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The Zacks Analyst Blog Highlights: EPAM Systems, Swiss Re and Ares Management
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For Immediate Release
Chicago, IL – August 31, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: EPAM Systems, Inc. (EPAM - Free Report) , Swiss Re AG (SSREY - Free Report) and Ares Management Corporation (ARES - Free Report) .
Here are highlights from Monday’s Analyst Blog:
Draining a Bathtub of Liquidity: Global Week Ahead
We enter the Global Week Ahead, upon the heels of a Fed Chair Powell comment, made at the Jackson Hole conference, last Friday.
In prepared remarks, he wrote—
My view is that the "substantial further progress" test has been met for inflation. There has also been clear progress toward maximum employment.
At the FOMC's recent July meeting, I was of the view, as were most participants, that if the economy evolved broadly as anticipated, it could be appropriate to start reducing the pace of asset purchases this year.
The intervening month has brought more progress in the form of a strong employment report for July, but also the further spread of the Delta variant.
Stocks were up strongly on news of an impending Fed taper? The S&P 500 trading at 4,500?
It appears — on the face of things — that the traders and Wall Street observers liked the idea that the Fed thought the U.S. economy was strong, and decided the Fed taper was not going to be counter-strong enough to alter the path of the major large-cap indices.
Tech stocks in particular, and the Industrial names, were strong last Friday.
That is altogether bullish, when Growth and Cyclical names rally in concert.
Next are Reuters' five events and themes likely to dominate global financial markets in the Global Week Ahead.
(1) Is the Delta Variant Shifting Outlooks?
Stocks enter September near record highs, but a fast-spreading Delta variant and worries that major central banks will soon start unwinding pandemic-era stimulus means investors are reassessing so-called reflation trades.
A bunch of indicators suggest markets are set for a reversal.
Defensive, safe-haven plays such as the dollar have seen sizable inflows while surveys suggest investor sentiment has collapsed.
While stock markets have stubbornly marched higher, the breadth of the market gains has narrowed significantly, which means they are being driven by fewer constituents.
Popular reflation trades like small-cap stocks have suffered, and fund managers say stock picking has got tougher.
(2) On Friday, U.S. Nonfarm Payrolls for August Are Out
With almost two million new jobs created in the past two months, Friday's nonfarm payrolls data for August could prove key as investors assess just how close the Federal Reserve is to scaling back emergency stimulus.
A Reuters poll forecast a 763,000 payrolls increase versus a 943,000 rise in July that gave the economy a powerful boost as it started the second half.
But the Delta COVID-19 variant has cast a shadow over the growth outlook, July retail sales fell sharply and one survey showed consumer sentiment slid in early August to its lowest in over a decade.
Stocks have largely shrugged off economic worries, sticking near record highs. Another robust jobs number that renews taper talk could change that as Wall Street enters September, historically a shaky month for equities.
(3) Will U.S. and European Stock Markets Trade Differently Come September?
September, according to Virginia Woolf, is the perfect month.
Those tired of thin summer trading, the slowdown in deal-making and the waiting for Fed taper hints, might agree.
Summer wasn't too bad for investors. U.S. and European stocks rose +7% and +6% respectively between June and August, 10-year U.S. and German bond yields fell around 30 basis points, and the dollar rose 3.5% against a basket of rivals.
Negatives included a 9% fall in Chinese shares after a regulatory crackdown, and a rapidly spreading Delta variant of COVID-19 that has taken daily reported infections globally above 700,000 (versus around 400,000 in early-June).
So, what will September bring?
First, potential reactions to Jerome Powell's Jackson Hole speech. Both the Fed and the ECB meet, while Norway may become the first major central bank to hike rates. Both Canada and Germany meanwhile hold elections.
Got that back-to-school feeling yet?
(4) Container Shipping No Longer Taken for Granted
Containers are moving again at China's Ningbo port after a COVID-19 outbreak had closed a terminal for two weeks. The logjam outside is the largest for three years, reminding investors that supply chains remain out of kilter.
