if they miss the stock may move lower
While management s discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations it s worth having a handicapping insight into the odds of a positive EPS surprise
Zacks Consensus Estimate
This biggest U S bank by assets is expected to post quarterly earnings of 2 20 per share in its upcoming report which represents a year over year change of 25
Revenues are expected to be 26 91 billion up 11 4 from the year ago quarter
Estimate Revisions Trend
The consensus EPS estimate for the quarter has been revised 0 61 lower over the last 30 days to the current level This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period
Investors should keep in mind that the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change
Price Consensus and EPS Surprise
Earnings Whisper
Estimate revisions ahead of a company s earnings release offer clues to the business conditions for the period whose results are coming out Our proprietary surprise prediction model the Zacks Earnings ESP Expected Surprise Prediction has this insight at its core
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter the Most Accurate Estimate is a version of the Zacks Consensus whose definition is subject to change The idea here is that analysts revising their estimates right before an earnings release have the latest information which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier
Thus a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate However the model s predictive power is significant for positive ESP readings only
A positive Earnings ESP is a strong predictor of an earnings beat particularly when combined with a Zacks Rank 1 Strong Buy 2 Buy or 3 Hold Our research shows that stocks with this combination produce a positive surprise nearly 70 of the time and a solid Zacks Rank actually increases the predictive power of Earnings ESP
Please note that a negative Earnings ESP reading is not indicative of an earnings miss Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and or Zacks Rank of 4 Sell or 5 Strong Sell
How Have the Numbers Shaped Up for JP Morgan
For JP Morgan the Most Accurate Estimate is lower than the Zacks Consensus Estimate suggesting that analysts have recently become bearish on the company s earnings prospects This has resulted in an Earnings ESP of 1 95
On the other hand the stock currently carries a Zacks Rank of 3
So this combination makes it difficult to conclusively predict that JP Morgan will beat the consensus EPS estimate
Does Earnings Surprise History Hold Any Clue
While calculating estimates for a company s future earnings analysts often consider to what extent it has been able to match past consensus estimates So it s worth taking a look at the surprise history for gauging its influence on the upcoming number
For the last reported quarter it was expected that JP Morgan would post earnings of 2 24 per share when it actually produced earnings of 2 34 delivering a surprise of 4 46
Over the last four quarters the company has beaten consensus EPS estimates four times
Bottom Line
An earnings beat or miss may not be the sole basis for a stock moving higher or lower Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors Similarly unforeseen catalysts help a number of stocks gain despite an earnings miss
That said betting on stocks that are expected to beat earnings expectations does increase the odds of success This is why it s worth checking a company s Earnings ESP and Zacks Rank ahead of its quarterly release Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they ve reported
JP Morgan doesn t appear a compelling earnings beat candidate However investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release |
JPM | Here s Why Palladium ETF Is Soaring | Thanks to demand supply imbalance palladium is enjoying its longest bull run in its history hitting new records lately In fact the metal has been defying the global commodities trends which were being dragged by a strong dollar and global slowdown concerns read Inside the SurgeMost of the metal s rally was prompted by a global shift from diesel to gasoline and hybrid vehicles that has led to higher demand for the metal and resulted in the speculation of supply deficit Notably palladium is used to make catalytic converters in gasoline automobiles Additionally cuts in auto tariffs from China boosted demand for the metal The rally also came amid growing political tensions between the United States and Russia one of the top producers of palladium adding to concerns over future supply One analyst Citigroup NYSE C believes that palladium shortage will probably persist through 2020 leading to the tightest market in two decades
A recent report from the consultancy stated that 2018 palladium supply is headed for the second highest level this decade though auto catalyst demand remained strong and is expected to hit a record 8 5 million ounces The consultancy looks for a supply demand deficit of 1 2 million palladium ounces The latest strength came following China s plan to introduce policies aimed at boosting domestic spending on items such as autos and home appliances this year This means increased purchase of vehicles which in turn would spur demand for pallidum If these weren t enough palladium forward contracts are in a state of backwardation wherein later dated contracts are cheaper than near term contracts This signals that the metal market is tightening and demand is robust paving the way for a palladium rally This trend is likely to persist at least in the near term acting as the biggest catalyst for the commodity The metals surge pushed pallidum price higher than gold last month for the first time in 16 years Palladium price is currently hovering around 1 320 while gold bullion is trading below the 1 300 mark read Given the bullish trends palladium is poised to surge even further and investors could tap this opportune moment with the help of the pure play Aberdeen Standard Physical Palladium Shares ETF PALL in FocusThe fund seeks to match the price of palladium It owns palladium bullion in plate or ingots kept in Zurich or London under the custody of JPMorgan Chase NYSE JPM Bank The product has amassed 192 2 million in its asset base and trades in lower volume of about 18 000 shares a day It charges 60 bps in annual fees and has gained about 25 over the 13 week period The fund has a Zacks ETF Rank 3 Hold with a High risk outlook see Want key ETF info delivered straight to your inbox Zacks free Fund Newsletter will brief you on top news and analysis as well as top performing ETFs each week |
MS | China may backslide on deleveraging if trade war looms | By Elias Glenn and Stella Qiu BEIJING Reuters China s efforts to reduce its reliance on debt and find a more sustainable route to grow its economy may be derailed by the simmering trade dispute with the United States economists warn This was the year that Beijing was expected to step up its controls on unfettered lending particularly in the so called shadow banking area as it seeks to contain a dangerous build up in debt across much of the economy But there have been signs in the past few weeks that as U S President Donald Trump has ratcheted up the pressure on China over its trade policy including a series of threats to impose punitive tariffs on Chinese goods coming into the United States that a backsliding on deleveraging may be close The most obvious sign of this came last Tuesday when China s central bank unexpectedly announced it was cutting the amount of cash that banks must keep in reserves Then on Thursday China s state planner said it aims to cut commercial and industrial electricity prices by an average of 10 percent a move that aligns with a years long effort to reduce corporate costs though the size and timing of the cut again surprised financial markets China has also this year vowed to lighten the tax burden on individuals and businesses and on May 1 will lower the value added tax rate for the manufacturing transportation construction telecommunication and agricultural sectors This all has at least some investors and economists predicting that if the skirmishes with the United States turn into something approaching a no holds barred trade war then Beijing will do a lot more to support industry and the overall economy If you were to see a negative growth shock then I don t think they would hold the line and say we re still going to prioritize reducing credit growth and deleveraging the financial sector I think that would change priorities said Alex Wolf senior emerging markets economist at Aberdeen Standard Investments Underlying this are government concerns that if the economy slowed significantly from the current 2018 target of around 6 5 percent growth then it could cause hardship in parts of the economy and leave more people jobless or underemployed The Communist Party government has been traditionally sensitive to anything that could create unrest such as strikes and other protests and potentially lead to a challenge to its authority SIGNS OF SLOWING MOMENTUM To be sure over the past year China has powered through a slowdown in home price gains weaker credit growth and an environmental crackdown to deliver better than expected growth In the first quarter gross domestic product GDP in the world s second largest economy grew 6 8 percent well above the annual target And some don t see the trade tensions getting out of control We are still optimistic about the global economic recovery and China s exports outlook giving Beijing leeway to stick to the current deleveraging agenda said Robin Xing Chief China Economist at Morgan Stanley NYSE MS But the Chinese economic data for March such as weaker growth in industrial output and investment is suggesting that momentum is slowing If there is a faltering in exports whose strong growth last year provided cover for Beijing to drive down the leverage it could push the authorities to shift policy back to its old playbook to support growth the economists say Net exports contribution to GDP growth last year was the highest in 10 years according to data from the National Bureau of Statistics But so far this year that trend has reversed with exports pulling down growth Analysts caution that it is still too early to assess the direct impact of tariffs on China s economic growth and macro policy as none of the recently announced tariffs has been implemented and any that eventually does go into effect could be significantly watered down through negotiation Even if Trump s current threats to impose tariffs on 150 billion of Chinese imports are fully implemented that would still only impact less than 7 percent of China s total exports last year and less than 2 percent of GDP The direct impact of tariffs is most likely to initially show up in higher inflation and some localized unemployment if factories in affected sectors see their business hit but neither are expected to be severe economists and officials say Cong Liang director at the National Development and Reform Commission s department of national economy told Reuters that China s job market is resilient with a labor shortage in coastal cities showing the market is able to absorb any job losses caused by a Sino U S trade war But side skirmishes such as Washington s decision to ban American companies from providing components to Chinese telecoms equipment company ZTE SZ 000063 HK 0763 for seven years in an Iran sanctions busting case are likely to have a longer term impact on growth The U S government has also recently rejected attempts by Chinese companies to buy a number of American assets particularly in sensitive sectors And approval of some American led takeover deals are being held up in Beijing currently These barriers to capital flows and trade will hinder both economies but also hurt China s effort to move up the value chain improve the quality of its economic growth and maintain a steady increase in household incomes MORE RELIANCE ON DOMESTIC DEMAND The economic tension will probably dampen productivity growth in the coming decades it will dampen it in China and it will probably dampen productivity growth globally said Louis Kuijs head of Asia economics at Oxford Economics We are basically expecting domestic demand growth to play a larger role this year and next than we had initially And that will have to come about by a less restrictive policy stance than we had assumed before he said Oxford expects China s GDP to grow 6 5 percent this year indicating significant slowing from the first quarter The economists say that investors should look for a number of additional signals from Beijing to see whether it has shifted policy One would be another easing in bank reserve requirements China could allow local government to issue more special bonds to support government spending on urban redevelopment and infrastructure investment to shore up domestic demand said Xing from Morgan Stanley |
MS | Morgan Stanley Upgrades Twitter On Ad User Growth | Investing com Morgan Stanley NYSE MS has upgraded Twitter and raised its stock price target on the social media company saying both user and ad growth will improve The Wall Street firm changed Twitter from underweight to equal weight and lifted its 12 month target from 28 to 29 a share Morgan Stanley says Twitter has improved its tools for advertisers allowing them to better target users while also lowering ad prices Twitter s user growth is expected to benefit from big events such as the royal wedding and the midterm elections The company recently reported its first quarterly profit in February Shares have doubled in the past 12 months |
JPM | U S job growth surges unemployment rate drops to 3 6 percent | By Lucia Mutikani WASHINGTON Reuters U S job growth surged in April and the unemployment rate dropped to the lowest in nearly half a century pointing to sustained strength in economic activity even as last year s massive stimulus from Republican tax cuts and spending increases fades The Labor Department s closely watched monthly employment report on Friday showed the greater than expected 263 000 new jobs created last month were spread across most industry sectors and the unemployment rate was just 3 6 percent the lowest since December 1969 Still wage gains did not accelerate as expected holding at a reading that is consistent with moderate inflation Moreover the decline in the unemployment rate was driven largely by the most people leaving the labor force in a year and a half The report was supportive of the Federal Reserve s decision on Wednesday to keep interest rates unchanged and signal little desire to adjust monetary policy anytime soon Fed Chairman Jerome Powell described the economy and job growth as a bit stronger than we anticipated and inflation somewhat weaker Employment gains are strong enough to dispel any immediate concerns over the health of the economy while wage gains are not strong enough to force the Federal Reserve s hand to tighten the policy stance said Harm Bandholz chief U S economist at UniCredit Research in New York Aside from April s surge in nonfarm payrolls the economy created 16 000 more jobs in February and March than previously reported Economists polled by Reuters had forecast payrolls rising by 185 000 jobs last month The strong economy especially the labor market could boost President Donald Trump s re election hopes next year Trump who has boasted about the economy being one of the major wins of his first term in office cheered April s robust employment gains JOBS JOBS JOBS Trump tweeted The economy will mark 10 years of expansion in July the longest on record Job gains are well above the roughly 100 000 needed per month to keep up with growth in the working age population The second month of strong employment growth put to rest concerns about a recession and ironically undercut Trump s call for the Fed to cut interest rates A brief inversion of the U S Treasury yield curve in March had fanned fears of an economic downturn leading markets to price in a rate cut this year It would be awfully hard for the Fed to explain a rate cut given the strong job market so forget that said Joel Naroff chief economist at Naroff Economic Advisors in Holland Pennsylvania Hiring remains strong despite anecdotal evidence of worker shortages in the transportation manufacturing and construction industries suggesting there is still some spare capacity in the labor market Steadily rising wages had until recently been keeping workers in the labor force and drawing back some who had dropped out Average hourly earnings rose six cents or 0 2 percent in April after rising by the same margin in March That kept the annual increase in wages at 3 2 percent for a second straight month Though wage growth is not strong enough to drive up inflation it is seen sufficient to underpin economic growth as the stimulus from last year s 1 5 trillion tax cut wanes The economy grew at a 3 2 percent annualized rate in the first quarter driven by a surge in exports and inventories quickening from the October December period s 2 2 percent pace The dollar fell against a basket of currencies while U S Treasury prices rose Stocks on Wall Street were trading higher WEAK SUPPLY MANAGER SURVEYS Despite April s robust job gains there are signs the economy slowed early in the second quarter A survey from the Institute for Supply Management ISM on Friday showed a measure of services industry activity dropped to a 20 month low in April It followed on the heels of another ISM survey this week showing factory activity hitting a 2 1 2 year low last month Last month s two tenths of a percentage point drop in the unemployment rate from 3 8 percent in March was because 490 000 people left the labor force in April the most in 18 months It was the fourth straight month of workers dropping out of the labor force and could shrink the pool of available workers The labor force participation rate or the proportion of working age Americans who have a job or are looking for one fell to 62 8 percent in April from 63 0 percent in March This suggested more slack in the labor market than indicated by the unemployment rate The drop in participation was almost across the board with significant declines among prime age and younger workers The supply side of the economy looks a little less shiny in light of the decline in the participation rate said Michael Feroli an economist at JPMorgan NYSE JPM in New York A broader measure of unemployment which includes people who want to work but have given up searching and those working part time because they cannot find full time employment was unchanged at 7 3 percent in April Economists expect job growth will slow this year as fewer workers become available which will push up wages and lift inflation back to the Fed s 2 percent target An inflation measure tracked by the U S central bank increased 1 6 percent in the year to March the smallest gain in 14 months Employment at construction sites increased by 33 000 jobs in April rising for a second straight month Manufacturing sector payrolls rebounded by 4 000 jobs after being unchanged in March The industry is being pressured by layoffs in the automobile sector as assembly plants try to cope with declining sales and an inventory overhang The auto sector shed jobs for a fourth straight month Employment increased in the leisure and hospitality professional and business services healthcare transportation and warehousing and financial activities industries But retail payrolls declined for a third straight month
Temporary help a harbinger for future hiring rebounded last month after dropping in March Government payrolls increased by 27 000 in April |
JPM | Australian election rate cut calls grow as decision nears Reuters poll | By Swati Pandey SYDNEY Reuters A slim majority of economists polled by Reuters expects Australia s central bank to keep rates at a record low this week although calls for an easing have grown louder after disappointingly weak first quarter inflation The Reserve Bank of Australia RBA has left policy at 1 50 percent since last easing in August 2016 and as many as 25 of 42 economists polled in late April expect this record spell of unchanged rates to extend on May 7 A raft of banks from ANZ to ING JPMorgan NYSE JPM and Citi are among the 17 predicting a cut on Tuesday This is a sharp turnaround from the previous poll in March when a majority had forecast unchanged policy until 2020 Expectations changed rapidly after official data showed key measures of underlying inflation favored by the RBA averaged around 1 4 percent for the year marking 13 quarters below the central bank s 2 3 percent target range We struggle to see how core inflation can get back to 2 percent without additional monetary stimulus ANZ economists said The change in the outlook accompanies disappointing fourth quarter gross domestic product data for March quarter while retail sales a gauge of consumer health have also remained tepid for some time now A rate cut on Tuesday could challenge the federal government s campaign claim that it is a strong economic manager ahead of a national vote on May 18 We suspect the RBA would prefer if monetary policy was not politicized during a close and fractious Federal election campaign said Bank of America Merrill Lynch economist Tony Morriss who expects policy easing between July and September Fiscal policy is set to become more expansionary whoever wins Opinion polls show the opposition Labor Party might emerge as a winner A majority of economists in the Reuters survey including Morriss predict two cuts to 1 00 percent later this year as the slow economic momentum has already led the RBA to ditch its long held tightening bias Across the Tasman Sea New Zealand s central bank is in a similar conundrum It will meet on May 8 one after day the RBA and is seen more likely to lower rates after signaling an easing bias in its last meeting We think an RBNZ cut to match Australia s 1 50 percent cash rate is the most likely outcome BofA ML s Morriss said
A hold for the RBA on Tuesday might reduce the chances of a cut from the RBNZ on Wednesday at least at the margin |
JPM | The Market Gave Trump Space for Tariff Tweet But for How Long | Bloomberg President Donald Trump had the comfort of an 18 percent rally in U S stocks for the year so far when he tweeted the threat of more China tariffs But what the market giveth the market has demonstrated it can taketh away
The circumstances were quite different at the start of 2019 when the S P 500 Index s biggest quarterly sell off in more than seven years had fueled fears of recession Key economic advisers were campaigning in the White House for a quick resolution to the trade war with China to help markets recover Even with a solid recovery in shares by March Trump himself was pushing his negotiators to close a trade deal soon concerned that failure could drag down stocks people familiar with the matter said
There s an element of saying the market has rallied this year and the U S administration saying that s a sign of strength in the U S economy so we can be a bit more forceful right now with China said Kerry Craig a global market strategist at JPMorgan NYSE JPM Asset Management in Melbourne
Yet with the rally itself driven in part by expectations of a trade deal the risk is that the tariff threat unwinds anything the U S might have been playing on Craig said
No modern president has been as direct as Trump in the importance he places on American equities Go back no further than last month when he renewed his campaign for Federal Reserve monetary easing with a tweet claiming the stock market would have been much higher In early March he said that you re going to see a very big spike in stocks once trade deals get done
True Trump effectively kicked off the trade war back when U S stocks had just gone through the volmageddon unwind last year But the American economy was just starting to get a kick from tax cuts at the time so there was support from other areas And that economic good cheer helped U S equities outperform the rest of the world during the summer of 2018 as the trade war raged on Chinese shares in particular did poorly by contrast
Trump even crowed in an August tweet that our market is stronger than ever while China s had tumbled weakening its bargaining power That confidence evaporated during the rout in U S benchmarks seen in October and with even greater vehemence December when the president blamed the Fed for having hurt both the economy and markets with its tightening campaign The S P 500 slid 14 percent that quarter
Supporting Pillars
The Fed s pivot to a patient stance on interest rates and a pledge to halt the contraction in its balance sheet in coming months has provided part of the lift for stocks which saw Wall Street notch fresh records last week Also helping strong earnings with about three quarters of S P 500 members reporting for the January to March period beating consensus expectations according to data compiled by Bloomberg
Those two pillars could still help limit declines in American equities The 1 8 percent slide in futures on the S P 500 Index as of 3 18 p m Hong Kong time was a fraction of the 5 6 percent plunge in the Shanghai Composite But all bets could be off if the trade deal investors had anticipated as soon as this week proves beyond reach
Now that Wall Street is at record highs he has some leeway to threaten again Stephen Innes the head of trading at SPI Asset Management said of Trump He s willing to shave off some equity market gains to make that happen
Innes added that ultimately after this clear out some attractive levels will be there for the taking
That may be all the more true if the slide serves as a way station to a trade deal
The most likely outcome is that a deal will still be done said Arthur Kroeber the head of research at Gavekal Research The main reason is that global markets have priced in a deal so a failure of the talks will trigger a massive sell off he wrote in a note to clients The odds still favor an agreement in time for Trump and Xi Jinping to sign it ahead of the G 20 summit in Osaka on June 28 |
JPM | JPMorgan s Dimon Puts Odds of China U S Trade Deal at 80 | Bloomberg JPMorgan Chase Co NYSE JPM Chief Executive Officer Jamie Dimon put the odds of the U S and China reaching a trade deal at 80 percent sounding a note of optimism even after the rising specter of tariffs roiled global markets
Despite the recent increase in tensions between the sides the bank chief said in an interview with Bloomberg Television that it remains probable that there will eventually be an agreement He said however that global growth would be hit if the talks go really south
Now we have this whole kind of little bump in the road said Dimon Sometimes his tweets don t pan out to be as bad I don t think they ll get the deal done by Friday
U S President Donald Trump threatened to raise tariffs on Chinese goods starting Friday China s Vice Premier Liu He will meet with U S Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on May 9 and 10 according to a statement Tuesday on the Chinese Ministry of Commerce website
China has already opened many industries Dimon said on the sidelines of JPMorgan s annual China summit in Beijing something that s in the country s own interests The U S bank recently received approval to take a majority stake in an onshore securities venture
The outlook for the trade talks was cast into doubt after Trump s surprise announcement over Twitter on Sunday that he planned to raise the tariff increase from the current 10 percent because talks were moving too slowly The president said he may also impose duties shortly on 325 billion of Chinese goods that aren t currently covered a move that would hit virtually all imports from the Asian nation |
JPM | China s Trade Shows Economic Recovery Tested by Global Slowdown | Bloomberg An unexpected fall in China s exports and an equally unforeseen rise in imports show that the world s second largest economy continues a tentative recovery while global demand weakens and trade tensions re escalate
Exports dropped 2 7 percent in April versus a forecast 3 percent increase while imports expanded by 4 percent compared to a projected slip the customs administration said Wednesday
