We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Wide Variations in Global Growth: Global Week Ahead
Read MoreHide Full Article
In the Global Week Ahead, a host of updates from purchasing managers’ indices (PMIs) arrive for several of the world’s major economies.
As usual, PMIs help to inform stock market traders on what to expect for first quarter of 2021 real GDP growth. And set the stage for careful speculation beyond that.
In advance, traders should expect wide regional variations--
- On Monday, Mexico’s manufacturing PMI likely remains in contraction for March.
- Contrast this with gains elsewhere in North America (the U.S. and Canada).
- India’s manufacturing PMIs are out Monday too.
- India services and composite readings are out Wednesday. They likely continue to indicate moderate growth.
- Tuesday’s PMIs from Brazil probably show that economy in contraction. Readings there fell below 50 some time ago.
- A Brazil slowdown is happening as part of a tragically soaring Brazil COVID-19 case trend.
Adding to the insights, the IMF and World Bank Spring Meetings — underway this week — are sure to focus on these wide variations.
Inside the global growth narrative.
Next are Reuters’ five world market themes, reordered for equity traders—
(1) Archegos Capital Meltdown Consequences…
Dust is settling after the Archegos Capital meltdown, but discussions will continue around leverage, risk-taking and disclosures on Wall Street.
Shares in companies such as ViacomCBS and Discovery Inc. remain far below recent highs after the New York-based Archegos fund suffered a margin call, forcing banks to liquidate holdings.
Shares in banks exposed to the fund have been hit, in particular Credit Suisse and Nomura, which were slower than rivals in exiting Archegos-linked positions. Shares in the duo are down around -20% since last Friday.
But many lenders acted as brokers for Archegos and there are fears that collective write-downs could exceed $6 billion.
Banks are benefiting from higher bond yields and steeper bond yield curves, but the upcoming results season will shed light on their financial health.
- Goldman Sachs reports on April 14th
- Credit Suisse on April 22nd and
- Nomura on April 27th
(2) Factory Prices in China Going Up
After falling for much of the past decade, factory prices in China are going up, potentially exacerbating global inflationary pressures that have put bond markets on edge.
China is set to release the Producer Price Index for March on April 9th.
January brought the first annual price gains in a year while February saw the fastest rises since 2018. With manufacturers swamped by orders and facing higher commodity input costs, upward pressures continue to build.
(3) Wither Global Shipping?
The 400-foot Ever Given container ship, which ran aground in the Suez Canal on March 23, has been dislodged. But a queue of ships — loaded ones headed for markets as well as empty ones returning to factories — will take some days to clear.
The overall fallout may last weeks. Containerized goods worth almost $10 billion traverse the Suez daily, so the delays add to pressures on supply chains already strained by roaring demand for electronics, clothing, factory equipment and commodities.
Several global retailers were impacted, as well as auto firms’ just-in-time supply chains.
And if bottlenecks build at other ports, cargo rates and container shortages may rise further. The Baltic dry index, which tracks dry goods freight rates is near 18-month highs while supramax freight costs — vessels around 50,000 deadweight tons — are approaching record high.
(4) Annual Shareholder Meetings and Environmental, Social and Governance (ESG) Metrics
A year of pandemic-linked suffering worldwide has left companies facing extra scrutiny from investors on how closely they adhere to environmental, social and governance (ESG) metrics.
Expect more of this at upcoming annual general meetings. The calendar includes Clariant and Zurich Insurance Group on Wednesday, UBS, Royal Bank of Canada and Nokia on Thursday and Rio Tinto on Friday.
Executives will face investor warnings on executive pay and perks, climate, workers’ rights and diversity. BlackRock, for instance, has told companies to implement a “no deforestation” policy or face pushback from it at AGMs.
Some efforts are bearing fruit. Mining company Rio Tinto plans to back shareholder resolutions for emissions targets and for tougher measures against lobby groups that do not follow its climate goals.
(5) IMF and World Bank Annual Spring Meetings
Financial policymakers from around the globe are preparing to convene — virtually, of course — for the springtime meetings of the International Monetary Fund (IMF) and the World Bank. G20 nations’ finance chiefs meet, too, on April 7.
The IMF will give a snapshot of the economic scars from the pandemic but it will also revise up forecasts for 2021 and 2022 growth.
The meetings will discuss a $650 billion push to boost — and possibly reallocate — the IMF’s own currency, Special Drawing Rights, to support beleaguered economies.
The agenda also contains debt relief initiatives and questions on coordinating stimulus. Finally, governments and multilateral organizations may face pressures to alleviate vaccine inequality between rich and poor countries.