A drag from the transport snarls might show up in China's purchasing managers' index figures due next week. But there are plenty of other indicators of global hitches from McDonald's troubles supplying milkshakes in Britain to manufacturing bottlenecks in Europe and the United States.
One conclusion, from New Zealand central bank's assistant governor, is that the supply-side hit from COVID-19 has been far larger, run far longer and been more inflationary than expected.
Shipping delays and fees suggest this headwind will persist.
(5) Eurozone Consumer Inflation Data Hits the Tape
A slew of preliminary inflation data will enliven the coming week in the Eurozone.
Germany and Spain kick off the series on Monday, while on Tuesday "flash" August Eurozone inflation is expected to show a 2.5% year-on-year rise versus 2.2% in July.
Like many other major central banks, the European Central Bank believes rising inflation is transitory, and the long-term outlook remains subdued. But with supply disruptions, exacerbated by the Delta surge, adding to upward price pressures, inflation could prove stickier than anticipated.
Both markets and the ECB, which meets on Sept. 9th, will pay close attention.
Zacks #1 Rank (STRONG BUY) Stocks
With broad market valuations extended, let's address the situation, in terms of specific names.
(1) EPAM Systems: Incredible to see a $622 share price here. This makes the IT services company carry a $35.2B market cap. I see a Zacks Value score of F, a Zacks Growth score of D and a Zacks Momentum score of A.
(2) Swiss Re: Let's go in the other direction. This is just a $23 a share stock, making this giant multi-line/reinsurer carry a market cap of $29.8B. I see a Zacks Value score of C, a Zacks Growth score of F and a Zacks Momentum score of D.
(3) Ares Management: This is a global alternative investment manager. It manages four investment groups that invest in the tradable credit, direct lending, and private equity and real estate markets. I see a $74 share price, making for a $21.4B market cap. I see a Zacks Value score of F, a Zacks Growth score of F and a Zacks Momentum score of D.
Taking real notice of valuation scores, I would only have current interest in Swiss Re.
Valuations are going to matter at some point in time.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: EPAM Systems, Swiss Re and Ares Management
For Immediate Release
Chicago, IL – August 31, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: EPAM Systems, Inc. (EPAM - Free Report) , Swiss Re AG (SSREY - Free Report) and Ares Management Corporation (ARES - Free Report) .
Here are highlights from Monday’s Analyst Blog:
Draining a Bathtub of Liquidity: Global Week Ahead
We enter the Global Week Ahead, upon the heels of a Fed Chair Powell comment, made at the Jackson Hole conference, last Friday.
In prepared remarks, he wrote—
My view is that the "substantial further progress" test has been met for inflation. There has also been clear progress toward maximum employment.
At the FOMC's recent July meeting, I was of the view, as were most participants, that if the economy evolved broadly as anticipated, it could be appropriate to start reducing the pace of asset purchases this year.
The intervening month has brought more progress in the form of a strong employment report for July, but also the further spread of the Delta variant.
Stocks were up strongly on news of an impending Fed taper? The S&P 500 trading at 4,500?
It appears — on the face of things — that the traders and Wall Street observers liked the idea that the Fed thought the U.S. economy was strong, and decided the Fed taper was not going to be counter-strong enough to alter the path of the major large-cap indices.
Tech stocks in particular, and the Industrial names, were strong last Friday.
That is altogether bullish, when Growth and Cyclical names rally in concert.
Next are Reuters' five events and themes likely to dominate global financial markets in the Global Week Ahead.
(1) Is the Delta Variant Shifting Outlooks?
Stocks enter September near record highs, but a fast-spreading Delta variant and worries that major central banks will soon start unwinding pandemic-era stimulus means investors are reassessing so-called reflation trades.
A bunch of indicators suggest markets are set for a reversal.
Defensive, safe-haven plays such as the dollar have seen sizable inflows while surveys suggest investor sentiment has collapsed.
While stock markets have stubbornly marched higher, the breadth of the market gains has narrowed significantly, which means they are being driven by fewer constituents.