Those misses highlight that the global slowdown is weighing down on China s growth instead of the other way around at least for now Months of policy stimulus has fueled a pickup in the Asian economy although the re escalating trade threats may throttle those green shoots
The lackluster exports show that the global economy probably hasn t bottomed yet while the imports signal recovering domestic demand said Peiqian Liu Asia strategist at Natwest Markets PLC in Singapore The noise and uncertainties in the trade war will continue to weigh on China s trade
China s shipments to the U S Japan and South Korea slumped from a year earlier last month and those to the largest European economies also slowed from a surge in March The trade surplus with the U S in the first four months of 2019 expanded 10 5 percent from the same period in 2018 to about 570 billion yuan 84 billion as trade flows both ways declined
While early data from Japan and the euro area show signs of stabilization President Donald Trump s abrupt Sunday announcements that he planned to raise tariffs on 200 billion of Chinese imports to 25 percent from 10 percent is throwing that outlook back into uncertainty He also threatened to impose duties shortly on all other goods not already tariffed A Chinese delegation led by Vice Premier Liu He will visit Washington for negotiations Thursday and Friday
In an all out trade war scenario annual gross domestic product may shrink by as much as 0 6 percent in the U S and by 1 5 percent in China according to the International Monetary Fund
The tensions between the U S and China are a threat for the global economy according to IMF Managing Director Christine Lagarde JPMorgan Chase Co NYSE JPM Chief Executive Officer Jamie Dimon also noted that global growth would be hit if the talks go really south but still put the odds of the U S and China reaching a trade deal at 80 percent
What Bloomberg s Economists Say
The contraction in China s April trade data is worrying even after taking into account the seasonal driven large upswings in March It is even more concerning in light of the latest flare up of trade tensions between China and the U S Chief Asia Economist Chang Shu wrote in a note
The flaring trade tensions will threaten China s outlook which had been brightened by strong data in March following fiscal stimulus and credit easing since last year The imported volume of crude oil copper and coal increased from a year earlier in April
Still the import data may have been flattered by rising oil and iron ore prices A tax cut announced earlier this year may also have prompted importers to delay shipments until after April 1 from when they can pay lower value added taxes according to Lu Ting chief China economist at Nomura Holdings Inc in Hong Kong
There is real risk of double dip in growth and Beijing cannot afford to stop easing yet Lu wrote in a note With the rapid escalation of the trade conflict with the US we believe Beijing will likely step up easing measures again
Updates with more detail and economist comments |
JPM | Dimon Says Yields Extraordinarily Low 4 Wouldn t Be Bad | Bloomberg JPMorgan Chase Co NYSE JPM Chief Executive Officer Jamie Dimon repeated his warning about the need to prepare for higher Treasury yields despite their retreat since he said last August they could surpass 5 percent
People tend to forecast a little bit of a change and sometimes it s a huge inflection point which people almost never capture Dimon said Wednesday in an interview with Bloomberg Television in Beijing When I talk to my board we ve got to be able to handle 5 percent 7 percent 8 percent 10 percent because you don t know
While refraining from a year end forecast for 10 year U S yields Dimon said that 4 percent when you are having fairly good growth is not a bad number The current level 2 46 percent in midday trading in Tokyo is extraordinarily low
Central banks purchases of government debt had to have an effect on the 10 year yield he said though the Federal Reserve has now reversed its quantitative easing some Even the Bank of Japan may one day need to follow suit he said
When Dimon cautioned last year that yields could head toward 5 percent or more the Fed was still projecting a series of interest rate hikes for 2019 That all changed after market turmoil in the fourth quarter of 2018 helped persuade the central bank to shift to a patient stance on rates
Wait and See
There s nothing wrong with wait and see for the Fed at this point Dimon said But growth has been good and they ve got to react
The banker said it may be better for Fed officials to ditch projections entirely for the policy rate given that they must always be data dependent keying decisions off of the latest indicators and outlook
He said officials also need to think about whether the quantitative easing they deployed from 2008 to 2014 was really effective and what its long term impact will be Along with considering the effect of regulatory changes they ll end up in the right place he predicted
Trade Tensions
Dimon played down concerns about the latest sell off in stocks in response to U S China trade tensions I never worry that much about it The market s always going to be reacting to different things
Read more here about Dimon s comments on the trade tensions
If you just raised the odds of a real global trade war a little bit then the declines in equities this week were a rational reaction Dimon said If the talks were to go really south it would hit world growth said Dimon who still estimated 80 percent odds of a bilateral deal
It would be a huge mistake for American policy to be set based on the stock market he added
Updates with quotes starting in second paragraph |
MS | Carrying The Underperforming Yen | One noticeable element of Monday s price action was the underperformance of the Japanese yen
While the US dollar struggled versus currencies such as the euro the Canadian dollar the British pound and the Swiss franc the greenback gained versus the yen As a consequence the yen broadly slid in value It may well be that markets have at least for the moment concluded that with other central banks edging away from current ultra accommodative policy settings while the Bank of Japan remains committed to very loose monetary policy the yen is a candidate for a funding currency in carry plays
Certainly US firm Morgan Stanley is of that mind writing about USDJPY on Monday that if would need a break of the 112 10 top to open potential to 114 40 its high traded in May Morgan Stanley NYSE MS was also bullish on the prospects for the yen crosses
Japan s Mitsubishi UFJ Financial Grouo MUFG has also been casting its eye over possible carry trades and also sees the yen as the likely funder Referring to low volatility conditions in FX that in the past have prompted traders to look at carry trades MUFG wrote Monday that in such an environment the yen should be the currency that suffers and while the yen has weakened modestly there must be a risk of greater under performance over the coming days and weeks if these market conditions persist Time will tell but it s worth bearing in mind
Written by Neal Kimberley External Currency Analyst
All financial products traded on margin carry a high degree of risk to your capital Any forecasts given are not a reliable indicator of future performance and the decision to act on any ideas and suggestions presented is at the sole discretion of the reader |
MS | Moving Averages June Month End Update | The S P 500 closed June with a monthly gain of 0 48 after a monthly gain in May of 1 16 All three S P 500 MAs are signaling invested and four of the five Ivy Portfolio ETFs Vanguard Total Stock Market NYSE VTI Vanguard FTSE All World ex US NYSE VEU iShares 7 10 Year Treasury Bond NYSE IEF and Vanguard REIT NYSE VNQ are signaling invested In the table monthly closes that are within 2 of a signal are highlighted in yellow
The Ivy Portfolio
The above table shows the current 10 month simple moving average SMA signal for each of the five ETFs featured in We ve also included a table of 12 month SMAs for the same ETFs for this popular alternative strategy
Background on Moving Averages
Buying and selling based on a moving average of monthly closes can be an effective strategy for managing the risk of severe loss from major bear markets In essence when the monthly close of the index is above the moving average value you hold the index When the index closes below you move to cash The disadvantage is that it never gets you out at the top or back in at the bottom Also it can produce the occasional whipsaw short term buy or sell signal which we ve seen most recently in 2016
Nevertheless a chart of the S P 500 monthly closes since 1995 shows that a 10 or 12 month simple moving average SMA strategy would have ensured participation in most of the upside price movement while dramatically reducing losses
Here is the 12 month variant
The 10 month exponential moving average EMA is a slight variant on the simple moving average This version mathematically increases the weighting of newer data in the 10 month sequence Since 1995 it has produced fewer whipsaws than the equivalent simple moving average although it was a month slower to signal a sell after these two market tops
A look back at the 10 and 12 month moving averages in the Dow during the shows the effectiveness of these strategies during those dangerous times
The Psychology of Momentum Signals
Timing works because of a basic human trait People imitate successful behavior When they hear of others making money in the market they buy in Eventually the trend reverses It may be merely the normal expansions and contractions of the business cycle Sometimes the cause is more dramatic an asset bubble a major war a pandemic or an unexpected financial shock When the trend reverses successful investors sell early The imitation of success gradually turns the previous buying momentum into selling momentum
Implementing the Strategy
Our illustrations from the S P 500 are just that illustrations We use the S P because of the extensive historical data that s readily available However followers of a moving average strategy should make buy sell decisions on the signals for the each specific investment not a broad index Even if you re investing in a fund that tracks the S P 500 e g Vanguard s VFINX or the SPY NYSE SPY ETF the moving average signals for the funds will occasionally differ from the underlying index because of dividend reinvestment The S P 500 numbers in our illustrations exclude dividends
The strategy is most effective in a tax advantaged account with a low cost brokerage service You want the gains for yourself not your broker or your Uncle Sam
Note For anyone who would like to see the 10 and 12 month simple moving averages in the S P 500 and the equity versus cash positions since 1950 here s an xlsx format of the data Columns D and F shows the positions signaled by the month end close for the two SMA strategies
Recommended Reading
In the past we ve recommended Mebane Faber s thoughtful article The article has now been updated and expanded as Part Three Active Management in his book coauthored with Eric Richardson
The book analyzes the application of moving averages the S P 500 and four additional asset classes the Morgan Stanley NYSE MS Capital International EAFE Index MSCI EAFE Goldman Sachs Commodity Index GSCI National Association of Real Estate Investment Trusts Index NAREIT and United States government 10 year Treasury bonds
Footnote on calculating monthly moving averages If you re making your own calculations of moving averages for dividend paying stocks or ETFs you will occasionally get different results if you don t adjust for dividends For example in 2012 VNQ remained invested at the end of November based on adjusted monthly closes but there was a sell signal if you ignored dividend adjustments Because the data for earlier months will change when dividends are paid you must update the data for all the months in the calculation if a dividend was paid since the previous monthly close This will be the case for any dividend paying stocks or funds |
MS | Are Options Traders Betting On A Big Move In Morgan Stanley MS Stock | Investors in Morgan Stanley NYSE MS need to pay close attention to the stock based on moves in the options market lately That is because the July 7th 2017 37 50 Put had some of the highest implied volatility of all equity options today What is Implied Volatility Implied volatility shows how much movement the market is expecting in the future Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other It could also mean there is an event coming up soon that may cause a big rally or a huge sell off However implied volatility is only one piece of the puzzle when putting together an options trading strategy What do the Analysts Think Clearly options traders are pricing in a big move for Morgan Stanley shares but what is the fundamental picture for the company Currently Morgan Stanley is a Zacks Rank 3 Hold in the Financial Investment Bank industry that ranks in the Bottom 42 of our Zacks Industry Rank Over the last 60 days one analyst has increased earnings estimate for the current quarter while three analysts have revised the estimate downward The net effect has taken our Zacks Consensus Estimate for the current quarter from 85 cents per share to 80 cents in that period Given the way analysts feel about Morgan Stanley right now this huge implied volatility could mean there s a trade developing Often times options traders look for options with high levels of implied volatility to sell premium This is a strategy many seasoned traders use because it captures decay At expiration the hope for these traders is that the underlying stock does not move as much as originally expected Looking to Trade Options Each week our very own Dave Bartosiak gives his top options trades Check out his recent live analysis and options trade for the TSLA earnings report completely free See it here or check out the embedded video below for more details |
JPM | Best Commodity ETFs Of 2018 To Watch Again In 2019 | Like the other asset classes commodities also saw feeble trading in 2018 with deep losses in everything from oil and copper to coffee and sugar U S China trade dispute slowing growth in China and global slowdown concerns were the major culprits that are likely to persist this year as well Additionally strong dollar continued to weigh on commodities as a high dollar made dollar denominated assets expensive for foreign investors potentially diminishing demand for commodities Notably U S dollar index logged in its best annual rise in three years Crude oil and gasoline were the major losers while palladium and cocoa escaped the rout and continue to be bright spots Palladium got a boost especially from strong demand as environmental concerns prompted a global shift from diesel to gasoline and hybrid vehicles Additionally supply shortages added to the strength The bullish trend continued at the start of 2019 as palladium prices hit the key 1 300 level for the first time ever Meanwhile cocoa prices were on the rise on supply disruption as dry weather in top producing areas such as Ivory Coast hurt output read Natural gas price spiked in November on colder than expected temperatures that led to higher heating demand after remaining flat for most of last year
Coming to gold the bullion registered the best monthly gain in December in two years as threats of global slowdown sparked demand for a safe haven The yellow bullion acts as a store of value and hedge against market turmoil Gold will likely see an uptick in 2019 given that the Fed will adopt a dovish stance and volatility persists However a booming U S economy and bouts of upbeat data will again steal the metal s shine Additionally trade talks between the United States and China will add to the woes Given this we have highlighted best performing commodity ETFs of 2018 that will remain in focus in 2019 iPath Bloomberg Cocoa Subindex Total Return ETN BE NIB This note follows the Bloomberg Cocoa Subindex Total Return which delivers returns through an unleveraged investment in the futures contracts on cocoa It has been able to manage 22 6 million in AUM and trades in a good volume of 51 000 shares per day Expense ratio comes in at 0 70 The note has surged 23 last year and carries a Zacks ETF Rank 4 Sell with a High risk outlook read Aberdeen Standard Physical Palladium Shares ETF PALL seeks to match the price of palladium With AUM of 186 3 million the ETF owns palladium bullion in plate or ingots kept in Zurich or London under the custody of JPMorgan Chase NYSE JPM Bank It has an expense ratio of 0 60 and sees lower volume of about 17 000 shares a day The product was up 17 2 last year and has a Zacks ETF Rank 3 Hold with a High risk outlook United States 12 Month Natural Gas Fund AX UNL This product seeks to offer spread out exposure across the futures curve in order to mitigate contango a huge problem in the natural gas ETF market The investment objective of UNL is to reflect the daily changes in the price of natural gas delivered at the Henry Hub Louisiana Its benchmark is the near month futures contract to expire and the contracts for the following 11 months for a total of 12 consecutive months If the near month futures contract is within two weeks of expiration the benchmark will be the next month contract to expire and the contracts for following 11 consecutive months UNL has accumulated 5 6 million in its asset base and charges 90 bps in annual fees The product trades in paltry average daily volume of 8 000 shares and has gained 12 5 last year read SPDR Gold Trust ETF V GLD Though GLD NYSE GLD has lost nearly 3 in 2018 it could see a reversal this year given the Fed s dovish outlook This fund tracks the price of gold bullion measured in U S dollars and kept in London under the custody of HSBC Bank USA It is the ultra popular gold ETF with AUM of 32 8 billion and average daily volume of around 7 8 million shares a day Expense ratio comes in at 0 40 The fund has a Zacks ETF Rank 3 Hold with a Medium risk outlook read Want key ETF info delivered straight to your inbox Zacks free Fund Newsletter will brief you on top news and analysis as well as top performing ETFs each week |
MS | Morgan Stanley seeks new court in Italian derivatives case | ROME Reuters Morgan Stanley N MS on Thursday asked to have a lawsuit against it for 2 7 billion euros 3 34 billion in damages thrown out of an Italian administrative court an Italian judge said At the opening of the trial in Rome the U S investment bank the other defendants asked a three judge panel at the Court of Accounts which rules on abuses of public funds to reject the case in an acknowledgement that the judges do not have jurisdiction Marco Fratini one of the judges said The defendants who deny any wrongdoing maintain the issue should be reviewed by a civil court The U S investment bank maintains that derivatives contracts signed with Italy s Treasury that led to losses belong in a civil court not the Court of Accounts which rules on abuses of public funds sources close to the case said before the hearing began If the Court of Accounts accepts the claim the state would then have three months to bring the case before a new tribunal The hearing is ongoing and it is not clear whether the judges will rule on the issue on Thursday The Morgan Stanley derivative transactions were made between 1995 and 2005 and were terminated in December 2011 and January 2012 Morgan Stanley said in a securities filing The interest rate derivatives were meant as a form of insurance for the Italian government one of the most heavily indebted in Europe in the event that market rates rose Instead after the 2008 2009 global financial crisis interest rates plunged and the state incurred large losses on its derivative positions as it was able to borrow more cheaply in the bond markets The Court of Accounts prosecutors argue that some contracts negotiated with Morgan Stanley were speculative in nature and contained termination clauses that were overly advantageous to the bank Morgan Stanley says the claim is groundless and in August 2016 the bank rejected a settlement proposal from an Italian prosecutor for a one off payment a securities filing showed The case includes claims worth 1 18 billion euros against two senior officials former public debt chief Maria Cannata and Treasury chief administrator Vincenzo La Via and former finance ministers Domenico Siniscalco and Vittorio Grilli These defendants also challenged the jurisdiction of the trial on Thursday Fratini said A Treasury spokesman said in July that it had full faith in the work undertaken by its managers and trusted that the court could clear up these matters Siniscalco and Grilli declined to comment
Compensation orders by the Court of Accounts can be appealed Once confirmed they are legally enforceable through asset seizures if necessary |
MS | Wall Street regulator sanctions Tezos cryptocurrency project co founder | By Anna Irrera Steve Stecklow and John McCrank NEW YORK Reuters A Wall Street regulator has suspended the co founder of the controversial Tezos cryptocurrency project from associating with broker dealers for two years part of a settlement to resolve allegations that he made false statements about his side venture while working at Morgan Stanley N MS The Financial Industry Regulatory Authority FINRA fined Arthur Breitman 20 000 for the alleged violations which he neither admitted nor denied in an agreement dated April 18 The action follows a Reuters investigation published in October that found Breitman a French citizen registered with FINRA had not reported any outside business activities while working at Morgan Stanley in 2014 and 2015 when he was developing and pitching Tezos FINRA requires registered securities professionals to provide prior written notice to their employer to conduct outside business activities if there is reasonable expectation of compensation Breitman did not notify Morgan Stanley at any time that he was engaging in these outside business activities FINRA said in the settlement agreement Breitman also falsely attested on two Morgan Stanley compliance questionnaires that he had disclosed all outside business activities to the Wall Street bank according to the agreement Tezos raised 232 million in July through an initial coin offering an online fundraiser where new virtual currencies are issued to buyers It has since been embroiled in controversy and has yet to issue any tokens to its contributors The settlement with FINRA is unrelated to and has no impact on the launch of the Tezos network Sarah Lightdale an attorney for Breitman said in a statement Arthur cooperated fully with FINRA at all times and Arthur is pleased to put this personal matter behind him A Morgan Stanley spokesman declined to comment Breitman left the bank in 2016 and is not currently associated with a broker dealer according to his FINRA record In an interview last June Breitman s wife Kathleen who is Tezos s other co founder told Reuters We made all the proper disclosures It was a hobby you know And like there was never any intention to really commercialize any of the software But Reuters reported that a copy of a Tezos Business Plan from early 2015 listed Arthur Breitman as chief executive and projected that if the company survived 15 years it would be worth between 2 billion and 20 billion In its findings the regulator cited the Business Plan and alleged that Breitman broke a FINRA rule that such communications may not make any exaggerated or unwarranted claims opinions or forecasts The Business Plan failed to provide a balanced presentation and sound basis for evaluating an investment in Tezos the settlement agreement said Reuters also reported that in an email Arthur Breitman sent to an acquaintance in early 2015 he said he was seeking to create a business based on Tezos but was trying not to be associated publicly with the project He had published two papers about Tezos under a pseudonym L M Goodman He also expressed concern that his activities might conflict with his employment at Morgan Stanley according to messages reviewed by Reuters
In its findings FINRA said Breitman s use of the L M Goodman pseudonym to promote Tezos effectively concealed Breitman s involvement with Tezos from Morgan Stanley |
MS | FINRA Fines Tezos Cofounder 20k For Morgan Stanley Disclosure Failures | US regulators have fined Tezos cofounder Arthur Breitman 20 000 and barred him from broker dealer interaction until 2020 Reuters reports April 20
According to an agreement between Breitman and Wall Street s Financial Industry Regulatory Authority FINRA sealed April 18 a failure to disclose outside business activities related to Tezos while working for Morgan Stanley NYSE MS triggered the penalties |
MS | Global Chip Manufacturer Expects Lower Profit Due To Uncertain Crypto Mining Demand | Taiwan Semiconductor Manufacturing Co TSMC a global chip manufacturing giant has lowered its 2018 revenue forecast to 10 percent growth down from its previous estimate of 10 to 15 percent based in part on uncertainty in cryptocurrency mining demand CNBC reported April 19
Morgan Stanley NYSE MS estimates that about 10 percent of TSMC s revenue depends on crypto mining demand Charlie Chan equity analyst at Morgan Stanley Taiwan said that in their analysis Bitcoin mining hardware demand and price will decline further and affect TSMC s wafer demand |
MS | Price Break Miners Deal with Risks of Unprofitability Chip Maker Sounds the Alarm Over the Space | As Bitcoin s price remains firmly stuck below 10 000 Wall Street players and others have turned their attentions to how the price levels are causing potential financial problems for miners
Morgan Stanley NYSE MS was the latest to join the conversation releasing a note on the subject to its clients on Thursday
Also on Thursday came the most recent earnings results from Taiwan Semiconductor Manufacturing Investors learned that the company had concerns about the uncertainties surrounding crypto mining and had lowered its guidance
Morgan Stanley
Like other observers of the mining situation Morgan Stanley has pegged a specific price at which mining may not be worth the while of the many who had once seen it as a lucrative means to make money
The magic price range that observers of mining believe should remain on the radar screen is between 8 000 and 8 600 If Bitcoin s price goes below 8 000 again and stays there mining will likely be unprofitable for them
In its note released by Morgan Stanley Wednesday equity analyst Charlie Chan reportedly said
We estimate the break even point for big mining pools should be US 8 600 even if we assume a very low electricity cost US 0 03 kW h
In the note Chan went on to say that if Bitcoin can t rise to at least 8 600 soon miners will likely find it unprofitable to keep creating the cryptocurrency
We Wednesday about a report by Bloomberg that made similar findings According to this report if Bitcoin s price drops below 8 000 again for an extended period there will likely be a swifter consolidation to industrial scale mining
The media outlet reported
That could knock out the last guy in a dorm room operations and leave holders of the currency vulnerable to the dictates of the big miners
Chip maker s assessment
For its part Morgan Stanley estimates about 10 of the chipmaker s revenue hinges on crypto mining demand
In the note it released it was stated
we think the Bitcoin mining hardware demand and price will decline further
While Morgan Stanley was releasing its note on mining to clients Thursday another mining player was making its own moves
Taiwan Semiconductor Manufacturing lowered its 2018 revenue guidance to 10 growth from 10 to 15 partly because of the uncertainty surrounding crypto mining demand The change was announced during the company s Q1 2018 earnings call
As far as the uncertainties are concerned the company s co CEO and President Mark Liu said
We see a very strong demand in the first quarter from cryptocurrency and in the first quarter So during this second quarter this is start of the second quarter we see some weakness on 28 nanometer but the rest of the technology is still very strong on cryptocurrency |