Top Zacks #1 Rank (STRONG BUY) Stocks
There are a number of banking/finance sector stocks on our #1 list at the moment. Let’s look into three.
(1) The Goldman Sachs Group (GS - Free Report) : This major Wall Street firm’s shares price is at $327 now. That gives it a market cap of $113.3B. I see a Zacks Value score of C, a Zacks Growth score of B and a Zacks Momentum score of A.
(2) Bank of Montreal (BMO - Free Report) : This is a Canadian banking giant. Shares price at $90 now. That gives it a $58.3B market cap. I see a Zacks Value score of C, a Zacks Growth score of F and a Zacks Momentum score of D.
(3) East-West Bancorp (EWBC - Free Report) : This is a lesser-known $74 U.S. banking stock, based in California. Shares prices at $75 now. That gives it a $10.6B market cap. I see a Zacks Value score of C, a Zacks Growth score of F and a Zacks Momentum score of A.
All three share a Zacks Value score of C.
This score of C means all of the good North American banking news out there is likely already priced in.
Key Global Macro
As I mentioned, the PMIs coming out are good macro matters to focus on this week.
In light of that--
On Monday, the U.S. Markit Services PMI comes out. The prior reading was 60. That is very strong, much like last week’s Manufacturing PMI data for March.
ISM Services PMI comes out too. I see a 58.5 consensus on that one. Up from 55.3 in a prior reading.
On Tuesday, the China Caixin Services PMI comes out. I see a 51.7 consensus.
Australia’s RBA comes out with its latest policy rate decision. No change is expected.
On Wednesday, the World Bank/IMF Spring meetings proceed.
The latest U.S. FOMC minutes come out.
India’s central bank issues its policy decisions.
On Thursday, U.S. weekly initial jobless claims come out. I see a 650K reading, down from 719K the week prior. Continued progress here will build on last week’s strong U.S. nonfarm payroll report for March.
Peru’s central bank issues its policy decisions.
On Friday, the U.S. Producer Price Index (PPI) comes out. Ex-Food & Energy are likely to be up +2.7% y/y. This underlying intermediate inflation rate can ultimately push up final consumer prices.
Conclusion
The big banks usually kick off any earnings season. Goldman Sachs reports its latest quarterly earnings on Wednesday, April 14th.
That means stock traders remain one or two weeks away, from a focus on a stream of quarterly EPS reports.
This first week of April Global Week Ahead needs to find a different focus.
Alongside the global growth debate, the big Biden infrastructure plan – shaped in terms of both a U.S. spending and a U.S. tax debate – likely leads headlines the world over.
I finish this piece by pointing out to all of you: those two subjects are inter-related.
Have a Great Trading Week!
Regards,
John Blank
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Wide Variations in Global Growth: Global Week Ahead
In the Global Week Ahead, a host of updates from purchasing managers’ indices (PMIs) arrive for several of the world’s major economies.
As usual, PMIs help to inform stock market traders on what to expect for first quarter of 2021 real GDP growth. And set the stage for careful speculation beyond that.
In advance, traders should expect wide regional variations--
Adding to the insights, the IMF and World Bank Spring Meetings — underway this week — are sure to focus on these wide variations.
Inside the global growth narrative.
Next are Reuters’ five world market themes, reordered for equity traders—
(1) Archegos Capital Meltdown Consequences…
Dust is settling after the Archegos Capital meltdown, but discussions will continue around leverage, risk-taking and disclosures on Wall Street.
Shares in companies such as ViacomCBS and Discovery Inc. remain far below recent highs after the New York-based Archegos fund suffered a margin call, forcing banks to liquidate holdings.
Shares in banks exposed to the fund have been hit, in particular Credit Suisse and Nomura, which were slower than rivals in exiting Archegos-linked positions. Shares in the duo are down around -20% since last Friday.
But many lenders acted as brokers for Archegos and there are fears that collective write-downs could exceed $6 billion.
Banks are benefiting from higher bond yields and steeper bond yield curves, but the upcoming results season will shed light on their financial health.
(2) Factory Prices in China Going Up
After falling for much of the past decade, factory prices in China are going up, potentially exacerbating global inflationary pressures that have put bond markets on edge.
China is set to release the Producer Price Index for March on April 9th.
January brought the first annual price gains in a year while February saw the fastest rises since 2018. With manufacturers swamped by orders and facing higher commodity input costs, upward pressures continue to build.
(3) Wither Global Shipping?
The 400-foot Ever Given container ship, which ran aground in the Suez Canal on March 23, has been dislodged. But a queue of ships — loaded ones headed for markets as well as empty ones returning to factories — will take some days to clear.