Popular reflation trades like small-cap stocks have suffered, and fund managers say stock picking has got tougher.
(2) On Friday, U.S. Nonfarm Payrolls for August Are Out
With almost two million new jobs created in the past two months, Friday's nonfarm payrolls data for August could prove key as investors assess just how close the Federal Reserve is to scaling back emergency stimulus.
A Reuters poll forecast a 763,000 payrolls increase versus a 943,000 rise in July that gave the economy a powerful boost as it started the second half.
But the Delta COVID-19 variant has cast a shadow over the growth outlook, July retail sales fell sharply and one survey showed consumer sentiment slid in early August to its lowest in over a decade.
Stocks have largely shrugged off economic worries, sticking near record highs. Another robust jobs number that renews taper talk could change that as Wall Street enters September, historically a shaky month for equities.
(3) Will U.S. and European Stock Markets Trade Differently Come September?
September, according to Virginia Woolf, is the perfect month.
Those tired of thin summer trading, the slowdown in deal-making and the waiting for Fed taper hints, might agree.
Summer wasn't too bad for investors. U.S. and European stocks rose +7% and +6% respectively between June and August, 10-year U.S. and German bond yields fell around 30 basis points, and the dollar rose 3.5% against a basket of rivals.
Negatives included a 9% fall in Chinese shares after a regulatory crackdown, and a rapidly spreading Delta variant of COVID-19 that has taken daily reported infections globally above 700,000 (versus around 400,000 in early-June).
So, what will September bring?
First, potential reactions to Jerome Powell's Jackson Hole speech. Both the Fed and the ECB meet, while Norway may become the first major central bank to hike rates. Both Canada and Germany meanwhile hold elections.
Got that back-to-school feeling yet?
(4) Container Shipping No Longer Taken for Granted
Containers are moving again at China's Ningbo port after a COVID-19 outbreak had closed a terminal for two weeks. The logjam outside is the largest for three years, reminding investors that supply chains remain out of kilter.
A drag from the transport snarls might show up in China's purchasing managers' index figures due next week. But there are plenty of other indicators of global hitches from McDonald's troubles supplying milkshakes in Britain to manufacturing bottlenecks in Europe and the United States.
One conclusion, from New Zealand central bank's assistant governor, is that the supply-side hit from COVID-19 has been far larger, run far longer and been more inflationary than expected.
Shipping delays and fees suggest this headwind will persist.
(5) Eurozone Consumer Inflation Data Hits the Tape
A slew of preliminary inflation data will enliven the coming week in the Eurozone.
Germany and Spain kick off the series on Monday, while on Tuesday "flash" August Eurozone inflation is expected to show a 2.5% year-on-year rise versus 2.2% in July.
Like many other major central banks, the European Central Bank believes rising inflation is transitory, and the long-term outlook remains subdued. But with supply disruptions, exacerbated by the Delta surge, adding to upward price pressures, inflation could prove stickier than anticipated.
Both markets and the ECB, which meets on Sept. 9th, will pay close attention.
Zacks #1 Rank (STRONG BUY) Stocks
With broad market valuations extended, let's address the situation, in terms of specific names.
(1) EPAM Systems: Incredible to see a $622 share price here. This makes the IT services company carry a $35.2B market cap. I see a Zacks Value score of F, a Zacks Growth score of D and a Zacks Momentum score of A.
(2) Swiss Re: Let's go in the other direction. This is just a $23 a share stock, making this giant multi-line/reinsurer carry a market cap of $29.8B. I see a Zacks Value score of C, a Zacks Growth score of F and a Zacks Momentum score of D.
(3) Ares Management: This is a global alternative investment manager. It manages four investment groups that invest in the tradable credit, direct lending, and private equity and real estate markets. I see a $74 share price, making for a $21.4B market cap. I see a Zacks Value score of F, a Zacks Growth score of F and a Zacks Momentum score of D.
Taking real notice of valuation scores, I would only have current interest in Swiss Re.
Valuations are going to matter at some point in time.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.