MS | Tezos Co Founder Gets FINRA Fine Suspension from Associating with Broker Dealers | The US Financial Industry Regulatory Authority FINRA Tezos co founder Arthur Breitman from associating with broker dealers for two years and fined him 20 000 The regulator s decision is part of a settlement to resolve charges that Breitman made false statements about his outside business activities while being employed at Morgan Stanley NYSE MS He has neither admit nor denied the accusations
According to FINRA rules registered securities professionals have to provide prior written notice to their employer before engaging in outside business operations if there is reasonable expectation of compensation The FINRA s settlement agreement says Breitman did not notify Morgan Stanley at any time about his side venture
In October 2017 Reuters the findings of an investigation demonstrating that Breitman who is registered with FINRA had not disclosed any outside business activities while being employed at Morgan Stanley from 2014 to 2015 This was the period when he was focused on creating the Tezos project Tezos carried out one of the largest initial coin offerings ICOs in 2017 by raising 232 million in July but failed as a project because of internal disagreements
Breitman filled two Morgan Stanley compliance questionnaires during that period and falsely stated he had disclosed all of his outside projects
Sarah Lightdale an attorney for Breitman commented on FINRA s decision as follows
The settlement with FINRA is unrelated to and has no impact on the launch of the Tezos network Arthur cooperated fully with FINRA at all times and Arthur is pleased to put this personal matter behind him
In June 2017 Breitman s spouse Kathleen also co founder of Tezos said in an interview for Reuters
We made all the proper disclosures It was a hobby you know And like there was never any intention to really commercialize any of the software
However the hobby claim is invalidated by the fact that Breitman was behind a Tezos Business Plan in 2015 as a CEO and expected the venture to be valued from 2 billion to 20 billion should it manage to continue for 15 years
Moreover in early 2015 he reportedly told an acquaintance via email that he was looking to develop a business around Tezos but didn t want to be publicly related to it Breitman published two Tezos papers under the pseudonym L M Goodman
It seems that Breitman was aware of the illegality of his actions In some of the email messages sent to people close to him he expressed worries that his Tezos business might conflict with his position at the Wall Street bank
In November last year Tezos with a class action lawsuit in California for selling unregistered securities and defrauding investors |
JPM | BOE Stuck on Hold as Brexit Delay Kicks in Decision Day Guide | Bloomberg The Bank of England looks set to take a cautious approach to interest rate changes during the U K s Brexit delay with the continued uncertainty outweighing the evidence of resilience in the economy
Officials will vote to hold the benchmark interest rate at 0 75 percent when they announce their decision at noon in London Thursday according to all economists surveyed by Bloomberg Still analysts are on the lookout for evidence of a hawkish tilt in the minutes of the meeting with some seeing one official pushing for an immediate hike
That stance would contrast with the U S Federal Reserve which left rates unchanged on Wednesday and didn t give a clear signal as to whether the next move would be an increase or a cut
The BOE s meeting is the first since Prime Minister Theresa May secured an extension to the U K s Brexit deadline until October meaning that after years of conditioning forecasts on a smooth exit in March officials will have to update their predictions to reflect the delay
Growth Outlook
It s likely they will just push back their expectations for an orderly departure and with economic data having largely surprised to the upside in the first quarter analysts expect the BOE to raise their forecasts for 2019 growth and inflation
Rate Bets
Even so most economists and traders don t expect the the six month delay to Brexit to give officials enough of a window to move While bets on a hike picked up slightly during April investors aren t fully pricing in a move until at least late 2020
That would mean Governor Mark Carney won t hike rates again before he leaves The government last week began the search for a successor to take over when Carney steps down in January
Slowing Inflation
Aside from Brexit a softer inflation picture may also strengthen arguments for caution Price growth was below the BOE s 2 percent target for the whole of the first quarter giving more breathing space
Possibility of Dissent
Still there remains a chance of a hawkish surprise at the meeting JPMorgan Chase Co NYSE JPM says that markets are ignoring the risk that policy makers lay the ground for future moves this week while one quarter of economists surveyed by Bloomberg see one official voting for an immediate hike Such a move would mark the first dissenting vote in almost a year
Employment Strength
Michael Saunders the committee s most hawkish member is the obvious candidate to lead the charge for higher rates While he said earlier this year that he didn t see a rush until Brexit uncertainty lifts the delay and increasingly impressive labor market data may be enough to convince him to resume his push |
JPM | ECB Bully Forces Credit Risk Scramble Says JPMorgan s Michele | Bloomberg Central banks hellbent on cheap money are strong arming investors into riskier bond bets and there s little reason to fight it for now says Bob Michele
The chief investment officer at JPMorgan NYSE JPM Asset Management is touting Spanish government bonds and European bank capital notes as negative yields engulf the region s bonds
The ECB has bullied us and the rest of the market into it Michele said in an interview with Jonathan Ferro on Bloomberg TV Wednesday They re not going to raise rates so that leaves us scrambling for yield They re going to maintain the balance sheet so it ends up backstopping countries like Spain
Whether an ECB design to drive capital to the neediest areas or fears about Japanese style stagnation playing out for Michele it s a green light to grab the yield
Expectations that Europe is hurtling into a decade of lowflation and anemic growth are keeping German bund yields near zero and prompting policy makers to renew pledges of support Since European Central Bank chief Mario Draghi said last month he s ready to adjust all policy tools money has poured into places like Italy Spain Portugal and corporate credit of all stripes
After they hoarded cash in December and then got blockbuster fund inflows fixed income managers are putting money to work European corporate bonds are having their best start to a year since 2012 according to data compiled by Bloomberg
Bank capital in the form of contingent convertible bonds also known as additional tier 1 notes have returned more than 10 percent this year outpacing euro denominated junk and euro government securities
All that is stoking fears monetary largesse is masking shaky fundamentals and blindsiding investors to potential pitfalls Banco Santander MC SAN SA exemplified idiosyncratic risk in subordinated bank debt with its shock decision in February not to call a CoCo bond at the earliest opportunity
Animal Spirits
Looking at yield itself is not sufficient as there are a lot of optionalities embedded in the product said Gilles Pradere a portfolio manager at RAM Active Investments SA which oversees 4 5 billion In a recession I suspect the market will handle the risk of losing everything with a very large discount he said
Federal Reserve policymakers repeated Wednesday they would be patient as the central bank weighs future rate moves and the outlook for inflation The Fed s dovish pivot this year unleashed animal spirits reversing the fourth quarter meltdown according to Scott Minerd chief investment officer at Guggenheim Partners
There is some point where this long period of accommodation has to become concerning to the stability to the financial system when the Federal Reserve does eventually face a recession in the future Minerd said in an interview with Bloomberg TV
For now it s Europe s flagging growth drawing Americans A weaker common currency and interest rate differentials boost returns for those who convert euro denominated purchases into their home currency
You re buying European assets you re hedging it back to dollars you re picking up close to 3 percent Michele said
Adds detail on Fed meeting in 10th paragraph |
MS | NDX Has A Second Negative Week USB Breaks Out | VIX challenged both Short term and Intermediate term resistance before closing beneath them A rally above Long term resistance at 12 68implies that VIX may challenge its Ending Diagonal at 17 50 in the next move
Investors on Wall Street have proven to be ingenious in finding new vehicles and avenues to take risks in the quest of making a profit
One glaring example is the VIX the benchmark volatility index used as a measure of market risk which was invented 24 years ago to signal possible market crashes in the making But since then the index has morphed into its own market a giant casino that speculators use to seek big money shorting the VIX on bets that it will go even lower In addition volatility control investment funds valued at about 200 billion use the VIX as a signal to buy or sell stocks pension funds are placing bets on its movement and insurance companies are linking products to it the Journal says
SPX caught between support and resistance
After last week s SPX has been testing its Cycle Top Support at 2430 00 and its Diagonal trendline at 2445 00 This has left an inside week of consolidation and uncertainty among investors This has been option expiration week which is normally positive
For confirmation that the market is now in its blow off top phase contrary to claims that the market keeps climbing a wall of worry and that the money on the sidelines refuses to enter look no further than the latest BofA flow show in which Michael Hartnett reports that capital markets just saw their biggest week of equity inflows since the US election 24 6bn another chunky inflow to bonds 9 0bn which combines to the second largest week of inflows to Wall Street ever largest was 35 5bn in Dec 2014
Unfortunately for active managers the news was anything but good because for another week in a row the big winner was ETFs with 26 3bn equity ETF inflow vs 1 7bn outflow from equity mutual funds while fixed income saw 4 8bn bond ETF inflows vs 4 2bn into bond mutual funds seven equity ETFs SPY NYSE SPY IVV IWM VO VTI XLF VUG one bond ETF EMB had inflows 1bn
NDX has a second negative week
NDX tested its trendline near 5600 00 and bounced closing at its weekly Short term support The next move to look for is a challenge of the trendline and supports beneath it A decline beneath the Cycle Top support at 5580 58 may suggest a deeper correction is in order Has the NASDAQ been defanged
FANG Stocks just took out Friday Monday s crash lows to the lowest since April 28th as NFLX leads the collapse
The no brainer is down 12 from its record highs last week officially entering correction
No I am not talking about President Trump but rather the crash in both Technology stocks and Oil prices which are obstructing the continuation of the bull market
As I discussed the mini flash crash in Technology certainly woke investors up
While there is certainly damage being wrought in the Technology and Discretionary sectors the rotation to Financials Energy Small and Mid Capitalization areas are offsetting the correctionary process As shown below the markets remain confined to the bullish trend currently while the overbought condition is being reduced
High Yield Bond Index rallies above Intermediate term resistance
The High Yield Bond Index rallied above Intermediate term resistance at 166 33 The sell signal has been nullified but it won t take much to reclaim it The Cycles Model suggestsweakness may resume next week
For investors seeking momentum iShares iBoxx High Yield Corporate Bond ETF HYG is probably on radar now The fund just hit a 52 week high and is up about 8 1 from its 52 week low price of 82 01 share
But are more gains in store for this ETF Let s take a quick look at the fund and the near term outlook on it to get a better idea on where it might be headed
USB breaks out
The Long Bond broke out above Long term resistance at 154 99 signaling more strength ahead This week s modest weakness may have been all it took to revive the uptrend
It is not only Equity volatility being crushed these days
Treasury Volatility too reached all time lows area this week dipping below 4
In the last 5 years whenever Treasury Volatility closed below rock bottom 4 level large movements in term rates followed swiftly by approx 100bps each time see Chart quickly pushing volatility back up again in the process
The euro begins its breakdown
The euro made a new high on Wednesday and reversed making a daily Key Reversal but not weekly The reversal from the high may be unusually strong and fast since it must make a Master Cycle low in the next week
The common currency hit a two week low on Thursday morning of 1 11555 down half of percent on the day despite moving higher earlier in the week
Thursday s drop was caused by a more hawkish tone by the U S Federal Reserve than what markets were expecting
John Hardy Head of forex strategy at Saxo Bank told CNBC via email
The euro got a bit overextended on the recent run higher as it ran out of new good news to take it higher and the European Central Bank did its utmost to dampen expectations for the beginning of any asset purchase taper
Euro Stoxx breaks the trendline
The Euro Stoxx 50 Index broke through the Ending Diagonal trendline andbounced off intermediate term support at 3508 55 closing above it The next week may be rugged for the Euro Stoxx bulls as it may have an entire week of weakness in its Cycle pattern
Markets in Europe closed higher on Friday as investors digested news of more money for Greece and focused on wider political events and data releases
The pan European Stoxx 600 ended Friday 0 66 percent higher with the majority of sectors in positive territory All major bourses were little changed for the week however as a sell off in tech stocks continued to weigh
Wall Street however remained in the red as a miss on U S housing data did little to buoy major indices which have been weighed down by slumping tech stocks for the majority of the week
The yen challenges Long term resistance again
The yen challenged Long term resistance at 90 89 closing above Intermediate term support at 89 61 This week s pullback does not appear to be a significant one It is probable that the rally may resume for another week A breakout above Long term resistance may alter the pace of the rally
The dour U S data boosted the yen which had slid to a two week low versus the dollar
Axel Merk president and portfolio manager at Merk Hard Currency Fund in Palo Alto California said
The move in the yen very much coincided with a strengthening of bonds in the U S which also coincided with a selling off in U S equity markets My guess would be that the risk off environment prevailed
Earlier the yen had weakened after Bank of Japan Governor Haruhiko Kuroda said there was some distance to achieving the BoJ s inflation target of 2 percent and it was inappropriate to say how the Bank would exit its massive stimulus program as domestic inflation has remained sluggish
The Nikkei closes lower for the week
The Nikkei bounced on Friday but closed the week at a loss The Cycles Model suggests a probable continuation of the decline A sell signal may be generated beneath 20000 with confirmation of the correction beneath Short term support at 19617 61 The decline may not be long but threatens to be deep
Japan s Nikkei share average rebounded on Friday morning rising for the first time in the week as the dollar bounced against the yen after solid U S data while financial stocks attracted strong gains
Trading in Takata Corp stock was suspended by the Tokyo Stock Exchange after media reported that the company is preparing to file for bankruptcy as early as next week as the safety equipment manufacturer attempts to manage the world s largest safety recall Takata is working toward a deal for financial backing from U S auto parts maker Key Safety Systems Inc
U S dollar is probing new lows
USD appears to be probing new lows while unable to gain any traction above mid cycle resistance at 97 46 for the past month The Cycles Model suggests a possible 5 week decline in USD
Speculators slashed net long positions on the U S dollar in the latest week to their lowest level since last August according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday
The value of the dollar s net long position slid to 6 48 billion in the week ended June 13 from 8 0 billion the previous week
Up until the Federal Reserve s interest rate hike on Wednesday the dollar had been on a declining trend this year amid a spate of soft data such as U S inflation and non farm payrolls
Gold slips under Short term support
Gold declined beneath Short term support at 1260 20 earning a sell signal A further decline beneath Intermediate term support at 1253 16 confirms that signal The Cycles Model suggests a significant low may occur in the next week
Gold could continue to suffer in the short term as Federal Reserve monetary policy tightening weighs on the market according to analysts
Traders are closing the book on what has been a volatile week with prices ending near a three week low at key August Comex gold futures are ending its second week of negative losses last trading at 1 256 10 an ounce down more than 1 from the previous Friday
The silver market is also seeing a second consecutive weekly close with prices ending the week back below the key level of 17 an ounce July Comex silver futures last traded at 16 45 an ounce down more than 3 from last week
Crude tests the Head Shoulders neckline
Crude declined to the Head Shoulders neckline at 44 00 this week and may be ready to follow through in the next week There are now three formations indicating the probable target for the coming decline this Summer
The return of oil and gas initial public offerings was nice while it lasted
Energy companies aiming to go public are staying on the sidelines as crude prices struggle to keep above 50 a barrel analysts and investment professionals say The price weakness has halted a recovery in stock debuts in the energy sector which typically accounts for one tenth of the overall IPO market
West Texas Intermediate crude futures slipped to a fresh a seven month closing low below 45 a barrel on Thursday after plunging nearly 4 percent in the prior session
Shanghai Index has an inside week
The Shanghai Index had a boring trading week as its price barely wriggled between Short term support at 3122 46 and Intermediate term resistance at 3181 10 However the Shanghai Index is due for a fall next week Attempts to limit the decline may have succeeded so far but may have reached their limit
The surge in Hong Kong housing costs has lifted home prices well beyond the bounds of affordability for most local families and young professionals leading to long lines at housing sales that were sometimes oversubscribed by as much as 15x But while home prices have risen for every type of home Bloomberg notes that the intensifying demand for micro apartments some of which are as small as 128 square feet about the size of a garden shed has caused prices for this segment of the housing market to climb more quickly than normal sized homes Why Because they re practically all Chinese buyers can afford
Nicole Wong regional head of property research at CLSA Ltd in Hong Kong said
The pool of buyers for small flats is getting bigger and bigger because people have to downgrade their expectations of the size of flats they can live in
The KBW Bank completes its correction
BKX rallied slightly higher on Tuesday but ended the week unchanged The sell signal has been temporarily neutralized as BKX rose above its Intermediate term support at 92 36 The expected weakness may have been delayed due to options expiration but an important low is now overdue this week
For 66 years the Glass Steagall act reduced the risks in the banking system Eight years after the act was repealed the banking system blew up threatening the international economy US taxpayers were forced to come up with 750 billion dollars a sum much larger than the Pentagon s budget in order to bail out the banks This huge sum was insufficient to do the job The Federal Reserve had to step in and expand its balance sheet by 4 trillion in order to protect the solvency of banks declared too big to fail
The enormous increase in the supply of dollars known as Quantitative Easing inflated financial asset prices instead of the consumer price index This rise in bond and stock prices is a major cause of the worsening income and wealth distribution in the United States The economic polarization has undercut the image and reality of the US as a land of opportunity and has introduced political and economic instability into the life of the country
What I m about to tell you isn t some wild conspiracy Or fake news
It s raw fact based on publicly available data from the US Federal Reserve
This data shows a very simple but concerning trend banks in the United States are becoming less safe Again
And they re doing it on purpose Again
Few people ever give much thought to the safety and security of their bank
After all banks go out of their way to instill an overwhelming sense of confidence that they re rock solid
Confirming earlier concerns over performance Citigroup NYSE C CFO John Gerspach warned investors at a Morgan Stanley NYSE MS Conference this morning that Citi s second quarter trading revenues would be down 12 13
Of course none of that has anything to do with the stock price s performance |
MS | Yen Weaker On Data Brexit Talks Begin | Global stock indices and futures made a positive start to the week
London woke up to another sad day on news that a vehicle hit pedestrians past mid night near the Finsbury Park Tragic news amplify tensions in the UK politics as the Brexit negotiations formally begin today with Theresa May having secured no coalition after losing the majority government on June 8 snap election
Cable started the week downbeat and traded between 1 2744 and 1 2798 in Asia The pound remains rangebound against the US dollar between 1 2658 1 2824 100 day moving average minor 23 6 retrace which has acted as double top resistance in June A positive breakout should see intermediate resistance at 1 2980 June high and 1 3000 psychological level before the critical mid term resistance at 1 3044 major 38 2 retrace on post Brexit sell off A negative breakout could encourage a further slide to 1 2577 50 level and 1 2536 200 day moving average
The FTSE 100 surpassed the 200 day moving average 7505p at the London open as soft pound attracted investors in the UK s 100 largest caps before the start of the official Brexit negotiations today
All sectors opened higher Energy 1 03 and mining stocks 1 01 lead gains Markets lean towards a softer Brexit although the downside risks prevail
In France President Emmanuel Macron gained a historical majority in the second and final round of the parliamentary election in Sunday Macron s one year old R publique en Marche secured 350 seats in 577 seat National Assembly Although Sunday s election outcome has been the best performance in more than 15 years there was no such enthusiasm due to the all time low participation rate of 44 which is 10 lower than the preceding historical low As a result Macron win had little to no impact on the euro markets at the open The EUR USD fluctuates near the 1 12 mark mid way between the solid 1 1300 resistance Trump Election Day peak and 1 1123 minor 23 6 retracement on April June rise which was significantly reinforced by Macron s election as President of France
The CAC 40 rallied to 5 326 in the aftermath of the Macron win as euro remained little changed
EUR GBP golden cross
The EUR GBP saw its 50 day moving average crossing above the 100 and 200 day moving averages The formation of golden cross could limit the euro s downside against the pound this week revive buyers for a recovery to 0 8868 June high before 0 8897 major 61 8 retrace on September April decline Solid resistance is eyed at this level due to the surprise hawkish shift from the Bank of England BoE at the June monetary policy meeting
US stocks set to renew record
The US stock futures are solidly bid at the start of the week The Dow Jones futures were up by 55 points NASDAQ and S P500 futures traded 29 25 and 6 75 points higher into the European open
The VIX index remains comfortably relaxed 10 38 There are no signs of anxiety in the US stock markets despite trading at frequently renewed record levels since nearly eight months
The Wall Street daily rolling index traded at a fresh record of 21 424 60
Gold under pressure
Gold extended weakness to 1 251 Traders are focused on 1 245 major 61 8 retracement on May June rise and 1 238 200 day moving average in the continuation of the June s downside correction
Japanese trade surplus wanes on stronger yen
Japanese stock markets started the week on a positive note Nikkei 0 62 and Topix 0 63 gained as yen softened on surprisingly soft May trade figures
Japanese trade balance unexpectedly turned negative in May fell from 481 1bn to 203 4bn yen versus 43 3bn yen expected by analysts Exports grew less than estimated and imports were unexpectedly higher as the yen strengthened by 4 45 during the second half of the month
Soft data may revive the Bank of Japan BoJ doves before the release of the last week s meeting minutes due on Wednesday Stagnant US yields could however cap the upside potential Resistance is eyed at 111 40 112 15 area including 50 100 200 day moving averages and 39 2 retracement on January April decline
Will China s A shares be part of the MSCI global indices
It is an important week for Chinese stocks as MSCI announces whether China s 6 8 trillion yen worth onshore stock market will finally be part of its global benchmarks MSCI China and MSCI EM
Chinese stocks were turned down three times before mostly due to capital controls trading restrictions and pauses Morgan Stanley NYSE MS analysts give just above 50 chances for a positive outcome
A fourth rebuff could squeeze the mainland stocks later in the week traders should remain alert to higher volatility and downside risks Hong Kong stocks 1 12 outperformed the Shanghai Composite 0 68 at the Monday s session |
MS | Will MSCI Include Chinese Stocks In Its Global Indices | It is an important week for the Chinese stocks The Morgan Stanley Capital International MSCI will decide whether or not the Chinese A shares will finally be included in its international stock indices MSCI China and MSCI EM
China s A share stocks refer to Renminbi denominated stocks traded at Shanghai and Shenzhen stock exchanges The market value of the A shares climb up to 6 8 trillion
The MSCI has refused to include the Chinese stocks in its international benchmarks because they are subject to strict capital controls by the Chinese government trading restriction and long interruptions in times of bearish market
Three factors are determining in MSCI s judgment to include Chinese stocks in its indices
First the accessibility of the A shares by international investors and their freedom for fund repatriation Investors should be given the mobility to repatriate their funds at desired times Chinese government frequently employed trader unfriendly measures such as trading suspensions and restrictions on the sell side to cool down the market pressures on times of global sell off This aspect is highly in disfavour of the A shares candidacy for an international benchmark as the inclusion of Chinese stocks would mean that many funds would have to invest in these stocks to track the global benchmarks and they should be guaranteed that their funds would not be stuck in the Chinese system at times of market anxiety