The overall fallout may last weeks. Containerized goods worth almost $10 billion traverse the Suez daily, so the delays add to pressures on supply chains already strained by roaring demand for electronics, clothing, factory equipment and commodities.
Several global retailers were impacted, as well as auto firms’ just-in-time supply chains.
And if bottlenecks build at other ports, cargo rates and container shortages may rise further. The Baltic dry index, which tracks dry goods freight rates is near 18-month highs while supramax freight costs — vessels around 50,000 deadweight tons — are approaching record high.
(4) Annual Shareholder Meetings and Environmental, Social and Governance (ESG) Metrics
A year of pandemic-linked suffering worldwide has left companies facing extra scrutiny from investors on how closely they adhere to environmental, social and governance (ESG) metrics.
Expect more of this at upcoming annual general meetings. The calendar includes Clariant and Zurich Insurance Group on Wednesday, UBS, Royal Bank of Canada and Nokia on Thursday and Rio Tinto on Friday.
Executives will face investor warnings on executive pay and perks, climate, workers’ rights and diversity. BlackRock, for instance, has told companies to implement a “no deforestation” policy or face pushback from it at AGMs.
Some efforts are bearing fruit. Mining company Rio Tinto plans to back shareholder resolutions for emissions targets and for tougher measures against lobby groups that do not follow its climate goals.
(5) IMF and World Bank Annual Spring Meetings
Financial policymakers from around the globe are preparing to convene — virtually, of course — for the springtime meetings of the International Monetary Fund (IMF) and the World Bank. G20 nations’ finance chiefs meet, too, on April 7.
The IMF will give a snapshot of the economic scars from the pandemic but it will also revise up forecasts for 2021 and 2022 growth.
The meetings will discuss a $650 billion push to boost — and possibly reallocate — the IMF’s own currency, Special Drawing Rights, to support beleaguered economies.
The agenda also contains debt relief initiatives and questions on coordinating stimulus. Finally, governments and multilateral organizations may face pressures to alleviate vaccine inequality between rich and poor countries.
Top Zacks #1 Rank (STRONG BUY) Stocks
There are a number of banking/finance sector stocks on our #1 list at the moment. Let’s look into three.
(1) The Goldman Sachs Group (GS - Free Report) : This major Wall Street firm’s shares price is at $327 now. That gives it a market cap of $113.3B. I see a Zacks Value score of C, a Zacks Growth score of B and a Zacks Momentum score of A.
(2) Bank of Montreal (BMO - Free Report) : This is a Canadian banking giant. Shares price at $90 now. That gives it a $58.3B market cap. I see a Zacks Value score of C, a Zacks Growth score of F and a Zacks Momentum score of D.
(3) East-West Bancorp (EWBC - Free Report) : This is a lesser-known $74 U.S. banking stock, based in California. Shares prices at $75 now. That gives it a $10.6B market cap. I see a Zacks Value score of C, a Zacks Growth score of F and a Zacks Momentum score of A.
All three share a Zacks Value score of C.
This score of C means all of the good North American banking news out there is likely already priced in.
Key Global Macro
As I mentioned, the PMIs coming out are good macro matters to focus on this week.
In light of that--
On Monday, the U.S. Markit Services PMI comes out. The prior reading was 60. That is very strong, much like last week’s Manufacturing PMI data for March.
ISM Services PMI comes out too. I see a 58.5 consensus on that one. Up from 55.3 in a prior reading.
On Tuesday, the China Caixin Services PMI comes out. I see a 51.7 consensus.
Australia’s RBA comes out with its latest policy rate decision. No change is expected.
On Wednesday, the World Bank/IMF Spring meetings proceed.
The latest U.S. FOMC minutes come out.
India’s central bank issues its policy decisions.
On Thursday, U.S. weekly initial jobless claims come out. I see a 650K reading, down from 719K the week prior. Continued progress here will build on last week’s strong U.S. nonfarm payroll report for March.
Peru’s central bank issues its policy decisions.
On Friday, the U.S. Producer Price Index (PPI) comes out. Ex-Food & Energy are likely to be up +2.7% y/y. This underlying intermediate inflation rate can ultimately push up final consumer prices.
Conclusion
The big banks usually kick off any earnings season. Goldman Sachs reports its latest quarterly earnings on Wednesday, April 14th.
That means stock traders remain one or two weeks away, from a focus on a stream of quarterly EPS reports.
This first week of April Global Week Ahead needs to find a different focus.
Alongside the global growth debate, the big Biden infrastructure plan – shaped in terms of both a U.S. spending and a U.S. tax debate – likely leads headlines the world over.
I finish this piece by pointing out to all of you: those two subjects are inter-related.
Have a Great Trading Week!
Regards,
John Blank