This brings us to the second rule which is an effective implementation of trading suspension rules
Finally the determination of the pre approval requirements regarding the underlying assets to the Chinese A shares
Of course not all stocks will be a fit for the MSCI s global indices The MSCI will consider 169 A share stocks which could be potentially included in the MSCI indices compared to 448 companies considered in 2016
A fourth rebuff is possible and highly probable as Morgan Stanley NYSE MS analysts estimate the probability of inclusion slightly above 50 Golden Sachs analysts revised this probability down to 60 from 70 a year earlier
Minor nominal impact major sentiment impact
The narrowing scope of eligible shares means that only China s most competitive stocks will be in examination this week and some may pave their way to the MSCI s most popular international indices
Yet even in case of a positive outcome for all of the stocks eligible for inclusion the Chinese A share stocks will represent roughly 0 5 of the MSCI EM index and less than 2 of the MSCI China index Therefore the nominal impact would only be minor in terms of the overall index values
However the psychological impact would be determinant
Although China s rising overseas businesses increasing global influence and the government s efforts to reform the financial markets are meant to provide international investors a more business and trading friendly conditions the skepticism regarding the Chinese onshore stocks remained relatively high since the Shanghai Composite wrote off nearly half of its value following the mid 2015 sell off Ever since the highly leveraged stock index has been considered as unstable and too volatile by long term solid investors
This is why the A shares inclusion in the MSCI indices would increase their international recognition and temper the negative reputation of worthy mainland shares Hence this would be an important step for the future of the Chinese stock markets even though the financial extent of a minority of A shares inclusion will be insignificant in the short run
In the long run being part of the MSCI means increased and relatively stable inflows in the Chinese stocks which will in turn help decreasing the volatility in their values and restore long term investors confidence in well performing stocks operating in the world s biggest emerging market |
MS | Blockchain Team Gold s Newest Player | After the US markets close today Morgan Stanley NYSE MS will announce whether Chinese stocks get the green light for inclusion in its emerging market index
This announcement has the potential to create substantial international liquidity flows into Chinese stocks
That can have a very positive effect on the price of gold Here s why Gold plays a huge role in Chinese culture When the citizens are happy or in the mood to celebrate they buy gold
For most of 2017 the Chinese stock market has left the US market in the dust and today s announcement could add even more zest to the rally
This is the iShares China Large Cap NYSE FXI chart a Chinese stock market ETF
It s clear that even without inclusion in the Morgan Stanley indexes the Chinese stock market is roaring higher Note the bullish island reversal pattern that is in play now
The Chinese gold market especially the market for investment grade bars of gold is recovering in step with the new bull cycle in Chinese stocks
This is the daily gold chart I realize that gold market investors are a bit disappointed that gold hasn t surged above 1300 in 2017 but good things come to those with patience
Note the position of my 14 7 7 Stochastics oscillator at the bottom of the chart Gold tends to rally when it reaches the 10 area it s near that now When it reaches the 90 area as it did a few weeks ago gold tends to soften
It s not rocket science from a technical perspective gold tends to breathe much like a person does
Most of the major trends in the gold market tend to be related to the ebb and flow of Chindian demand Commercial traders operating on the LBMA and the COMEX use leverage to essentially magnify the price action
Most of gold s price rally in 2017 was caused by Chinese New Year demand That waned in February The general trend has been sideways since then which is normal for this market
The rallies to 1300 in March and May were related to India s Akha Teej festival demand and the Indian government s decision to levy a modest GST rate for gold
I ve been adamant for years that gold is a much bigger market than most investors realize and it s so big that Chindian demand can affect Western bond and currency markets It can be argued somewhat persuasively that the Fed doesn t move the gold price The gold price action moves the Fed
Since February gold has been consolidating quite majestically Gold bugs should act now to jettison any petty fears they have about future price action
Note the numerous blockchain currencies I ve highlighted and their fabulous gains over just the past 24 hours
I cover blockchain in detail at my gublockchain com website and I view it as the newest sub sector of the precious metals asset class
That s because most of the blockchain currencies were designed around the nature of gold and the difficulties involved in mining it In a nutshell blockchain currencies are electronically mined Most of the founders of this market have a philosophy that is very anti establishment anti government and pro gold
Blockchain has been warmly embraced by precious metal investors in the East who are generally younger than the old guard gold bugs of the West Fresh approaches like blockchain are a welcome addition to the fight against fiat currency systems promoted by governments
Many older gold bugs in the West are also getting in on the blockchain action and that s good news Litecoin surged about 80 higher in 72 hours over the week end while gold and stock markets were closed
I view litecoin as the silver bullion of the blockchain world and bitcoin is like gold The bottom line may be that blockchain is not just the newest kid on the precious metals investment block it s also the hottest
This superb VanEck Vectors Gold Miners NYSE GDX chart Investor fear about gold stocks is unfounded and I m a power buyer of GDX on every ten cents decline in the current price area
The triangular consolidation is perfectly normal for this time of year Note the excellent position of my Stochastics oscillator at the bottom of the chart
GDX is probably just days or hours away from the next rally My strongest recommendation to global gold stock enthusiasts is to jettison bad memories of the past and get serious about participating in the upcoming upside fun for gold stocks To participate in the rallies of tomorrow investors need to be buyers today
Thanks
Risks Disclaimers Legal
Stewart Thomson is no longer an investment advisor The information provided by Stewart and Graceland Updates is for general information purposes only Before taking any action on any investment it is imperative that you consult with multiple properly licensed experienced and qualified investment advisors and get numerous opinions before taking any action Your minimum risk on any investment in the world is 100 loss of all your money You may be taking or preparing to take leveraged positions in investments and not know it exposing yourself to unlimited risks This is highly concerning if you are an investor in any derivatives products There is an approx 700 trillion OTC Derivatives Iceberg with a tiny portion written off officially |
JPM | 10 Most Heavily Traded ETFs Of 2018 | Thanks to the rise in thematic investing and craze for smart beta the ETF industry is seeing explosive growth in terms of both AUM and launches The rapid growth can be traced back to unique strategies creativity transparency diversification benefits enhanced tax competences low turnover and most importantly low cost read In particular investors seek to trade in ETFs that can easily be purchased and sold on the market suggesting that the ETF should have enough liquidity Volume or the number of shares traded in a particular period is definitely the most important consideration for determining the liquidity of a particular fund A higher number of shares provides easy access to move in and out of the product keeping the bid ask spreads tight Further greater volume ensures easy creation and redemption of shares in the fund basket which is a regular and vital mechanism in ETFs This is especially true as authorized participants AP have the ability to create new baskets of ETF shares for underlying securities or redeem them when required This phenomenon allows ETFs to trade in line with their net asset value NAV see
Nevertheless assessing just the number of shares is not a profitable task as a higher number of cheaper funds can be bought for a given amount of money leading to increased volumes As a result honing in on dollar volume ETFs will reveal the true picture of liquidity Dollar volume measures the number of shares traded multiplied by share price
That said we have highlighted 10 ETFs that have seen higher dollar volume this year and are thus the top 10 volume leaders of 2018 as per SPDR S P 500 ETF AX SPY This fund tracks the S P 500 index and holds 505 well diversified stocks in its basket with each holding less than 3 7 of the assets read Zacks ETF Rank 2 Buy Aggregate YTD Volume 6 441 6 billionAUM 230 1 billionExpense Ratio 0 09 Top Sector Information Technology 20 YTD Returns 11 00 Invesco QQQ This product provides exposure to the 103 largest domestic and international companies excluding financial stocks by tracking the Nasdaq 100 Index It is concentrated on the top three firms that make up for more than 9 of the assets each Zacks ETF Rank 2Aggregate YTD Volume 1 935 billionAUM 57 7 billionExpense Ratio 0 20 Top Sector Information Technology 42 4 YTD Returns 7 4 iShares Russell 2000 ETF This ETF targets the small cap segment by tracking the Russell 2000 index and holds 2034 stocks with each holding less than 0 4 of the assets Zacks ETF Rank 3 Hold Aggregate YTD Volume 888 9 billionAUM 38 2 billionExpense Ratio 0 19 Top Sector Financials 18 3 YTD Returns 16 5 iShares MSCI Emerging Markets ETF NYSE EEM This fund targets emerging markets and follows the MSCI Emerging Markets Index It holds 951 stocks in its basket with none accounting for more than 5 share read Zacks ETF Rank 3Aggregate YTD Volume 838 8 billionAUM 28 9 billionExpense Ratio 0 69 Top Sector Financials 25 1 YTD Returns 17 3 iShares MSCI EAFE ETF This fund provides exposure to the stocks in Europe Australia Asia and the Far East by tracking the MSCI EAFE Index It holds 935 securities in its basket with none holding more than 1 75 of assets Zacks ETF Rank 3Aggregate YTD Volume 490 3 billionAUM 61 2 billionExpense Ratio 0 31 Top Sector Financials 19 2 YTD Returns 16 6 Financial Select Sector SPDR The fund targets the broad financial segment and follows the Financial Select Sector Index It holds 67 stocks in its basket with double digit allocation to the top two firms Berkshire Hathaway Inc NYSE BRKa BRK B and JPMorgan Chase NYSE JPM read Zacks ETF Rank 1Aggregate YTD Volume 416 7 billionAUM 21 1 billionExpense Ratio 0 13 Top Sector N AYTD Returns 19 1 iShares iBoxx High Yield Corporate Bond ETF TO HYG This ETF offers exposure to a broad range of U S high yield corporate bonds by tracking the Markit iBoxx USD Liquid High Yield Index Holding 974 securities effective duration and average maturity come in at 3 96 and 5 16 years respectively Zacks ETF Rank 5 Strong Sell Aggregate YTD Volume 342 5 billionAUM 12 1 billionExpense Ratio 0 49 Top Sector Communications 23 7 YTD Returns 3 8 iPath S P 500 VIX Short Term Futures ETN This ETN provides exposure to short term equity market volatility by following the S P 500 VIX Short Term Futures Index Total Return with the help of the CBOE Volatility Index futures contracts Zacks ETF Rank N AAggregate YTD Volume 379 billionAUM 1 3 billionExpense Ratio 0 89 Top Sector N AYTD Returns 76 8 iShares China Large Cap ETF TE FXI This fund provides exposure to a basket of 52 Chinese large cap stocks by tracking the FTSE China 50 Index It is concentrated on its top five holdings read Zacks ETF Rank 3Aggregate YTD Volume 305 8 billionAUM 5 6 billionExpense Ratio 0 74 Top Sector Financials 46 4 YTD Returns 14 2 iShares Core S P 500 ETF Like SPY NYSE SPY this fund also follows the S P 500 index holding a well diversified 505 securities in its basket Zacks ETF Rank 2Aggregate YTD Volume 310 3 billionAUM 139 billionExpense Ratio 0 04 Top Sector Information Technology 19 9 YTD Returns 10 5 Want key ETF info delivered straight to your inbox Zacks free Fund Newsletter will brief you on top news and analysis as well as top performing ETFs each week |
JPM | Is JPMorgan Disciplined Equity A JDEAX A Strong Mutual Fund Pick Right Now | If you have been looking for Large Cap Blend funds a place to start could be JPMorgan NYSE JPM Disciplined Equity A JDEAX JDEAX possesses a Zacks Mutual Fund Rank of 2 Buy which is based on nine forecasting factors like size cost and past performance
Objective
We note that JDEAX is a Large Cap Blend option an area loaded with different options More often than not Large Cap Blend mutual funds invest in companies with a market cap of over 10 billion Buying stakes in bigger companies offer these funds more stability and are well suited for investors with a buy and hold mindset Additionally blended funds mix large more established firms into their portfolios giving investors exposure to value and growth opportunities
History of Fund Manager
JDEAX finds itself in the J P Morgan family based out of Boston MA Since JPMorgan Disciplined Equity A made its debut in January of 1997 JDEAX has garnered more than 247 19 million in assets A team of investment professionals is the fund s current manager
Performance
Investors naturally seek funds with strong performance This fund has delivered a 5 year annualized total return of 9 58 and it sits in the top third among its category peers But if you are looking for a shorter time frame it is also worth looking at its 3 year annualized total return of 10 47 which places it in the middle third during this time frame
When looking at a fund s performance it is also important to note the standard deviation of the returns The lower the standard deviation the less volatility the fund experiences The standard deviation of JDEAX over the past three years is 10 23 compared to the category average of 8 89 Looking at the past 5 years the fund s standard deviation is 10 56 compared to the category average of 9 11 This makes the fund more volatile than its peers over the past half decade
Risk Factors
One cannot ignore the volatility of this segment however as it is always important for investors to remember the downside to any potential investment In JDEAX s case the fund lost 50 7 in the most recent bear market and underperformed comparable funds by 1 1 This makes the fund a possibly worse choice than its peers during a sliding market environment
Nevertheless investors should also note that the fund has a 5 year beta of 1 04 which means it is hypothetically more volatile than the market at large Alpha is an additional metric to take into consideration since it represents a portfolio s performance on a risk adjusted basis relative to a benchmark which in this case is the S P 500 JDEAX s 5 year performance has produced a negative alpha of 1 69 which means managers in this portfolio find it difficult to pick securities that generate better than benchmark returns
Holdings
Examining the equity holdings of a mutual fund is also a valuable exercise This can show us how the manager is applying their stated methodology as well as if there are any inherent biases in their approach For this particular fund the focus is primarily on equities that are traded in the United States
Right now 88 69 of this mutual fund s holdings are stocks with an average market capitalization of 217 77 billion The fund has the heaviest exposure to the following market sectors Technology Finance Turnover is 45 which means on average the fund makes fewer trades than its comparable peers Expenses
Costs are increasingly important for mutual fund investing and particularly as competition heats up in this market And all things being equal a lower cost product will outperform its otherwise identical counterpart so taking a closer look at these metrics is key for investors In terms of fees JDEAX is a load fund It has an expense ratio of 0 60 compared to the category average of 0 98 Looking at the fund from a cost perspective JDEAX is actually cheaper than its peers
Investors should also note that the minimum initial investment for the product is 1 000 and that each subsequent investment needs to be at 50
Bottom Line
Overall JPMorgan Disciplined Equity A JDEAX has a high Zacks Mutual Fund rank and in conjunction with its comparatively strong performance average downside risk and lower fees this fund looks like a good potential choice for investors right now
For additional information on this product or to compare it to other mutual funds in the Large Cap Blend make sure to go to for additional information And don t forget Zacks has all of your needs covered on the equity side too Make sure to check out Zacks com for more information on our screening capabilities Rank and all our articles as well |
JPM | Value Investors Avoid JPM Buy These 5 Bank Stocks Instead | JPMorgan NYSE JPM is witnessing downward estimate revisions The Zacks Consensus Estimate for the bank s earnings has moved down marginally for 2018 and 2019 over the past 30 days Also the company is witnessing investors apathy Shares of JPMorgan lost 8 7 in 2018 compared with a decline of 5 9 for the S P 500 Also JPMorgan s mortgage operation is slowing down This is because though rising rates are beneficial for banks these hamper growth in mortgage banking business Over the last three years 2015 2017 mortgage fees and related income declined at a CAGR of 19 8 with the same trend persisting in the first nine months of 2018 As fresh originations and refinancing activities are likely to continue declining mortgage banking business will remain under pressure in the quarters ahead Price Performance in 2018
Also a significant part of JPMorgan s revenues come from the trading business roughly one fifth of the company s total revenues As the business is highly susceptible to performance of the fixed income and equity markets there is always uncertainty about the level of contribution coming from trading revenues
Further JPMorgan has a debt to equity ratio of 1 17 compared with the industry average of 0 94 The high debt obligation might drag it to a relatively disadvantageous position Moreover JPMorgan seems overvalued when compared with the broader industry Its price sales and price earnings F1 ratios compare unfavorably with the respective industry averages Further the stock has an unimpressive of F Our research shows that stocks with a Value Score of A or B when combined with a Zacks Rank 1 Strong Buy or 2 Buy offer the best upside potential Hence the stock does not look promising at present So a stretched valuation and downward estimates revisions indicate limited upside potential for this Zacks Rank 3 Hold stock Some Great Picks in the Banking SpaceHeightening concerns about rising interest rates trade tensions and political uncertainty have kept the broader markets under pressure but the continued economic improvement has been the key offsetting factor
Similar to many other companies that are suffering from the ongoing broader issues it may not be easy for banks to produce decent returns in the near future Nonetheless betting on some banking stocks which possess solid growth prospects and carry a top Zacks Rank could be really rewarding These are expected to be worthy investment options for investors with promises of healthy returns With the help of the we have shortlisted banks with a Value Score of A or B and a Zacks Rank 1 or 2 You can see Also these banks have market cap of 3 billion or more and are expected to record earnings growth of more than 5 for 2019 Here are the five banks that met the criteria Cullen Frost Bankers Inc NYSE CFR with a market cap of 5 6 billion carries a Zacks Rank 2 and has a Value Score of B The bank s earnings are expected grow 5 3 year over year in 2019 Carrying a Zacks Rank 2 and Value Score of A Umpqua Holdings Corporation NASDAQ UMPQ has a market cap of 3 5 billion The company s 2019 earnings are expected to grow at the rate of 14 3 Western Alliance Bancorporation NYSE WAL carries a Zacks Rank 2 and has a Value Score of B The company earnings are expected grow 13 year over year in 2019 It has a market cap of 4 1 billion IBERIABANK Corporation NASDAQ IBKC with a market cap of 3 6 billion carries a Zacks Rank 2 and has a Value Score of B The bank s earnings are expected grow 8 9 year over year in 2019 Wintrust Financial Corporation NASDAQ WTFC carries a Zacks Rank 2 and has a Value Score of B The company earnings are expected grow 8 year over year in 2019 It has a market cap of 3 8 billion The Hottest Tech Mega Trend of AllLast year it generated 8 billion in global revenues By 2020 it s predicted to blast through the roof to 47 billion Famed investor Mark Cuban says it will produce the world s first trillionaires but that should still leave plenty of money for regular investors who make the right trades early |
JPM | Best ETF Strategies For Your Retirement Portfolio | 1 What Investments Should Go In A Tax Sheltered Account 5 Should You Be Trying To Time The Market 7 Ultra Short Term ETFs and Cash Investment Trend 9 How Could An Economic Downturn Impact The Leveraged Loan Market 11 The Disappearance Of Defined Benefit Plans 14 Expense ETFs vs Free ETFs In this episode of ETF Spotlight I talk with Dr Derek Horstmeyer assistant professor at George Mason University School of Business Dr Horstmeyer is also a regular contributor to the Wall Street Journal His research focus areas include ETF mutual fund performance
We discuss retirement investing strategies as the start of a new year is the perfect time to review your portfolio First of all investors should have a plan for saving for retirement And this plan should also consider opportunities to manage taxes while not basing decisions solely on taxes
Tax efficient investing can significantly enhance returns in the long term We start off by discussing how investors should decide which investments should be put in tax sheltered accounts and which in taxable accounts
The conventional wisdom is that older investors should have a lot of bonds in their IRAs and 401 k s but that may not be the smartest move Dr Horstmeyer wrote in a recent
We discuss popular ETFs like the SPDR S P 500 ETF AX SPY the iShares Core U S Aggregate Bond ETF AX AGG the Vanguard Real Estate ETF the iShares Russell 2000 ETF and the Vanguard Value ETF HN VTV that are frequently used in retirement portfolios
Which of these would benefit the most from tax sheltering Find out on the podcast
We then talk about the market gyrations that are making many investors very nervous but nervous investors often make bad investing decisions
We discuss why investors should not try to time the market
We have seen a lot of inflows into ultra short term bond ETFs like the JPMorgan NYSE JPM Ultra Short Income ETF and the PIMCO Enhanced Short Maturity Active ETF NS MINT this year as a flat yield curve discourages investors from taking on too much interest rate risk Further ultra short term government bond ETFs benefit from investor preference for safety
Individual investors exposure to cash rose to its highest level in nearly three years according to AAII s Asset Allocation Survey for the month of November
Are these ultra short term bond ETFs and cash viable options for investors in this market environment
Investors should also be aware of rising risks in the bond market The amount of debt rated in the lowest tier of investment grade has soared recently In the event of a downturn in the economy we could see a wave of downgrades to junk status from the lowest investment grade
Ultra popular investment grade bond ETFs like the iShares IBoxx Investment Grade Corporate Bond ETF that are widely held in retirement accounts could be impacted
Another area of concern is the leveraged loan market where issuance of covenant light loans has been rising
What do investors need to know
Finally we talk about the disappearance of defined benefit plans and how that has affected demand for annuity type products
Please visit to learn more about Dr Horstmeyer s research
Make sure to be on the lookout for the next edition of ETF Spotlight and remember to subscribe If you have any comments or questions please email
Want key ETF info delivered straight to your inbox
Zacks free Fund Newsletter will brief you on top news and analysis as well as top performing ETFs each week |
MS | SEC proposes rule to combat conflicted investment advice | By Elizabeth Dilts NEW YORK Reuters The U S Securities and Exchange Commission on Wednesday proposed a new rule that would require brokers at firms like Morgan Stanley N MS and Merrill Lynch Wealth Management to clearly explain the fees investors pay and commissions brokers earn when giving financial advice The 1 000 page Regulation Best Interest would require brokerages to put that information along with any conflicts of interest and questions clients should ask in a four page disclosure document that brokers would be required to give investors The rule comes after more than a decade of regulatory deliberation over how to address conflicts of interest in the investment advice industry If passed it would replace the Obama era fiduciary rule which was issued by the Labor Department and was overturned in March by the 5th U S Circuit Court of Appeals SEC Chairman Jay Clayton said the rule reflects our efforts to fill the gaps between investor expectations and legal requirements thereby increasing investor protection and the quality of advice while preserving access and choice recognizing that is driven by what is available and how much it costs The rule proposes that brokers act in the best interest of that customer at the time the recommendation is made without placing the financial or other interest of the firm ahead of the interest of the retail customer Commissioner Kara Stein was critical of the proposed rule and voted that it not be opened up for the 90 day public comment period because she said it does not set hard lines defining what is in a client s best interest and will add to confusion The Financial Industry Regulatory Authority which also governs brokerages already requires the 3 800 firms follow a best interest standard which could lead to different interpretations by it and the SEC she said I am concerned that this rule will not only confuse retail investors but also brokerages Stein said The rule includes a provision barring brokers from calling themselves investment advisors or advisers a formal title that comes with additional disclosure and registration requirements and which brokers sometimes use casually Stein said that if the SEC was going to say who can be called an advisor or adviser then it should be logically consistent and define the best interest standard
The SEC did not provide an estimate of what it would cost firms to comply with the rule |
JPM | Dollar dozes risks rude awakening from U S inflation | By Wayne Cole SYDNEY Reuters The dollar dozed in a snug band on Monday as Japan kicked off a week of holidays giving investors an extra excuse to idle ahead of a Federal Reserve policy meeting and a raft of global data including on U S core inflation and payrolls Movements were minimal with the dollar keeping to a mere 14 tick range on the yen and not much more on the euro Liquidity is set to be puddle deep in Asia this week with China also off from Wednesday to Friday All eyes are on the Fed to see what its policymakers made of a first quarter gross domestic product report that showed strong growth of 3 2 percent but largely for one off reasons including a surge in inventories Core inflation on the other hand surprised by slowing sharply leading speculators to actually narrow the odds on a rate cut this year Fed fund futures now imply a rate of 2 20 percent by the year end from 2 41 percent now The March reading for core personal consumption expenditures PCE the Fed s favoured inflation measure is due later Monday and there is a risk it might slow to 1 6 percent or even 1 5 percent The single biggest macro issue at the moment concerns Fed policy and whether inflation is soft enough to justify an insurance rate cut or two said analysts at JPMorgan NYSE JPM Chicago Fed President Charles Evans has implied a sustained core PCE at 1 5 percent would justify insurance cuts even with growth staying healthy and investors will be listening very closely to Fed Chair Jerome Powell on Wednesday for any hints about his thoughts on this topic It was this risk that saw the dollar fall back on Friday despite the upbeat GDP report Against a basket of currencies the dollar was a fraction softer at 97 970 having eased from a near two year peak of 98 330 Yet the dollar is hardly alone given pretty much every other major central bank has also turned dovish in recent months keeping their currencies subdued The Canadian dollar and Swedish crown for instance both took hits last week when their central banks put a halt on future rate hikes The European Central Bank is under pressure to keep its stimulus in place if not to do a new round while markets are pricing in rate cuts for Australia and New Zealand following weak inflation readings The Bank of Japan last week pledged to keep its policy super easy for at least another year in an effort to dispel talk it was wavering in its commitment While the yen gained at the end of last week that was mainly because speculators chose to cut short positions ahead of this week s extended Japanese holiday Some fear the lack of liquidity could lead to a re run of the dollar s flash crash from January when the yen made massive gains in a matter of minutes as bears were forced to cover short positions On Monday the dollar was parked at 111 60 yen having briefly touched its highest this year last week around 112 39 Chart support comes in at 111 37 and 110 83 The euro was a shade firmer at 1 1157 but still not far from a near two year trough of 1 1110
A swathe of manufacturing surveys from Europe and China are due later this week along with a first reading on EU GDP The U S payrolls report on Friday is forecast to show a solid increase of 180 000 in April with unemployment at 3 8 percent |
JPM | Fed May See 1995 96 Interest Rate Cuts as Template for Today | Bloomberg As Federal Reserve Chairman Jerome Powell and his colleagues gather this week for a policy making meeting some of them will likely have 1995 on their mind
That was the year that the Fed initiated a mid course correction in monetary policy cutting interest rates after a sustained bout of tightening Now some officials and investors are beginning to wonder if the Fed will again have to ease its stance after raising rates four times in 2018
I do see some parallels between the 1995 96 period and what we re currently in said David Stockton who was at the Fed at the time and is now with the Peterson Institute for International Economics There s always some concern that maybe you ve overdone it after repeatedly raising rates
Powell and his colleagues are widely expected to hold rates steady at their April 30 May 1 meeting What Fed watchers will be looking for are any hints in the post meeting statement or more likely Powell s subsequent press conference that the central bank is teeing up a rate cut for later in the year
I think they stay on hold here for a long time but there is a risk that lower inflation does push them to think about easing said Bruce Kasman chief economist for JPMorgan Chase Co NYSE JPM in New York
Fed Vice Chairman Richard Clarida has pointed to 1995 and 1998 as two instances where the central bank reduced rates as insurance against a weakening of the economy even though it didn t see a recession lurking
Some Fed watchers think 1995 is the better template for what s happening now
In 1998 the central bank cut rates three times in rapid fire succession to short circuit a financial crisis brought on by the Russian debt default and the near collapse of hedge fund Long Term Capital Management There s no such triggering event today
In contrast there s a number of parallels between now and 1995 1996 The Fed justified its three rate reductions back then in July and December 1995 and January 1996 by pointing to moderating price pressures
Policy makers today are even more fixated on the low level of inflation and have made no secret of their desire to see it higher
Excluding volatile food and energy costs the personal consumption expenditures price index rose 1 6 percent in March from a year earlier That compares with the Fed s 2 percent inflation target
U S and global growth was also slowing a quarter of a century ago if anything more markedly than now
Other similarities The Fed plowed ahead with rate drops in 1995 96 even though it judged the labor market to be pretty tight and stock prices to be buoyant Indeed it was in December 1996 that then Fed Chairman Alan Greenspan warned of irrational exuberance in financial markets
And then there is the politics President Bill Clinton was up for re election in 1996 while Donald Trump faces the voters next year
Clinton refrained from openly commenting on Fed policy after his economic team told him that public pressure on the independent central bank could prove counter productive
Trump has not been so reticent repeatedly calling on Powell Co to open up the monetary spigots in order to juice the economy and the stock market
Trump s acolytes argue that his tax cuts and deregulatory actions are paving the way for a productivity driven economic boom that won t spur inflation
If that came about and many economists are skeptical it will it would be akin to the late 1990s surge in growth that stemmed from the proliferation of the Internet
Former Fed Vice Chairman Alan Blinder who led the charge for lower rates in 1995 cautioned against drawing too many parallels to today
One big difference according to Blinder The Fed had clearly raised rates too far back then jacking them up by 0 75 percentage point in November 1994 and 0 5 point in February 1995 before beginning to trim them back in July of that year
We got a little hyper excited Blinder who is now a professor at Princeton University said
It s not so apparent that the Fed overdid it this time Its 0 25 point December hike lifted rates just barely into neutral territory where monetary policy neither spurs not restricts growth
While Blinder said a rate cut is possible he reckons that the Fed s next move is more likely to be an increase For now though I m perfectly fine with their patient stance
So too is Janet Yellen who also argued for a rate pullback a quarter century ago when she was a Fed governor
It seems to me that monetary policy is well positioned the former Fed chair said at an April 10 event in Houston
Peterson s Stockton thinks the central bank eventually will trim rates
They ll take out some insurance at some point he said Just as in 1995 96 the risks to doing that are relatively low |
JPM | U S consumer spending roars back but inflation tame | By Lucia Mutikani WASHINGTON Reuters U S consumer spending increased by the most in more than 9 1 2 years in March as households stepped up purchases of motor vehicles but price pressures remained muted with a key inflation measure posting its smallest annual gain in 14 months The surge in consumer spending reported by the Commerce Department on Monday sets a stronger base for growth in consumption heading into the second quarter after it slowed sharply in the first three months of the year It further allayed concerns about the economy s health which had been brought to the fore by a temporary inversion of the U S Treasury yield curve last month Tame inflation however supported the Federal Reserve s recent decision to suspend further interest rate increases this year Fed officials are scheduled to meet on Tuesday and Wednesday to assess the economy and deliberate on the future course of monetary policy The U S central bank in March dropped forecasts for any interest rate increases this year halting a three year policy tightening campaign The Fed raised borrowing costs four times in 2018 The economy is in a sweet spot for now with not enough inflation to cause the Fed to raise rates and with inflation not low enough to worry Fed officials that economic demand is weakening which could require rate cuts said Chris Rupkey chief economist at MUFG in New York Consumer spending which accounts for more than two thirds of U S economic activity surged 0 9 percent That was the biggest rise since August 2009 and was also driven by increased healthcare expenditures Spending rose 0 1 percent in February Data for January was revised up to show consumer spending rising 0 3 percent instead of the previously reported 0 1 percent gain The release of the February spending data was delayed by a five week partial shutdown of the federal government that ended on Jan 25 Economists polled by Reuters had forecast consumer spending jumping 0 7 percent in March When adjusted for inflation consumer spending increased 0 7 percent in March This so called real consumer spending was unchanged in February The data was included in last Friday s first quarter gross domestic product report March s surge in real consumer spending suggested an acceleration in consumption was likely in the second quarter Consumer spending increased at a 1 2 percent annualized rate in the first quarter the slowest in a year The overall economy grew at a 3 2 percent rate last quarter The dollar was little changed against a basket of currencies while U S Treasury prices fell Stocks on wall Street rose lifting the S P 500 and the Nasdaq Composite to record highs INFLATION BELOW TARGET In March spending on goods rebounded 1 7 percent with outlays on long lasting manufactured goods such as cars shooting up 2 3 percent Spending on goods fell 0 5 percent in February Outlays on services increased 0 5 percent last month driven by healthcare spending after rising 0 4 percent in February Inflation was benign with the personal consumption expenditures PCE price index excluding the volatile food and energy components unchanged in March after edging up 0 1 percent in February That lowered the year on year increase in the so called core PCE price index to 1 6 percent the smallest increase since January 2018 from 1 7 percent in February The core PCE index is the Fed s preferred inflation measure It hit the central bank s 2 percent inflation target in March last year for the first time since April 2012 The low inflation readings caught the attention of the White House where President Donald Trump has railed against the Fed for tightening monetary policy Trump has called for rate cuts tweeting earlier this month that there was almost no inflation The Trump administration blamed the economy s stumble at the turn of the year on the rate hikes On Monday White House economic adviser Larry Kudlow said slowing inflation opened the door for possible rate cuts Economists however are not convinced These below target rates of inflation will likely be acknowledged by the Fed at this week s meeting but we still think it unlikely that the Fed would be prompted into rate cuts by weak inflation readings alone said Jesse Edgerton an economist at JPMorgan NYSE JPM in New York With personal income ticking up 0 1 percent in March after rising 0 2 percent in February there are concerns that the current pace of consumer spending might be unsustainable Incomes have been almost flat since surging last December
But a strong labor market and still very high savings are seen underpinning spending Wages rose 0 4 percent in March after advancing 0 3 percent in the prior month Savings fell to 1 03 trillion in March from 1 16 trillion in February |
JPM | How to train your machine JPMorgan FX algos learn to trade better | By Saikat Chatterjee LONDON Reuters JPMorgan Chase NYSE JPM a top player in the 5 1 trillion a day global currency market has started applying a new technology that enables machine trading programs to learn from previous trades and search for the most profitable way to execute them Algorithmic trading is a growing trend in currency markets where banks have cut back on trading teams relying more on automated computing strategies to trade efficiently Algos as these programs are known are used by market makers to search at lightening speed for platforms with deeper liquidity pools or break up large orders into tiny bits tor reduce market impact But large banks have been investing millions of dollars into technology to grab a greater share of the algo trading market JPMorgan told Reuters its new algorithm named DNA or Deep Neural Network for Algo Execution effectively combined what a multitude of algos currently do into a single strategy and allowed the framework to judge how a client order should be executed For example a typical time weighted average price order executed by an algorithm may aim to buy a particular amount of currency over a few minutes or hours But if the order is not executed within that time frame the machine will trade aggressively toward the end to buy the required amount The new algo aims to take that decision making process one step further by determining on how best to execute the transaction based on results of past trades The algo has already been deployed for trading G7 currencies such as the euro dollar and sterling where it has access to data from thousands of past trades The objective of an algo is to minimize market impact by executing in an efficient and timely manner Chi Nzelu head of macro eCommerce at JP Morgan told Reuters What we have done is establish a neural network using a machine learning technique which determines how to place the order at what price and execution style Unlike equities which trade on exchanges currency trading takes place on a multitude of platforms enabling the usage of such automated trading strategies Trading platform EBS estimates as much as 70 percent of orders on its platform now originate from algorithms whereas in 2004 all trading was undertaken by humans JP Morgan s own trading platform too has seen algorithmic turnover surge Order volumes of over 5 million rose 50 percent on an annual basis and 80 percent of orders were driven by algos the bank said adding that December had set a record for its algo franchise in terms of orders as a proportion of spot turnover
A report by Greenwich Associates last week found JP Morgan and Citibank were at the top of the field in of electronic currency trading which now accounts for 80 percent of global turnover |
MS | Market Ignores Soft Jobs Number Trump Stiffs Paris Accord | The English idiom don t judge a book by its cover is a metaphorical phrase which means you shouldn t prejudge the worth or value of something by its outward appearance alone
Let s face it society today is based on speed and I don t mean the illegal pharmaceutical With the transformation of the world into digital dominance everything happens quickly Want information now click click touch touch presto there it is World events which used to be transmitted by television now get tweeted and instantly the globe is informed You get my drift
Anyway with the power of digitization and quick access it seems society believes the process of making decisions should be accomplished quickly now more than ever When dealing with anything regarding substantial sums of money however usually it is best to make assessments in a systematic way
Charlie Munger and Monish Pabrai advocate having checklists in a similar fashion as pilot training academies do for aspiring sky kings As one spends more time in the financial world you realize the wisdom in this approach In retrospect quite a few of the capital allocation mistakes I made would have been quickly eliminated with a more rigorous methodology Still nobody is born a great investor and these are the kinds of experiences one has to go through to improve
As time passes if one elevates the decision making process it should upgrade the quality of those decisions and shift the odds of favorable outcomes to where the vast majority slant in your favor Yes long held wisdom still applies in today s click click world
In the financial markets this week yesterdays weak May jobs report 135k vs 185k expected was shrugged off as equities continue to head higher Earlier the divisional heads of JP Morgan and Morgan Stanley NYSE MS suggested weak fixed income trading numbers would hamper this quarter s results as the rock bottom interest rates and volatility make things tough for the money center banks Also in the doghouse remains oil prices as the battle between OPEC and US shale providers continues to favor the shale guys
With US oil production over 9 3 million barrels per day and at a high for the year the big question is how long will this continue Reports from the ground seem to indicate costs are headed higher for sand and water the key inputs for fracking However in the deep water area expenses are headed down as big oil keeps working to leverage their existing fields and be far more concerned with return on capital If ever there were situations where today s leading quote is applicable banks and oil would be it I am not saying they are worth buying but my feeling is if you take your time the banks and energy areas are definitely interesting areas to investigate
In the political world the big news this week was President Trump deciding to get out of the Paris climate accord While the environmentalists and left wing are up in arms if one looks at the information about the decision you can understand why it was made Yes the United States should want the world to reduce carbon emissions and has actively done more to make it happen than any other country
If one looks at transportation and electricity production the two largest markets for energy alternative energy is nowhere close to being able to completely provide the market with enough to supply all users In electricity they make up maybe 15 of supply at most and in transportation it is below 5
So for now and the foreseeable future carbon based supplies dominate what the world works with Electric vehicle adoption will happen over time with some believing it will be quite quick Others feel nope it will take decades In fact in Asia coal plants are being built at the rate of a plant a week and China and India have no plans to reduce their quest for energy carbon based sources included It makes no sense unless you are a captive of the environmental and progressive lobby like our previous President and the Democratic party to hold back the US energy industry
It is has a great deal of potential for job creation like many other strategically important industries sensors cloud AI etc Mr Trump is often accused and probably been guilty of not abiding by the quote at the top of the page In the case of the Paris accords in my opinion he made the proper decision whether the world and environmental lobby likes it or not
Disclaimer Y H C Investments Yale Bock and the family of Yale Bock own positions in securities mentioned in the blog post Investing in stocks can lead to the complete loss of your capital As always on any company mentioned here past performance is not a guarantee of future returns Investing involves risk of losses on invested capital One should research any investment and make sure it is suitable with your objectives risk tolerance risk profile liquidity considerations tax situation and anything else pertinent to your financial situation Also the CFA credential in no way implies investment returns will be superior for any charter holder |
MS | Morgan Stanley ETF Mutual Fund Fees Will Fall Another 10 15 | It s never been cheaper to buy mutual funds and ETFs but the already low fees that issuers charge will only fall further in coming years
That s according to analysts Morgan Stanley NYSE MS who see another 10 15 drop in fees over the next few years got a hold of a recent note that Morgan Stanley sent to clients expressing the sentiment
Fees for mutual funds and exchange traded funds have been dropping regularly for years but despite many being offered at what would have seemed rock bottom prices not too long ago there may be more cuts ahead That s good news for investors though it could also result in further consolidation in the fund industry as providers and sponsors struggle against the lower revenue that comes with lower fees
Intensifying secular changes could reshape the industry and compress fees by 10 15 over the next three to five years offsetting asset driven growth and limiting earnings power Morgan Stanley wrote in a note to clients on Thursday
As competition heats up in the fund space issuers are battling for client assets by offering significant fee cuts Schwab for example has several of the lowest fee ETFs in the world recently substantially lowering the existing fees for a handful of funds The Schwab US Broad Market NYSE SCHB has an expense ratio of only 0 03
That fund closed at 59 00 on Friday up 0 24 0 41 Year to date SCHB has gained 8 90 versus a 9 23 rise in the benchmark S P 500 index during the same period
SCHB currently has an of A Strong Buy and is ranked 10 of 109 ETFs in the category |
JPM | Worst Market Crash In A Decade The Dow Has Fallen More Than 4000 Points | We have not seen anything like this since the financial crisis of 2008 On Thursday the Dow Jones Industrial Average lost another 464 points and over the last five trading sessions it has lost a total of more than 1 700 points CNN s Fear Greed index has swung all the way over to extreme fear and there has only been one December in all of U S history that was worse for the stock market than this one But back at the very beginning of October most of the experts never would have imagined that the year would end this way According to CNBC the Dow Jones Industrial Average hit an all time record high of26 951 81 in early October and investors were feeling really good about things at that point But on Thursday the index closed at just 22 859 60 and that means that the Dow has lost more than 4 000 points in less than three months
All of the major trend lines have been shattered and all of the key support levels have been breached When analysts look at stock charts these days all they are seeing is sell signal after sell signal One investment strategist told CNN that stocks are quickly approaching the capitulation phase
Equity markets are quickly approaching the capitulation phase after having broken below critical support Sam Stovall chief investment strategist at CFRA Research told CNN Business
According to Google capitulation means the action of surrendering or ceasing to resist an opponent or demand In this case the bulls are on the verge of surrendering to the bears and if that happens we could see a tremendous amount of chaos break loose on Wall Street
And the damage that has already been done has been extraordinary At this point firms listed on the S P 500 have seen 2 39 trillion dollars in market cap wiped out and a grand total of 16 7 trillion dollars in stock market wealth has been wiped out globally
Many are pointing the blame for what is happening at the Federal Reserve Here is just one example
We too were very vocal in recommending heavily that the Fed not hike yesterday said Julian Emanuel chief equity strategist at BTIG
This is all about the speed of things Emanuel added The problem with ignoring the consequences of the balance sheet reduction really tells you that the Fed is not paying attention to that fact that financial markets correct much more rapidly on the downside than they do in bull markets to the upside
Even though the U S economy is slowing down substantially and even though financial markets have already been crumbling the Federal Reserve raised interest rates anyway
And they knew that the financial markets would respond very negatively so nothing that has happened the last couple of days is any sort of a surprise
Of course it isn t just stocks that are plunging Junk bonds just had their worst day since the Brexit vote and that is an extremely ominous sign The following comes from Zero Hedge
High yield bond prices are collapsing but it is clear that liquidity has evaporated as traders have sent high yield bond ETFs more liquid dramatically below its fair value as they seek hedges ahead of their liquidation needs
Today is HYG s worst day since Brexit with price crashing to lowest since April 2016
As I have discussed before the collapse of junk bonds was an early sign that stocks were going to totally crash in 2008 and now we see a very similar pattern playing out in 2018
One of the signature moments from the crisis of 2008 was Jim Cramer s famous rant about the Federal Reserve on CNBC and he referenced that rant during remarks that he made on Thursday
For CNBC s Jim Cramer the worst part about the Federal Reserve s latest interest rate hike is that the central bank s chief Jerome Powell seemed to ignore what Cramer regards as serious weakness in the U S economy
I have a better read on the economy than the Fed and I know they re not going to listen to me the Mad Money host said Thursday as the Dow Jones Industrial Average fell to a 14 month low I feel powerless just like 2007 when I ranted that the Fed needed to start easing aggressively in order to stave off a financial catastrophe
Does Jim Cramer really believe that he has a better grasp on how the U S economy is performing than the Federal Reserve does
That is quite a bold statement but based on what the Fed has been doing lately it is tempting to think that they are utterly clueless at this point
But of course they aren t clueless They know exactly what they are doing and it isn t about helping the American people
Meanwhile just like we saw in 2008 the mainstream media is trying to assure everybody that they should keep their money in the stock market In fact CNN posted an article earlier today that encouraged people to put more money in because this latest downturn is a buying opportunity
The market s behaving like a two year old said David Kelly chief global strategist at JPMorgan NYSE JPM Funds The Federal Reserve is doing its job and it s doing it patiently and cautiously
Kelly said the recent market slide could present an entry point especially for investors who previously felt stocks were too expensive
You can believe that if you want but there is a reason why corporate insiders were selling stocks at the fastest pace in 10 years just before the market started to crash
This ridiculously absurd stock market bubble was not going to last forever and now it is imploding at a speed that is absolutely breathtaking
Hopefully things will stabilize a bit as we roll through the holidays but there is no guarantee that will happen |
MS | Morgan Stanley Warns Markets the Best Times May Be Near an End | Bloomberg Investors need to prepare for downside as the end of the economic cycle is near and U S markets are priced for best case scenarios Morgan Stanley NYSE MS says
While fiscal stimulus is supportive of growth in the near term the benefits are already likely in the price and increase potential downside for markets at the end of the cycle Morgan Stanley strategists including Michael Zezas Matthew Hornbach and Andrew Sheets wrote in a note Tuesday They also said U S stock valuations peaked before the tax bill was enacted with a cyclical top for equities later this year while peak margins and rate of change on organic earnings growth coming by late 2018 or early 2019
There s less reason to behave like it s morning in America than Happy Hour in America the report said Markets are closer to the end of the day than the beginning
The report said the fiscal expansion factor supports a range bound path for stocks as well as a flatter U S Treasury yield curve with a lower yield bias
We advocate a focus on sector and stock specific alpha as these late cycle dynamics portend narrowing markets and a cyclical top for equities later this year in our view the strategists said In Treasuries we see the curve continuing to flatten on Fed hikes and yield downside as the year progresses and the economic outlook becomes more mixed |
MS | Twitter surges after Morgan Stanley raises from underweight | By Noel Randewich SAN FRANCISCO Reuters Shares of Twitter Inc N TWTR surged nearly 11 percent on Tuesday and were on track for their best session in two months after Morgan Stanley NYSE MS upgraded its recommendation on the social network to equal weight from underweight Investors are likely to continue to pay a premium for Twitter s stock due to expectations of faster revenue growth in 2018 and signs of progress in a company turnaround Morgan Stanley analyst Brian Nowak wrote in a report Nowak raised his target price for Twitter by a dollar to 29 Twitter traded at 31 69 on the New York Stock Exchange at midday Constructive advertiser conversations improving user growth and positive revisions make a more compelling risk reward Nowak wrote A surprise return to revenue growth sent Twitter s stock 12 percent higher after its last quarterly report on Feb 8 and it is up 32 percent year to date The social network is popular with celebrities professional athletes and politicians and is ubiquitous in the media but it has struggled to turn a profit and consistently grow its revenue Overall analysts are cautious Nine recommend selling Twitter 21 have neutral ratings and seven recommend buying according to Thomson Reuters data On average they expect Twitter s stock to decline to 27 58 The stock is trading at 45 times expected earnings compared with Facebook s O FB valuation of 21 times earnings according to Thomson Reuters data
Twitter is expected on average by analysts to post a 10 percent increase in revenue to 605 million and non GAAP earnings per share of 12 cents when it reports its March quarter results on April 25 Under GAAP analysts on average expect a net loss of 23 million |
JPM | Sliding U S Inflation May Provoke Fed Rate Cut Later This Year | Bloomberg U S inflation is sliding again and this time Federal Reserve officials may feel compelled to respond
After a gauge of price pressures central bankers watch closely finally rose above their 2 percent target last summer marking the first time north of it since 2012 it moderated to 1 8 percent in January and some forecasters see it heading lower still throughout the first half of the year That may be reflected in two Commerce Department reports slated to be published in the coming days
Receding inflation could bolster the case for reducing interest rates in 2019 even though worries from earlier in the year about an economic downturn have largely passed
Fed officials have already begun discussing the possibility in public ahead of their April 30 May 1 policy meeting Meanwhile investors are piling into bets that the benchmark federal funds rate will come down later in the year even as they push U S stocks to record highs
Chicago Fed President Charles Evans laid out the case on April 15 while speaking with reporters after a speech in New York
I think the answer has to be yes Evans said when asked if low inflation could be grounds for a cut If core inflation were to move down to let s just say 1 5 percent that would indicate the current level of rates is actually restrictive in holding back inflation and so that would naturally call for a lower funds rate at least so that it was accommodative
His response highlights the way most policy makers think about how their interest rate moves affect the economy They believe people consider inflation when making decisions about borrowing and lending so it s important to focus on inflation adjusted interest rates
That means even if U S central bankers leave the fed funds rate unchanged which they have since raising it to just below 2 5 percent in December declining inflation effectively constitutes a tightening because it pushes up the so called real rate which in turn ought to slow the economy and possibly even put more downward pressure on inflation
After their March meeting Fed officials projected it would be appropriate to forgo additional rate hikes this year which would help keep inflation at 2 percent But some analysts think that inflation forecast is too optimistic which means real rates may continue rising In an April 17 report JPMorgan NYSE JPM analysts argued core inflation could fall to 1 5 percent as soon as next month
If that prediction proves correct the downward drift will come amid an official review of the current strategy for hitting the 2 percent target which was announced late last year
Officials believe inflation expectations are a key determinant of actual inflation and the centerpiece of the year long review is a conference at the Chicago Fed in June which will focus on how to convince the public that policy makers are serious about hitting their target
Tepid inflation has also led Fed officials to ponder the other factor they believe determines price pressures in the economy the job market The theoretical relationship between unemployment and inflation known as the Phillips curve and prominent since the 1960s seems to have mostly disappeared in the data half a century later
At a Feb 22 conference in New York San Francisco Fed President Mary Daly and her counterpart in New York John Williams NYSE WMB suggested strong labor markets still drive inflation higher but only in certain categories of goods and services such as housing
Daly cited two gauges developed by San Francisco Fed economists which divide up the items in the inflation basket based on whether or not they are sensitive to cyclical pressures and help explain why inflation rose last year before coming back down again
The gauges show that the inflation rate for such cyclically sensitive items has been flat for the past two years and remains well below levels achieved in previous expansions The inflation rate for other items which is harder for policy makers to influence jumped last year before sliding again in January
To the extent we ve got low inflation in an environment with sub 4 percent unemployment I think that that s indicative of the fact that we don t have an active Phillips curve in this environment and you have to look to other channels for signals about inflation St Louis Fed President James Bullard told reporters on April 17 in Annandale on Hudson New York
The other channel you need to look at is inflation expectations he said Those don t look that good either and so I am a little concerned about this |
JPM | BOJ to paint bleak inflation outlook keep policy steady | By Leika Kihara TOKYO Reuters The Bank of Japan is expected to keep monetary policy steady on Thursday and predict that inflation will fall short of its 2 percent target for three more years signaling that its massive stimulus will stay in place for the foreseeable future Given their dwindling policy tool kit BOJ officials have made clear that subdued inflation alone won t trigger additional easing and that the central bank will act only if risks threaten to derail Japan s economic recovery But slowing global demand and simmering trade tensions have hurt Japan s exports and business sentiment putting the test to the BOJ s projection the economy will keep expanding moderately With uncertainty over a scheduled sales tax hike in October also clouding the outlook some analysts expect the BOJ to change its forward guidance in coming months to give markets more clarity on how long interest rates will remain very low If the BOJ were to downgrade its inflation forecast changing the forward guidance could be among options said Izuru Kato chief economist at Totan Research But the BOJ likely won t do it this time because markets already expect any rate hike to be some time away he added At a two day meeting ending on Thursday the BOJ is expected to maintain its short term rate target at minus 0 1 percent and a pledge to guide long term yields around zero percent It is also expected to reiterate it will keep buying assets such as government bonds and exchange traded equity funds In quarterly projections also due on Thursday the BOJ may slightly cut its growth and price forecasts for the current fiscal year ending in March 2020 sources have told Reuters It will also project inflation to move above 1 5 percent but fall short of 2 percent in fiscal 2021 they said Such projections will underscore a dominant market view that heightening risks and soft inflation will keep major central banks from whittling down crisis mode policies any time soon Under forward guidance adopted last year the BOJ pledged to keep rates very low for an extended period given uncertainties such as the impact of this year s sales tax hike on the economy Some analysts say the BOJ could tweak the language to reassure markets that rates will stay ultra low long after the tax increase takes place The BOJ could extend its forward guidance and commit to maintaining current monetary easing at least through 2020 said Hiroshi Ugai chief Japan economist at JPMorgan NYSE JPM Securities Ugai said the BOJ could make the tweak on Thursday though most analysts expect any such change to happen later this year Despite some government steps to soften the tax blow analysts polled by Reuters expect it will briefly knock the economy into contraction in the fourth quarter Years of heavy money printing have failed to fire up inflation to the BOJ s 2 percent target and left it with little ammunition to fight the next recession Prolonged easing has also added to stresses on regional banks already facing slumping profits due to an ageing population and an exodus of borrowers to big cities Under current projections the BOJ expects core consumer inflation to hit 1 1 percent in the year ending in March 2020 and accelerate to 1 5 percent next year That is much higher than projections in a Reuters poll of 0 7 percent inflation this fiscal year and 0 8 percent the following year |
JPM | JPMorgan Continues to Explore Blockchain for Cross Border Payments Having Signed 220 Banks Worldwide Along the Way | On April 21 it was revealed that JPMorgan Chase NYSE JPM the United States largest bank with over 2 62 trillion in assets is planning to widen the use of its blockchain system
Specifically JPM is adding new features to its Interbank Information Network IIN which is now used by more than 220 banks across the globe With the JPM Coin launched earlier this year it seems that the U S financial institution is increasingly betting on blockchain pushing crypto closer to mainstream adoption |
JPM | Argentine Bonds Sink Into Distressed Territory as Macri Falters | Bloomberg Argentina s bonds tumbled for a second day sending an implied probability of default gauge over 60 percent and rattling the resolve of investors who want to believe President Mauricio Macri will fend off his populist foes and win re election this year
Argentina is once again feeling the pain of being considered one of the riskiest credits in emerging markets despite progress on a fiscal deficit and a record credit line from the International Monetary Fund as a strengthening dollar saps demand for high yielding assets It comes at a tough time for Macri who is struggling with sky high inflation and a recession ahead of October elections which have eroded his public image in polls and led to concerns of a populist comeback by his predecessor Cristina Fernandez de Kirchner
The extra yield investors demand to own Argentine debt over U S Treasuries has surged 160 basis points this week to 10 08 percentage points surpassing the threshold where a credit is considered distressed Dollar bonds lost 4 5 percent on Wednesday alone bringing year to date returns to a 3 percent loss against average gains of 6 6 percent for developing nation peers The first bond maturing after the election in April of 2021 has tumbled 9 cents this week and now yields 20 percent
In comments on Wednesday Macri admitted that the market volatility is stemming from the political uncertainty but said he believes it s wrong to expect Argentines will elect his political opponents
The world isn t sure whether Argentines want to go back and that makes the world very concerned sovereign risk goes up they take more defensive positions Macri said in a radio interview I think they re wrong they re wrong We Argentines aren t going back to the past
The implied probability of non payment over the next five years has jumped to 61 percent according to credit default swap trading Just a year ago that reading was 23 percent The peso which was already the worst performing currency in the world slipped another 4 percent to 45 78 per dollar a record low
The market selloff is exacerbating the situation as rising borrowing costs and a weakening peso translate into higher inflation expectations eroding support for Macri JJPMorgan analysts wrote in a note late Wednesday That negative feedback loop added to worse than expected inflation are the main drivers behind Argentina s dire situation they added
At the current juncture the market seems to be looking for a circuit breaker to that negative feedback loop the analysts said |
JPM | JPMorgan Says Brazil s Real Pension Boost Limited by Weak Growth | Bloomberg Brazil s push to overhaul its bloated pension system seen as key to restoring investor confidence in the nation threatens to drag down the real as political wrangling proves far more difficult than expected according to the currency s top forecaster
Cassiana Fernandez JPMorgan Chase Co NYSE JPM s chief Brazil economist sees the real at 3 90 per U S dollar by year s end more pessimistic than the 3 75 per dollar median forecast That s partially because she s more downbeat than the market on growth expecting the economy to expand just 1 5 percent this year a far cry from her initial forecast of 2 3 percent
The political uncertainty already began to impact market expectations Sao Paulo based Fernandez said in an interview What we expected to be one of the biggest drivers for growth this year which was an improvement in confidence levels due to the government s more liberal agenda will actually be weaker and take longer to materialize
The recent pessimism stands in stark contrast to the giddiness seen during President Jair Bolsonaro s election in October Investors shrugged off concern Bolsonaro who comes from a small party would have trouble finding support in a fragmented Congress to overhaul the social security system and generate savings of 1 16 trillion reais 295 billion over 10 years
Yet each lurch forward or back in the flagship measure has driven Brazilian assets this year lifting them on signs of progress and sending them down on perceived setbacks
Markets have no doubts about the quality of the economic team and its agenda Fernandez said The biggest doubt has always been about the government s political ability to implement that agenda A social security overhaul is challenging in any country and Brazil s political conditions only make it harder
After weeks of interrupted sessions shouting matches and debates on changes to the text lawmakers in the lower house s Constitution and Justice Committee agreed late Tuesday that the bill can proceed in Congress
The so called CCJ was seen as the easiest step the reform had to clear former President Michel Temer s proposal in comparison took less than 10 days to pass that stage Now months of debate and no fewer than six votes in both houses of Congress lie ahead before it can become law
Over the next few months negotiations at the special committee the next one analyzing the bill will be eyed for an idea of which specific points legislators will try to alter and how much that will dilute the reform s fiscal impact according to Fernandez She expects the overhaul to be approved in the last quarter of the year with the first floor vote in the lower house at the end of the third quarter Negotiations with lawmakers will likely cut the planned savings in half she said adding up to around 700 billion reais once the impact of the reform in states and municipalities is factored in
Fernandez who was the most accurate forecaster for the real in the first quarter of this year according to Bloomberg rankings says the currency could strengthen in the short term to 3 80 per dollar in the second and third quarters as concerns about a U S recession ease and as China growth surprises to the upside
But the fate of the overhaul and its impact on growth expectations remains the most important driver for the Brazilian real according her With a still fragile support base and frequent infighting the government will have to improve its relationship with lawmakers she said Bolsonaro was elected with a pledge to put an end to old politics refusing to exchange government posts for support a phrase he has frequently repeated since taking office
Knowing that the government is not willing to negotiate with the Congress is always a bad scenario she said There are various ways to negotiate not necessarily handing over roles What is important for markets is to know that the government is willing to make negotiate |
JPM | Will JP Morgan JPM Beat Estimates Again In Its Next Earnings Report | Have you been searching for a stock that might be well positioned to maintain its earnings beat streak in its upcoming report It is worth considering JPMorgan Chase JPM which belongs to the Zacks Banks Major Regional industry
This biggest U S bank by assets has an established record of topping earnings estimates especially when looking at the previous two reports The company boasts an average surprise for the past two quarters of 3 81
For the last reported quarter JP Morgan came out with earnings of 2 34 per share versus the Zacks Consensus Estimate of 2 24 per share representing a surprise of 4 46 For the previous quarter the company was expected to post earnings of 2 22 per share and it actually produced earnings of 2 29 per share delivering a surprise of 3 15
Price and EPS Surprise
With this earnings history in mind recent estimates have been moving higher for JP Morgan In fact the Zacks Earnings ESP Expected Surprise Prediction for the company is positive which is a great sign of an earnings beat especially when you combine this metric with its nice Zacks Rank
Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank 3 Hold or better produce a positive surprise nearly 70 of the time In other words if you have 10 stocks with this combination the number of stocks that beat the consensus estimate could be as high as seven
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter the Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change The idea here is that analysts revising their estimates right before an earnings release have the latest information which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier
JP Morgan has an Earnings ESP of 3 27 at the moment suggesting that analysts have grown bullish on its near term earnings potential When you combine this positive Earnings ESP with the stock s Zacks Rank 3 Hold it shows that another beat is possibly around the corner The company s next earnings report is expected to be released on January 11 2019
When the Earnings ESP comes up negative investors should note that this will reduce the predictive power of the metric But a negative value is not indicative of a stock s earnings miss
Many companies end up beating the consensus EPS estimate though this is not the only reason why their shares gain Additionally some stocks may remain stable even if they end up missing the consensus estimate
Because of this it s really important to check a company s Earnings ESP ahead of its quarterly release to increase the odds of success Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they ve reported |
JPM | JPMorgan Chase JPM Outpaces Stock Market Gains What You Should Know | In the latest trading session JPMorgan Chase JPM closed at 101 02 marking a 0 65 move from the previous day This change outpaced the S P 500 s 0 54 gain on the day Elsewhere the Dow gained 0 64 while the tech heavy Nasdaq added 0 95
Prior to today s trading shares of the biggest U S bank by assets had lost 8 41 over the past month This has lagged the Finance sector s loss of 6 45 and the S P 500 s loss of 4 97 in that time
Investors will be hoping for strength from JPM as it approaches its next earnings release which is expected to be January 11 2019 In that report analysts expect JPM to post earnings of 2 23 per share This would mark year over year growth of 26 7 Meanwhile our latest consensus estimate is calling for revenue of 27 10 billion up 12 19 from the prior year quarter
JPM s full year Zacks Consensus Estimates are calling for earnings of 9 25 per share and revenue of 109 73 billion These results would represent year over year changes of 34 64 and 10 14 respectively
It is also important to note the recent changes to analyst estimates for JPM These revisions help to show the ever changing nature of near term business trends With this in mind we can consider positive estimate revisions a sign of optimism about the company s business outlook
Research indicates that these estimate revisions are directly correlated with near term share price momentum We developed the Zacks Rank to capitalize on this phenomenon Our system takes these estimate changes into account and delivers a clear actionable rating model
The Zacks Rank system ranges from 1 Strong Buy to 5 Strong Sell It has a remarkable outside audited track record of success with 1 stocks delivering an average annual return of 25 since 1988 The Zacks Consensus EPS estimate has moved 0 1 lower within the past month JPM currently has a Zacks Rank of 3 Hold
Valuation is also important so investors should note that JPM has a Forward P E ratio of 10 85 right now This valuation marks a premium compared to its industry s average Forward P E of 10 4
Also we should mention that JPM has a PEG ratio of 1 63 This metric is used similarly to the famous P E ratio but the PEG ratio also takes into account the stock s expected earnings growth rate JPM s industry had an average PEG ratio of 1 1 as of yesterday s close
The Banks Major Regional industry is part of the Finance sector This group has a Zacks Industry Rank of 151 putting it in the bottom 41 of all 250 industries
The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors Our research shows that the top 50 rated industries outperform the bottom half by a factor of 2 to 1
Make sure to utilize Zacks Com to follow all of these stock moving metrics and more in the coming trading sessions |
MS | Wall Street Turns Cautious On Tech | Investing com Three more brokerage firms have warned investors that the best days of the tech sector are over Bank of America Merrill Lynch and Morgan Stanley NYSE MS told clients they see the sector heading lower partly because of unsustainable valuations and the threat of new regulation in the wake of the Facebook NASDAQ FB data scandal BoAML said Internet stocks were in a bubble after a 600 gain over the past seven years Morgan Stanley said it saw early signs of weakness in the sector around the time of fourth quarter earnings And RBC Capital Markets downgraded the tech sector to under weight saying it no longer expects it to lead the market JPMorgan Chase NYSE JPM first warned about tech valuations two weeks ago advising investors to lock in profits after years of outperformance |
JPM | Why Is Everyone Worried About Turkey s Foreign Reserves | Bloomberg Turkey s central bank won t explain what s behind the recent moves in its foreign currency reserves and that s making investors nervous
The lira weakened more than any other currency on Thursday amid speculation that the central bank was using money borrowed from commercial banks in short term swaps to inflate its foreign reserve figures It sank nearly 2 percent on growing concerns before paring some of those losses
Here s a quick look at what s going on
How much does Turkey hold in foreign currency reserves
That depends on what you count Net international reserves as defined by the International Monetary Fund stood at 28 4 billion in the week through April 12 But the central bank says it s misleading to focus on the net figures and instead urges investors to look at its gross reserves which amount to a little under 98 billion
The central bank reports the lower or net figure because of a stand by financing deal Turkey signed with the IMF nearly two decades ago according to Ibrahim Turhan a former deputy central bank governor He agrees that it makes more sense to focus on the gross figure which includes the amount commercial lenders park at the central bank as a requirement against their dollar liabilities As long as Turkish residents keep their foreign currency savings at banks then a part of that will continue to be held at the central bank which can use those funds in any way it sees fit Turhan said
Why do investors care so much about Turkey s reserves
Turkey has about 118 billion of foreign currency debt maturing within the next 12 months It ll need the central bank s buffers to meet those obligations if the flow of capital that finances the economy slows
Foreign investors have already withdrawn a net 1 6 billion from the lira denominated bond market this year amid political and economic turbulence A sudden drop in reserves in March prompted the lira s biggest single day decline since last year s currency crash JPMorgan Chase Co NYSE JPM recommends investors sell the lira citing the drawdown
Why do investors fear the reserve numbers might be inflated
Turkey s central bank began last month borrowing excess foreign currency from commercial lenders through FX swap auctions lending the banks liras in return Since the swaps were introduced there s been a steady build up in its reserves prompting speculation that the borrowed money was being used by the central bank to give the impression that its foreign currency stockpiles were growing when much of the money is destined for other uses
How much money are we talking about
In the first three weeks after the FX swaps were introduced through April 12 net reserves rose by just over 20 billion liras or around 3 5 billion at today s fixing The amount the central bank borrowed during the period was just under 13 billion leaving around 9 billion unaccounted for assuming the borrowed amount is reflected in reserves one for one If that s the case for the net reserves to remain steady the central bank would need to roll over the swaps every week when they expire
So where is the money
We don t know That s the short answer The longer answer is that the amount the central bank may have used to repay maturing foreign debt or what it may have sold to Turkey s state energy company which pays for gas imports doesn t add up to such large amounts
That has led to speculation that the central bank is using its FX arsenal to support the lira The central bank is obliged to announce currency market interventions however and it hasn t done so According to central bank data the last such intervention was done on Jan 23 2014 That s left investors wondering whether the central bank is intervening indirectly Traders say state lenders have been on the selling side of the dollar trade in recent weeks
What do the investors say
Most economists say the Turkish central bank owes investors a thorough explanation of what appears to be a discrepancy in the foreign currency reserve data Its credibility is already in question after repeated pressure from President Recep Tayyip Erdogan who s embarked on increasingly interventionist economic policies and lashed out at banks for giving negative guidance
For Win Thin global head of currency strategy at Brown Brothers Harriman Co the reserves saga is not just a matter of transparency over a single data point The real takeaway is that the institutional framework appears to be breaking down further in Turkey he said |
JPM | JPMorgan Chase to Add New Features to Blockchain Powered Network for Global Banks | JPMorgan Chase NYSE JPM is expanding the use of its blockchain technology to help reduce the number of global payments rejected by errors the Financial Times reported on April 21
The United States financial giant is adding new features to its Interbank Information Network IIN which is now used by more than 220 banks around the world The technology was initially designed to help institutions share payments data in real time cutting delays in processing times |
JPM | Japan s 10 day break to fete new emperor may breathe life into economy | By Malcolm Foster TOKYO Reuters Japan s unprecedented 10 day holiday to celebrate Crown Prince Naruhito s enthronement is expected to give the sluggish economy at least a short term boost Breweries hotels retailers restaurants and train operators are all expected to benefit from the holiday which runs from April 27 to May 6 Banks schools government offices and many businesses will be closed A record 24 7 million people about one fifth the country s population are expected to travel according to travel agency JTB Corp mostly within the country Japanese are in a festive mood with the new imperial era beginning and the 10 day break said Yoshiie Horii a spokesman for brewer Asahi Group which is increasing production of several brands by 5 10 percent ahead of the break We think this holiday will spur consumer spending Japan has a cluster of national holidays every year around this time dubbed Golden Week But this year authorities gave the nation an extended vacation to fete the imperial succession After a 31 year reign Emperor Akihito will abdicate on April 30 and be replaced by his son Naruhito the next day Japanese have made travel plans months ahead of time creating intense competition for popular destinations such as Hawaii and Europe Akiko Nishikata s family tried in November to reserve a package tour to Hawaii for Golden Week but were told they were sold out This is a once in a lifetime chance to go on a long trip so we re disappointed Nishikata said Instead they ll travel to either Hokkaido in the north or Kyushu in the south Also because the imperial transition is triggered by Akihito s abdication not his death consumers don t feel a need to hold back due to mourning To mark the new era department stores in Tokyo plan to offer limited quantities of commemorative items on May 1 including traditional sweets with Hello Reiwa on them and confections sprinkled with powdered gold TAX HIKE The expected economic bump from the long holiday will boost second quarter GDP growth and give Prime Minister Shinzo Abe s government another reason to proceed with a planned sales tax increase in October said Hideo Kumano chief economist at Dai ichi Life Research Institute Kumano estimates that domestic travel spending will jump nearly 30 percent from a year ago to 1 48 trillion yen 13 3 billion In March there was a lot of talk about a recession but that s completely disappeared with buzz from the announcement of Reiwa on April 1 he said May 1 will be even bigger Overall consumer spending during the 10 days is forecast to rise 7 6 percent compared with a year ago and contribute a quarter percentage point to GDP said Koya Miyamae senior economist at SMBC Nikko Securities But other analysts cautioned that an increase would probably be followed by a drop in consumption making the long term impact negligible A spending boost if any will be short lived said Masaki Kuwahara senior economist at Nomura Securities Manufacturers generally don t expect the longer holiday to have a big impact Toyota for example says its plants are usually closed for nine days during Golden Week and it is doing the same this year Computer systems companies and other businesses may see a dip in sales because of lost workdays but a Reuters survey of about 220 companies showed that nearly half didn t expect the long break to affect their business About 28 percent predicted a decline in output or sales while a quarter projected a rise JITTERY TRADERS Hospitals will alternate operating hours during the break as is typical during holidays Tokyo residents can visit a website to see which hospitals are taking patients and find more detailed information Financial market traders meanwhile are worried that the 10 day shutdown could cause disruptions and unsettle the yen The U S jobs report and several other key events will happen while the market is closed said Shogo Maekawa global market strategist at JPMorgan NYSE JPM Asset Management It s a risk that we can t trade for 10 days even if something volatile happens in overseas markets he said
1 111 6900 yen Reporting and writing by Malcolm Foster additional reporting by Tetsushi Kajimoto Naomi Tajitsu Izumi Nakagawa Ayai Tomisawa Editing by Gerry Doyle |
MS | Brief Study Of CGM Mutual Fund LOMMX | CGM Mutual Fund seeks long term capital appreciation with a prudent approach to protection of capital from undue risks The fund seeks to attain its objective by investing in a managed mix of equity and debt securities Under normal circumstances the fund invests approximately 75 of its assets in equity securities and 25 in debt or fixed income securities
This Allocation Balanced product has a history of positive total returns for over 10 years Specifically the fund s returns over the 3 5 year benchmarks 3 year 5 6 and 5 year 6 8 To see how this fund performed compared in its category and other 1 and 2 Ranked Mutual Funds
LOMMX s performance as of the last filing when compared to funds in its category was in the top 1 over the past 1 year and in the top 29 over the past 3 years and in the top 54 over the past 5 years
The CGM Mutual Fund as of the last filing allocates their fund in three major group Large Value Large Growth and Small Value Further as of the last filing Bank Of America Corp Morgan Stanley NYSE MS and Citigroup Inc NYSE C were the top holdings for LOMMX
This Zacks Rank 2 Buy was incepted in June 1961 and is managed by LOMMX carries an expense ratio of 1 17 and requires a minimal initial investment of 2 500
Want key mutual fund info delivered straight to your inbox
Zacks free Fund Newsletter will brief you on top news and analysis as well as top performing mutual funds each week |
MS | Further Trying To Define Liquidity | On December 3 1999 Enron Communications announced that the company had begun operations selling bandwidth as an energy commodity After publicizing the venture in May that year it seemed natural given that they had been selling similar products in the energy sector pioneering all sorts of products along the way As the internet matured there was no way Enron would be left out of what was clearly going to be the future The original product was DS 3 between New York and Los Angeles produced by Global Crossing offering the blazing capacity of 45 megabits per second
Enron s President Jeff Skilling said This is Day One of a potentially enormous market It never really happened though largely because carriers balked at the idea preferring direct to customer and resisting the necessary standardization that treated all networks as equal There were also questions about how serious the company was in offering the product as in hindsight it appeared more as if Enron management in late 1999 just needed a story to tell Wall Street
There is more truth to that than people know In the movie Smartest Guys in the Room the film spends I think too little time on what Enron called mark to market accounting It was huge for them in allowing the business to expand throughout the 1990 s It would become one primary element in the subprime disaster but not as mark to market so much as gain on sale accounting
A company s financial statements follow specific rules so that investors or even just the Taxman can assess what you are on any given day Gain on sale however is something totally different It allows you to present financial strength based not on what you have received in the past all the way to the present rather by what you expect to receive in the future and often far off in it The key word in that sentence may seem to be future but it is really expect
The filmmakers managed to find a company video filmed as an almost spoof with Jeff Skilling playing himself In it Skilling describes being approved for what he comically terms Hypothetical Future Value accounting which rather than being satire turned out to be the wave of the future As his character says if we do that we can add a kazillion dollars to the bottom line They did
Once you start getting into discounting of future values and cash flows in areas like energy trading or even bandwidth there is almost nothing to go on except your own predictions If you model X for that market and your take as Y it doesn t matter that X is unthinkably large and therefore Y sky high because there is no challenging the numbers Enron had developed practically the only models and more importantly had built up a reputation that was seemingly unassailable Why look behind their curtain because unless you were prepared to argue heteroscedasticity and Markov chains rather than transmission specs and pipelines you were at a fatal disadvantage
The problem for the world in 2017 is not that Enron turned out to be a fraud but that Enron turned out to be the leading edge By that I don t mean the wave of dot coms that disappointed and flamed out The future was the future meaning money and math
In truth there wasn t as much difference between LTCM and Enron as you may like LTCM did what Enron did only with much more discipline and rigidity I don t want to conflate Enron s criminality with LTCM s arrogance as the two cases were not similar in that regard The latter though depended upon statistical probabilities that gave it an off balance sheet number that was in every way like money and in that fashion LTCM and Enron were merely different points on the same spectrum
If John Meriwether showed up at your door with his roster of mathematical giants including Myron Scholes and Robert Merton and said that his trade was going to do X dollars over its lifetime nobody challenged the assertion Not because they didn t understand the trade swaps were even by then a well worn financial product Where it really mattered though was in the statistical processes whereby LTCM s numbers arrived at that present value of expected future cash flows That part nobody in 1995 understood outside of a few who were at that time prevented from replicating them
How does it work If you do a trade with your prime broker typically a large dealer and it has a positive market value then you have created money that can be used in several different ways even though not a single dollar has flowed anywhere it is all modeled as future expected cash flows The more friendly the statistical breakouts the larger that discounted present value especially if your broker can t argue against your numbers as Wall Street was unable to up until 1997
In modeling future cash flows a whole world of math and variables opens up that allow for just such complexity you have to predict not only various legs in swaps transactions there are also counter legs the discount rate and the biggest of the bigs volatility Nothing destroys any designed calculations like an unexpected rise in volatility Therefore there is enormous importance placed on being able to model meaning try to predict expected volatility too And that means hedging
But introducing hedging for the math anyway creates a whole other set of calculations that are required so that tolerances can be defined in the most complex set of interactions and counteractions Those would include not just the expected performance of hedges but also your expected flexibility in being able to further hedge should the original hedges perform unexpectedly In other words models that showed what would happen if you expect to lose control and thus being able to quantify how you can control a position going way out of control if so that the only purpose is for the math to define how all possibilities can be reduced to a single monetary calculation that shows you making money
What is left on the other side of that equation is supposed to be random chance but that s really not what is there Enron wasn t felled by mere bad luck they were cut down because of GIGO garbage in garbage out There are any number of prominent examples most of which were revealed during and after 2007 For example like MF Global you can be right and have it end up
In Morgan Stanley s trade the short position was likely paired with a long hedge position in super seniors of greater size the estimates were for 10 billion Where negative convexity plays a role is in its impact across tranches While prices of the less senior tranches were declining due to default fears and cash flow deterioration the price of the super senior would exhibit very low volatility until implied correlations hit that magical point where the correlation smile produces larger price volatility That makes this trade seem like a perfect expression of a bearish outlook make money on the middle tranche losing value while the super senior adds a hedge protection
The problem was in their modeling of not only implied correlation and negative convexity but the degree of reliance on derivative measures of financial parameters As illiquidity was impacting credit spreads and Gaussian copula based models were interpreting such moves as rising correlation the negative convexity feedback loop was a blind spot since Morgan Stanley NYSE MS likely never modeled irrational fear driving illiquidity as an input As implied correlation levels rose the super senior began to take on the characteristics of a long trade in subprime a truly bad place to be in the latter half of 2007
The dazzle was in the process especially with Enron the complexity so that you wouldn t notice that none of it was sound from the very beginning The same was true for LTCM MF Global or Morgan Stanley as above only their models were better in the respect they drew from more real world information rather than pure fantasy It was for all money nonetheless and it was all used as money for further purposes at least until the inherent contradictions became too glaring to ignore
In other words if your trades all assume that some currency irregularity in Thailand in 1996 is nothing to worry about but then all of a sudden it is or that you are short subprime in 2007 at seemingly the exact right moment until out of nowhere you are not just long but billions long the discounted present value of all those expected cash flows get flushed in the blink of an eye on a sudden burst in non random random chance volatility tail risk At that point those ephemeral expected future cash flows just up and disappear as fast and as easy as they appeared in the first place only this time you have market values on your trades moving in the wrong direction and your broker demanding not better modeled numbers of future values but tangible collateral in hand right now
This kind of math as money can be destroyed as quickly as it is created but with more ferocity and ruthlessness in the reverse
VICE CHAIRMAN MCDONOUGH The biblical justice in this situation is that the principals of LTCM apparently believed so firmly that this system would continue to work that they appear to have borrowed rather heavily to increase their own risk positions in their firm So there is a general and spreading belief that we may have some extraordinarily elegant people in private bankruptcy court in the fairly near future
MS RIVLIN How many more LTCMs are there
VICE CHAIRMAN MCDONOUGH We do not know of any other hedge fund that would be remotely of the size of LTCM P If John Meriwether can do it there certainly would have to be other smart individuals with computers who could engage in the same sort of activity So there have to be little versions of LTCM P
I have run across all kinds of famous last words but these are some of the most frustrating there have to be little versions of LTCM Little No All of Wall Street became LTCM as money itself had already been transformed into discounted future values credits that could be used to do monetary things and accomplish financial goals all in the present based on math about the future In that situation what is more money It isn t the actual exchange of actual cash it is the various things that change the numbers about cash that in all probability will never move one side to the other under any circumstance Whatever effects the calculations of those expected future cash flows is today more money than bank reserves or at the margins of the economy the stuff contained within M2 or even the incomplete M3
Where it all becomes truly unmoored from reality is when everyone is doing the same thing when there aren t just little versions of LTCM out there but instead nothing but LTCM s You have math that shows a positive discounted present value of a complex series of transactions that gives you a credit on the balance sheet of a big bank dealer who obtains balance sheet capacity by doing the same kind of thing with some other counterparty who does the same with another and so on and so on The monetary world becomes an impenetrable series of traded liabilities anchored to reality only by regressions expectations for future cash flows that can accomplish what fifty years ago only a deposit account could
Something changed in the middle 1990 s a genie set free from an evolutionary bottle that was downplayed and understated contemporarily even when the dangers occasionally forced themselves upon present time There is nothing wrong with trying to forecast the future nor even in trying to figure out what the future may be worth today But turning that intangible expectation into something valuable on terms equivalent with money is a leap too far The costs are nearly ten years of global depression an enormous sum already but with no end yet in sight
Thailand devalued the baht in July 1997 LTCM failed in September 1998 and somewhere in between Wall Street and more so Lombard Street figured they wanted in on all of it It would not be just Enron that would have all the fun for however long
If this were just some stock and bond speculation gone awry it would be an entertaining tale from afar but by taking over money as if it were the math and in many ways really is the tragedy is our shared experience that continues even now If the road to hell is paved with good intentions the road to economic tyranny is littered with the efforts of some of the smartest people in history those elegant intellectuals thinking themselves more worthy to re arrange society to all other exclusion in a more optimal structure and finding themselves and us instead at bankruptcy court
Why did QE and ZIRP fail Other than briefly tamping down some projections of volatility in the first maybe the second instance of it after 2011 they were a complete nothing because they never really addressed the future where all marginal money still today resides |
JPM | November ETF Asset Report Short Term Bonds Top | Given how important November was with midterms producing a divided congress in the United States a steep slump in oil prices solid online retail sales during Thanksgiving and Black Friday and the progress in Brexit talks it will be interesting to look back at how ETF investors behaved in the month
Let s take a look at the corners that were the hot favorites of investors and those that were cast out
S P 500 Rules
Since the U S market held ground in the month and the S P 500 performed well SPDR S P 500 ETF AX SPY topped the list with about 5 81 billion of monthly inflow
Short Term Bonds Prevail
Investors should note that yield on short term Treasury bills outdoes U S inflation meaning investors can now have real inflation adjusted return from cash per Financial Times Short term bonds also have low interest rate sensitivity than the longer term ones
iShares 1 3 Year Treasury Bond ETF SPDR Bloomberg Barclays LON BARC 1 3 Month T Bill ETF BO BIL iShares Short Treasury Bond ETF AX SHV JPMorgan NYSE JPM Ultra Short Income ETF and Vanguard Short Term Treasury Index ETF attracted about 2 45 billion 1 74 billion 1 72 billion 1 05 billion and 1 05 billion respectively
Minimum Volatility ETF Gains Too
Since there were host of worries in the market in November including higher interest rates collapse in oil prices concerns over trade war and its resultant threat to the global economy cautious investors piled up their assets in minimum volatility ETFs iShares Edge MSCI Min Vol U S A ETF raked in about 1 9 billion in assets read
Emerging Markets Back to Investors Favor
Cheaper valuation and a subdued greenback led to renewed interests in investors about investing in emerging markets EM Also the Fed chair Jerome Powell came up with apparently dovish comments at the end of the month which also gave EM assets a hand of late So iShares Core MSCI Emerging Markets ETF created about 3 26 billion in assets in the month read
Technology and Communications Out of Favor
Rising rate and overvaluation concern caused a carnage in tech and internet stocks in mid November So the tech heavy Invesco QQQ Trust lost about 1 62 billion in assets Vanguard Information Technology ETF HN VGT shed about 418 2 billion while Communication Services Select Sector SPDR Fund lost about 546 5 billion in the month read
Corporate Bond ETF Falters Too
iShares iBoxx USD Investment Grade Corporate Bond ETF shed about 1 074 billion in assets in the fund probably on rising rate concerns
Banking Bust
SPDR S P Regional Banking ETF CO KRE shed about 438 9 billion in assetsin November as the yield curve flattened read
Want key ETF info delivered straight to your inbox
Zacks free Fund Newsletter will brief you on top news and analysis as well as top performing ETFs each week |
JPM | JPMorgan Chase JPM Dips More Than Broader Markets What You Should Know | In the latest trading session JPMorgan Chase JPM closed at 105 19 marking a 1 9 move from the previous day This change lagged the S P 500 s 0 15 loss on the day Elsewhere the Dow lost 0 32 while the tech heavy Nasdaq added 0 42
Prior to today s trading shares of the biggest U S bank by assets had lost 3 81 over the past month This has lagged the Finance sector s loss of 2 02 and the S P 500 s loss of 1 1 in that time
Investors will be hoping for strength from JPM as it approaches its next earnings release which is expected to be January 11 2019 In that report analysts expect JPM to post earnings of 2 24 per share This would mark year over year growth of 27 27 Our most recent consensus estimate is calling for quarterly revenue of 27 10 billion up 12 19 from the year ago period
Looking at the full year our Zacks Consensus Estimates suggest analysts are expecting earnings of 9 26 per share and revenue of 109 73 billion These totals would mark changes of 34 79 and 10 14 respectively from last year
Any recent changes to analyst estimates for JPM should also be noted by investors Recent revisions tend to reflect the latest near term business trends With this in mind we can consider positive estimate revisions a sign of optimism about the company s business outlook
Based on our research we believe these estimate revisions are directly related to near team stock moves We developed the Zacks Rank to capitalize on this phenomenon Our system takes these estimate changes into account and delivers a clear actionable rating model
Ranging from 1 Strong Buy to 5 Strong Sell the Zacks Rank system has a proven outside audited track record of outperformance with 1 stocks returning an average of 25 annually since 1988 The Zacks Consensus EPS estimate remained stagnant within the past month JPM is currently a Zacks Rank 2 Buy
Digging into valuation JPM currently has a Forward P E ratio of 11 58 This valuation marks a premium compared to its industry s average Forward P E of 11 12
It is also worth noting that JPM currently has a PEG ratio of 1 74 This popular metric is similar to the widely known P E ratio with the difference being that the PEG ratio also takes into account the company s expected earnings growth rate The Banks Major Regional industry currently had an average PEG ratio of 1 12 as of yesterday s close
The Banks Major Regional industry is part of the Finance sector This group has a Zacks Industry Rank of 101 putting it in the top 39 of all 250 industries
The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups Our research shows that the top 50 rated industries outperform the bottom half by a factor of 2 to 1
Be sure to follow all of these stock moving metrics and many more on Zacks com |
MS | SEC ends probe into Puerto Rico s 3 5 billion 2014 bond issuance sources | By Nick Brown NEW YORK Reuters The U S Securities and Exchange Commission has dropped a probe into whether former Puerto Rican officials misled investors when they sold 3 5 billion of general obligation bonds in March 2014 according to two sources with direct knowledge of the matter Ex Puerto Rican leaders who had been interviewed as part of the SEC s investigation received letters last week from the agency saying the SEC would not recommend enforcement actions said the sources The issuance came during the administration of ex Governor Alejandro Garcia Padilla and then Puerto Rico Treasury Secretary Melba Acosta as the U S territory slid precipitously toward bankruptcy Prices on the bonds began to fall shortly after they were sold leading the SEC to look into whether issuers painted too rosy a picture of Puerto Rico s finances The probe targeted Puerto Rican officials and underwriters at Morgan Stanley N MS and Barclays L BARC In June the SEC made preliminary recommendations to file enforcement actions against brokers at Barclays and Morgan Stanley but the underwriters are now off the hook as well the sources said A spokesman for Barclays declined to comment while a representative for Morgan Stanley could not be immediately reached on Monday night The bonds now held largely by hedge funds and mutual funds were the last big debt issuance from Puerto Rico which declared the biggest bankruptcy in U S government history in May As the island was trying to restructure some 120 billion in bond and pension debt Hurricane Maria devastated its infrastructure in September cutting power to the entire island and causing tens of billions of dollars in damage Puerto Rico s GO bonds which had traded at roughly 60 cents on the dollar plummeted to about 20 cents after the storm They have rebounded somewhat over the last two months trading at just over 40 cents on Monday according to Thomson Reuters data GO holders are locked in a legal battle with creditors who hold so called COFINA debt which is backed by the island s sales tax revenue Both sides claim an ironclad right to Puerto Rico s sales tax and a hearing on the matter is scheduled for Tuesday in New York before U S Judge Laura Taylor Swain |
MS | Cryptocurrency miners seek cheap energy in Norway and Sweden | By Christoph Steitz and Stephen Jewkes FRANKFURT MILAN Reuters Cryptocurrency miners are moving in to Norway and Sweden to take advantage of cheap hydro electric energy and low temperatures to power and cool their servers Iceland has been Europe s most popular location for miners of digital currencies such as bitcoin and ethereum But at 6 5 euro cents and 7 1 cents per kilowatt hours respectively commercial power prices in Sweden and Norway are cheaper than Iceland s 8 cents and far below the European average of 11 cents The interest is good news for Sweden s Vattenfall VATN UL and Norway s Statkraft STATKF UL the dominant utilities in their countries Supplying power to cryptocurrency miners is a tiny part of current business but the two state owned firms have said they see it as an opportunity The process is energy intensive Miners plug in thousands of servers at a time to get the computing power to produce cryptocurrencies which is done by solving mathematical equations For a graphic on bitcoin s energy consumption click Miners of bitcoin will use about 130 terawatt hours of energy this year matching Argentina s consumption or the projected usage of all the world s electric vehicles by the mid 2020s according to Morgan Stanley NYSE MS We re on a global hunt to secure as much power as we can said Olivier Roussy Newton director and co founder of Canadian group HIVE Blockchain Technologies V HIVE which started mining ethereum in Sweden in January The company said it was expanding energy capacity for its crypto mining in Sweden to 17 4 megawatts with funds available to ramp up a further 26 8 MW by September Last month it agreed to buy data center company Kolos Norway AS for 9 9 million with a view to expanding its mining operations In March U S miner Bitfury opened a new 35 million mining data center in Norway The miner will be buying 350 gigawatt hours of pure clean energy from local renewable energy provider Helgeland Kraft HKRAT UL Many bitcoin miners are looking at the area including the Chinese because of abundant cheap hydro power said Bill Tai a member of Bitfury s board of directors China s Bitmain the world s largest bitcoin miner which recently set up a unit in Switzerland has also been investigating Sweden and Norway s potential two industry sources with knowledge of the matter said China accounts for around 70 percent of the crytopcurrency mining industry but Beijing has discouraged it in part due to concerns about pollution from coal fired power This has forced them to look elsewhere A lot of miners are keen to get into Norway and that includes Bitmain and other Chinese names said Mark Collins chief executive of CBH Consulting AG a Zurich based clean energy consultant running for the blockchain industry A second source with knowledge of the matter also mentioned Bitmain s interest A number of nationalities are turning to the Nordics that source said Bitmain spokesman Nishant Sharma said the company would announce expansions in Europe and other regions as they occur He said he was not aware of any special plans for Sweden or Norway GREEN POWER Mining a single bitcoin requires 1 400 1 800 worth of electricity up to a quarter of the total costs and about the annual power bill of a four person household in Germany This means that cryptocurrency miners are under pressure from policymakers to prove their green credentials and Norway and Sweden s clean energy holds even greater appeal This area is the Saudi Arabia of green energy said Tai In Norway hydropower accounts for over 99 percent of electricity production while in Sweden the number is about 40 percent with the same again from nuclear Some utilities in Europe such as Italy s Enel MI ENEI and Germany s E ON DE EONGn are worried that the speculation behind cryptocurrencies could lead to a market crash Enel said in February it was not interested in powering cryptocurrency miners But Norway and Sweden have welcomed the business It is an opportunity for energy providers in the area It s a consistent power draw for them without spikes and troughs and energy providers like that said Collins Norway recently changed tax rules to exempt data centers from paying property taxes in a bid to attract foreign companies Node Pole a Swedish investment advisor owned by Vattenfall and smaller peer Skelleftea Kraft helped Chinese tech company Canaan Creative a miner and one of the world s largest makers of bitcoin mining chips to set up shop in Sweden last year For the last 6 8 months there has been an increasing interest in opportunities in Sweden Node Pole Chief Executive Patrik Oehlund said Vattenfall provides Canaan with the roughly 10 MW of power capacity it needs and the utility sees more bitcoin deals on the horizon There are a number of companies in different phases of evaluating establishment on the Nordic Market said Matts Wesslen Vattenfall s manager of energy intensive industries Nevertheless Alex de Vries blockchain specialist at PwC said the opportunities in cryptocurrency mining may be short lived If bitcoin energy consumption continues like it does today it will become unsustainable he said
That might be an opportunity for utilities in the short term but over the long term miners will have to find ways to become more efficient to cut electricity use |
MS | Cyber security firm Avast plans watershed London tech listing | By Emma Rumney and Eric Auchard LONDON Reuters Avast the world s largest consumer antivirus supplier by customers said on Thursday it will apply to list its shares on the London Stock Exchange in what could be a blockbuster float expected to value the company at around 4 billion The listing which is anticipated in early May will see a free float of at least 25 percent of Avast s issued share capital with the aim of raising around 200 million in primary proceeds A source familiar with the matter said the firm also hopes to raise a further 800 million via secondary sales meaning an overall target of around 1 billion and bringing the firm s valuation to 4 billion if successful That would represent the largest ever UK technology IPO and puts it head to head with British competitor Sophos the only other cyber security firm listed in London It will be Avast s second attempt at an IPO after it scrapped a plan to list on the U S Nasdaq in 2012 due to tough market conditions Founded three decades ago in the former Czechoslovakia in the waning years of Communism Avast claims to provide basic antivirus defenses to 40 percent of consumer PCs outside China where foreign security products are banned It has grown amid a dramatic increase in the number and type of threats since it was founded in 1991 and thanks to its ability to stay ahead of the bad guys CEO Vincent Steckler said A listing on the London Stock Exchange is a natural fit providing us wider access to capital markets and supporting the future growth of our business in the years ahead he said in a statement Avast will also use the primary proceeds of the offering to pay down its debt its statement said FREEMIUM MODEL The company was a pioneer of the now widely used freemium business model distributing its antivirus products for free over the internet then charging customers for premium features It counted 435 million users at the end of last year including 290 million consumer PC users and 145 million mobile users and a turnover of 780 million It acquired AVG a Czech rival two years ago to significantly expand its user base As well as antivirus software it also supplies privacy protection and other internet utility software targeting both consumers and small and medium sized businesses In a fragmented market Avast competes with brands including Czech based ESET Malwarebytes and McAfee both of Silicon Valley Romania s Bitdefender Britain s Sophos and Kaspersky Lab of Russia Avast s public offer follows the successful listing of two other high profile freemium companies in the United States Dropbox which started as a free service to share and store photos went public last month and music streaming Spotify had the largest ever direct listing earlier in April Morgan Stanley NYSE MS and UBS have been appointed joint global co ordinators and lead bookrunners for Avast s IPO It is 46 percent owned by its founders Czech entrepreneurs Pavel Baudi and Eduard Ku era CVC Capital Partners has a 29 percent stake with Summit Partners holding 7 percent |
JPM | JPMorgan Rises 3 | Investing com JPMorgan NYSE JPM rose by 3 01 to trade at 114 44 by 15 42 19 42 GMT on Wednesday on the NYSE exchange
The volume of JPMorgan shares traded since the start of the session was 13 88M JPMorgan has traded in a range of 111 01 to 114 45 on the day
The stock has traded at 114 4500 at its highest and 104 2500 at its lowest during the past seven days |
JPM | JPMorgan shuffles CFO and card services executives | By David Henry NEW YORK Reuters JPMorgan Chase Co NYSE JPM switched roles for two women executives on Wednesday putting Chief Financial Officer Marianne Lake in charge of consumer lending and naming card services chief Jenn Piepszak to take Lake s place The moves were announced in an internal memo from Chief Executive Officer Jamie Dimon and the bank s two co presidents Both women are 49 and the changes are effective on May 1 Dimon has a practice of moving executives into different positions to broaden their experience in the bank The switch will give Lake her first opportunity to run a business at the bank which addresses a missing qualification in her standing as a likely successor to Dimon She has won praise from investors and Wall Street analysts for handling the CFO job and Dimon s demands Dimon 63 has said he expects to step down within five years Lake s new responsibilities will include card services home lending and auto finance She was CFO of consumer banking businesses before becoming CFO of the bank in January 2013 Piepszak s star has been rising at JPMorgan as she has moved through different businesses in JPMorgan s consumer community banking segment under co president Gordon Smith Jenn has excelled in every role she has taken on in her 25 years with our firm the memo said
JPMorgan is the biggest U S bank by assets and is the most profitable among big banks as measured by return on tangible equity |
JPM | Currency Markets Are So Sleepy That HSBC Is Out of New Ideas | Bloomberg Foreign exchange markets are so quiet that HSBC s strategists are drawing a blank
We are in an unusual position in this month s FX Tactician deciding for the first time not to introduce a new trade idea for the month ahead Daragh Maher the bank s U S head of currency strategy wrote in a note to clients In part this reflects the lack of volatility evident in G10 FX markets which means we have neither hit our take profit levels nor our stop loss in the trades we entered in January February and March
The lack of movement in the markets means that implied three month volatility for G7 currencies is running two standard deviations below its long run average according to an index from JPMorgan NYSE JPM The lack of gyrations bedevils traders taking a position on directional swings between pairs and pushed influential investors to wager on continued tranquility to generate returns in a low volatility environment
Adding insult to injury the lone source of shockwaves in 2019 the British pound has seen market expectations for near term swings crater after the European Union and U K agreed to a Brexit deadline extension No wonder currency only hedge funds are a dying breed
HSBC still has confidence in its previous recommendations Maher said in his note which include selling the Aussie dollar against the greenback buying the U S currency versus the Canadian loonie and shorting the euro relative to the Japanese yen David Bloom head of global foreign exchange strategy at the bank adds that borrowing euros to buy dollars is the greatest carry trade in the world in light of the interest rate differential |
JPM | Lira Falls Most in World as Central Bank Data Confounds Traders | Bloomberg The Turkish lira weakened the most in the world as the central bank struggles to explain recent moves in its foreign currency reserves fueling concern about the state of the nation s finances amid the looming prospect of more political upheaval
The lira sank as much as 1 9 percent after the Financial Times reported the central bank used short term swaps with local lenders over the past month to bolster its net international reserves which stood at 28 4 billion as of April 12 Data complied by Bloomberg show the outstanding amount on these transactions was 12 7 billion as of the end of last week
President Recep Tayyip Erdogan said the report showed that Turkey is under attack by Western media portraying Turkey s economy as collapsed finished Regardless of the reports our situation is clear Erdogan said in a televised speech from Ankara
A senior central bank official speaking on condition of anonymity suggested it was unreasonable to expect that reserves will move in tandem with currency swaps The amounts the regulator borrows from banks through swaps shows up in its balance sheet but the changes in reserves are the outcome of wider transactions and operations the official said
The confusion is casting a shadow over the outlook of Turkish assets amid political turmoil triggered by a dispute over the result of a local election in Istanbul where Erdogan s party is contesting its defeat A sudden drop in reserves in March gave way to the lira s biggest single day drop since last year s currency crash
Fraud Ruling
Turkey s High Election Board is expected to rule early next week on the governing AKP s claim of fraud state television reported Ekrem Imamoglu of the CHP assumed the office of Istanbul mayor after being awarded a disputed victory sending the lira higher on Wednesday
In his first speech after taking up his mandate Imamoglu called for a swift resolution to end the uncertainty There are processes going on as of now we re aware of this he said Naturally we await certain statements on these processes for the peace and happiness of our city and its residents
Losing Istanbul to the opposition would add to Erdogan s troubles after the March 31 elections brought to an end AKP s control over Turkey s major cities Inflation and unemployment have been taking their toll on the country after a plunge in the value of the currency pushed the economy into its first recession in a decade
Away from home Erdogan has been struggling to contain the fallout from a diplomatic spat with the U S over Turkey s planned purchase of a Russian air defense system and dispatched top aides to Washington this week
Reserves Question
The central bank has refrained from providing an official explanation of how the borrowed money is being accounted for in its weekly reserves figures but officials have privately acknowledged the need for clarity as analysts try to square the swap volumes with recent volatility in Turkey s foreign holdings
Turkey has around 118 billion of foreign currency debt coming due within the next 12 months and relies on the central bank s buffers to meet its obligations if the flow of capital that finances the economy begins to slow
Foreign investors have already withdrawn a net 1 6 billion from the nation s lira bond market this year amid political and economic turbulence that has rocked the country s markets
While there s nothing at fault with the central bank s accounting its off balance sheet liabilities need to be taken taken into account in assessing changes in reserves said a central bank official who spoke on condition of anonymity To avoid any unnecessary speculation the central bank needs to clarify its net reserve position he said
Last month JPMorgan Chase Co NYSE JPM recommend investors sell the lira citing the drawdown of the buffers in March Earlier this month Moody s Investor Service said the drop was credit negative as the country s very low levels of reserves cover less than half of its shot term external payments
The drop doesn t reflect any extraordinary developments a central bank official said last month asking not be identified |
JPM | J P Morgan raises first quarter U S GDP forecast substantially | NEW YORK Reuters JPMorgan Chase Co NYSE JPM lifted its forecast for U S real gross domestic product to an annualized rate of 2 9 a large jump from its earlier 2 0 estimate according to a note from the investment bank s research team on Thursday
U S retail sales increased by the most in 1 1 2 years in March as households boosted purchases of motor vehicles and a range of other goods the latest indication that economic growth picked up in the first quarter after a false start |
MS | Cisco Systems CSCO Rallies On Morgan Stanley Upgrade | On Monday shares of Internet networking leader Cisco Systems NASDAQ CSCO are rallying up about 2 8 to 34 39 per share in afternoon trading on the heels of a rating upgrade from Morgan Stanley NYSE MS Cisco s jump the Dow Jones more than 100 points higher
Analyst James Faucette upgraded Cisco from equal weight to overweight with a 39 price target The upgrade follows a major shift toward security defined networks and Faucette believes this could be a potential long term growth driver for Cisco making the stock a great opportunity for investors who want to capitalize on this change in the cybersecurity industry
Cisco continues to drive a mix shift towards software and recurring revenues and in conjunction with strong firewall refresh activity will gain share of IT budgets as customers increasingly favor Cisco s end to end portfolio and architecture to improve cybersecurity Faucette added
Faucette also predicts management driving market share gains in software and improving replacement cycles that provide long term EPS growth
CSCO stock also got a likely bump from the massive cyberattack that occurred over the weekend affecting some of the biggest names in the cybersecurity industry Companies like FireEye NASDAQ FEYE and Palo Alto Networks NYSE PANW
Currently CSCO is a 4 Sell on the Zacks Rank with a VGM score of B The company reports its next quarterly earnings on May 17 after the bell and Zacks expects earnings of 53 cents per share and revenues of 11 89 billion
5 Trades That Could Profit Big League from Trump Policies
If the stocks above spark your interest wait until you look into companies primed to make substantial gains from Washington s changing course Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals tariffs lower taxes higher interest rates and spending surges in defense and infrastructure |
MS | Sears SHLD Stock Sinks After CEO Rant Bankruptcy Talk | Shares of Sears Holdings Corporation NASDAQ SHLD plummeted on Monday after its CEO took to the internet to post a bizarre statement against one of the company s vendors
In a on Monday CEO Eddie Lampert attacked One World writing Today we are taking a stand against one vendor that is trying to take unfair advantage of us One World a company with whom we have had over a nine year business relationship has threatened to refuse to perform under their Supply Agreement unless we agree to what we believe are unreasonable demands
One World is a part of Hong Kong based Techtronic Industries which makes power tools and accessories for Sears Craftsman brand
The CEO also wrote there have been examples of parties we do business with trying to take advantage of negative rumors about Sears to make themselves a better deal a deal that is unilaterally in their interest
In such a case we will not simply roll over and be taken advantage of we will do what s right to protect the interests of our company and the millions of stakeholders we serve
According to Lampert One World has enjoyed significant benefits from its relationship with Sears we have paid One World more than 868 million since 2007 a relationship that helped One World build a formidable presence in the tool industry
The company s stock price closed down 12 43 on Monday Sears has suffered along with other retailers to keep up sales and in store traffic Lampert s latest rant has seemingly hurt his company at least in the short run
Other Bad News
On top of the outburst from the CEO that helped its stock price fall on Monday the once powerful retailer saw a financial industry giant openly talk about its potential bankruptcy
Yesterday on the likelihood that the Hoffman Estates Illinois based company could go under
Sears one and two year credit default swaps imply the market is pricing a high profitability of default over the next 12 to 24 months Morgan Stanley noted If Sears files for bankruptcy this year and subsequently liquidates JCP could be a major beneficiary
Sears stock price has plummeted by almost 40 over the last month alone and closed at 8 31 per share on Monday The company currently holds 4 billion in net debt and has a
5 Trades Could Profit Big League from Trump Policies
If the stocks above spark your interest wait until you look into companies primed to make substantial gains from Washington s changing course Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals tariffs lower taxes higher interest rates and spending surges in defense and infrastructure |
MS | Cisco Eyes Upside Breakout On Cyber Attacks | Below is my constructive bullish analysis of Cisco Systems NASDAQ CSCO which on May 10 was trading at 33 64 65
CSCO opened Monday on an up gap in reaction to both Morgan Stanley s NYSE MS upgrade to OW from EW a revised upside target of 39 from 32 and security driven networking share gains over the longer term
The recent WannaCry ransomware attacks tangentially benefit CSCO which combined with Morgan Stanley s enthusiasm dovetails with my increasingly bullish intermediate and longer term outlook calling for a challenge and hurdle of key resistance at 34 53 60 that triggers upside targets of 35 60 90 and then 37 38 thereafter en route to 41 43
Keep in mind that Cisco reports quarterly earnings on Wednesday after the close
The fact that Morgan Stanley upgraded CSCO just ahead of earnings coupled with the bullish technical set up suggests strongly that CSCO just might be entering a research sweet spot in the days directly ahead Last is 34 44 45
May 10 s CSCO Analysis
has a potentially spectacular longer term technical set up that exhibits a hug accumulation period that originates during the 2001 Nasdaq dot com implosion and which is flirting with and upside breakout that will have far reaching and very positive implications for the company going forward We could just Buy and Hold CSCO in our Model Portfolio into and through earnings next Wednesday Of course if we are in the slightest bit price sensitive then waiting until after earnings might be wise especially because at the most recent new multi year high at 34 60 established two days ago 5 08 17 let s notice on the daily chart that RSI and MACD Momentum failed to confirm the new high price strength and as such provides compelling caution near term into earnings As we speak the price structure is bearing down on the up sloping 20 DMA now at 33 53 which if violated and sustained will point CSCO towards filling the up gap left behind on April 24 32 82 33 18 and thereafter possibly to test the mid April pivot low at 32 42 Right now my inclination is to watch CSCO s behavior in and around its 20 DMA today but looking to start a position ahead of earnings ideally in the 33 00 area in the hours days directly ahead MJP 5 10 17 at 33 64 65 |
MS | Jack In The Box JACK Stock Pops After Q2 Earnings Will Reconsider Qdoba | Jack in the Box Inc NASDAQ JACK just released its second quarter 2017 financial results posting earnings of 0 98 per share and revenues of 369 million
Currently JACK is a Zacks Rank 3 Hold but this ranking could change based on today s results The stock is up 10 81 to 112 97 per share in after hours trading shortly after its earnings report was released
JACK
Beat earnings estimates The company posted earnings of 0 98 per share excluding 0 09 from non recurring items beating the Zacks Consensus Estimate of 0 90 per share
Beat revenue estimates The company saw revenue figures of 369 4 million just edging out our consensus estimate of 368 8 million
JACK reported fiscal second quarter earnings of 33 1 million The company also repurchased roughly 2 23 million shares of common stock
Before Tuesday shares of the fast food chain had dropped almost 9 since the start of the year However in the last 12 months its stock rose 34
For the third quarter JACK expects same store sales to move up or down 1 JACK projects a full year same store sales increase of approximately 1 The company expects full year earnings in the range of 4 10 to 4 30 per share
At our investor meeting last May we said one of the factors that would cause us to reconsider our strategy with respect to Qdoba was valuation JACK chairman and CEO Lenny Comma said in a statement It has become more apparent since then that the overall valuation of the company is being impacted by having two different business models As a result we ve retained Morgan Stanley Co NYSE MS LLC to assist the Board in its evaluation of potential alternatives with respect to Qdoba as well as other ways to enhance shareholder value
Lastly we continue to make good progress on our Jack in the Box refranchising initiative with the sale of 60 restaurants in the second quarter In addition as of today we have signed non binding letters of intent with franchisees to sell approximately 70 additional restaurants
Here s a graph that looks at JACK s Price Consensus and EPS Surprise history Jack In The Box Inc Price Consensus and EPS Surprise Jack in the Box is a quick service hamburger restaurant chain Jack in the Box restaurants offer a broad selection of distinctive innovative products targeted at the adult fast food consumer The Jack in the Box menu features a variety of hamburgers specialty sandwiches salads Mexican food finger foods and side items The core of the Jack in the Box menu is its hamburger products including its signature hamburgers the Jumbo Jack Ultimate Cheeseburger and Sourdough Jack
Check back later for our full analysis on JACK s earnings report
5 Trades Could Profit Big League from Trump Policies
If the stocks above spark your interest wait until you look into companies primed to make substantial gains from Washington s changing course
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals tariffs lower taxes higher interest rates and spending surges in defense and infrastructure |
MS | Jack In The Box Shares Explode On Earnings Release | Jack In The Box Inc NASDAQ JACK
Jack in the Box reported their 2nd quarter earnings after the closing bell on Tuesday May 16 2017 Immediately after the numbers were made public shares exploded higher hitting a high of 115 00 in the after hours session before trading sideways and closing at 113 30
Shares have traded in a 52 week range from 72 39 112 83 so clearly when shares open up for Wednesday morning trading they will be at new 52 week highs and well over a major resistance line which we illustrate in the daily price chart below
The Numbers
Jack posted earnings of 0 98 per share which beat the Zacks Consensus Estimate of 0 90 per share Revenues were 369 million which beat the consensus of 368 million The company will keep the 1 60 dividend and they announced that they bought back 2 23 million shares
The Charts
The above 15 minute price chart clearly shows the big green up candle at the time of the earnings release Shares traded fairly flat most of the day and again after that initial 15 minute igniting candle stick
The above Daily price chart shows how Jack has traded since January 2017 Note the two red resistance lines and the one green support line The lower or near term red resistance line appears will be penetrated to the upside when trading opens in the morning session on Wednesday
Company Comments
Chairman and CEO Lenny Comma had this to say in a prepared statement
At our investor meeting last May one of the factors that would cause us to reconsider our strategy with respect to Qdoba was valuation It has become more apparent since then that the overall valuation of the company is being impacted by having two different business models As a result we ve retained Morgan Stanley Co NYSE MS LLC to assist the Board in its evaluation of potential alternatives with respect to Qdoba as well as other ways to enhance shareholder value
After a sluggish start to the quarter believe was attributable to delayed tax refunds and record rainfall in California Jack in the Box system same store sales improved to positive territory as these transitory issues passed and we pivoted our advertising towards value messages However same store sales at Qdoba company restaurants worsened in the latter two months of the quarter as we lapped more aggressive discounting in last year s second quarter
we continue to make good progress on our Jack in the Box refranchising initiative with the sale of 60 restaurants in the second quarter In addition as of today we have signed non binding letters of intent with franchisees to sell approximately 70 additional restaurants
Company Profile
Jack in the Box Inc operates and franchises Jack in the Box quick service restaurants QSRs and Qdoba Mexican Eats Qdoba fast casual restaurants The Company operates in two segments Jack in the Box and Qdoba restaurant operations Qdoba is a fast casual Mexican food brand in the United States offering food items including burritos tacos salads and quesadillas Jack in the Box is a hamburger chain which offers a selection of products including classic burgers such as Jumbo Jack burgers and new product lines such as Buttery Jack burgers and its Brunchfast menu As of October 2 2016 the Company operated 2 954 Jack in the Box QSRs and Qdoba fast casual restaurants As of October 2 2016 Jack in the Box system included 2 255restaurants of which 417 were company operated and 1 838 were franchise operated As of October 2 2016 the Qdoba system included 699 restaurants of which 367 were company operated and 332 were franchise operated |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.