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The Zacks Analyst Blog Highlights Berkshire Hathaway, Tencent and HSBC
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For Immediate Release
Chicago, IL – September 20, 2022 – 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: Berkshire Hathaway (BRK.B - Free Report) , Tencent (TCEHY - Free Report) and HSBC (HSBC - Free Report) .
Here are highlights from Monday’s Analyst Blog:
The Fed Meeting: Global Week Ahead
Across this Global Week Ahead, the world’s major developed country central banks, led by the USA, take center stage.
A line-up of major central bank decisions from the United States, to Japan, Britain and some less important ones, such as Switzerland, Brazil and South Africa, will keep the stock markets focused.
Elsewhere?
Forward-looking purchasing managers' indexes (PMIs) out from a host of countries will provide clues on how global growth is performing under so much stress.
Finally, will Ukraine's counter-offensive change the trajectory of its conflict with Russia?
Here are Reuters’ five world market themes, reordered for equity traders.
(1) The Fed Meeting Matters Most, of Course
A key Fed meeting has become even more important after stronger-than-expected inflation data raised expectations for how aggressive policymakers will need to be to tame consumer prices.
A 75-basis point rate increase is priced in for Wednesday, but some are preparing for a full percentage point hike — a move unthinkable just days ago.
Fed Chair Jerome Powell's take on the pace of monetary tightening, economic resilience and sustainability of inflation will be crucial, as will signs of how the balance sheet unwind is proceeding. Some worry the process, in which the Fed cuts its balance sheet by $95 billion per month, could hurt market liquidity and weigh on the economy.
(2) Bank of Japan to Follow the FOMC
Next up is Thursday's Bank of Japan (BOJ) decision. The rate gap between the U.S. and Japan is set to yawn beyond 3%, with the BOJ universally seen clinging to unprecedented easing.
That level fueled the carry-trade fad before the global financial crisis. Some warn it's set to ramp up again, putting additional pressure on a yen already at 24-year lows, as the proverbial Mrs. Watanabe (Japan’s “household money managers”) unleashes some of the quadrillion yen ($7 trillion) piled under her proverbial mattress.
The currency's precipitous, almost weekly slide against the dollar even provoked the BOJ's weak-yen-proponent Governor, Haruhiko Kuroda, to warn of "unfavorable" rapid moves.
The central bank recently called lenders to ask about exchange rates, considered one of the final steps before a currency intervention. Analysts see little chance this would succeed though, with yen weakness very much of the BOJ's own making.
The Swiss National Bank meets also on Thursday and is expected to deliver another big rate hike — a move that could see Swiss rates turn positive for the first time in eight years.
(3) Bank of England Will Also Follow the FOMC
The ability of the Bank of England (BoE) and Britain's new finance minister, Kwasi Kwarteng, to manage an economy in decline faces a major test.
The BoE is set to raise interest rates on Thursday — by 50 bps or maybe even 75 bps — to fight inflation.
On Friday, Kwarteng is expected to deliver his first fiscal statement to deliver new Prime Minister Liz Truss' pledge to reverse April's increase in social security contributions and a planned corporation tax rise. Tax cuts could stoke price rises.
Opposing directions of monetary and fiscal policy underscore the challenges for Britain, which has the highest inflation rate among the world's big rich countries, and faces a recession. Traders, who recently pushed sterling to a near four-decade low, are watching closely.
(4) On Friday, the First Batch of “Flash” September PMIs Land
The first snapshot of business activity in September across the world is out on Friday. No doubt closely watched PMIs from a host of major economies will likely confirm what many now suspect: The world economy is careering towards a recession.
Eurozone PMI is already below the 50-marker that separates contraction from expansion — a sign the bloc may enter a recession earlier than previously thought, as the energy shock and tighter monetary policy bite. With Italy's Sept. 25 election looming, the bloc's economic outlook is much in focus.
Governments' efforts to soften the blow of soaring energy prices may help ease recession worries.
Then again, for some observers, markets need to start taking recession risks more seriously.
(5) Ukraine’s Military Success: Where Does It Go Now?
Ukraine's recent lightning counter-offensive — which according to Kyiv has liberated some 8,000 square km of territory — brought fresh momentum to Europe's first war in seven decades.
Russian forces suffered a stunning reversal with Ukraine's special forces in the northeastern region of Kharkiv forcing them into a sometimes rushed and chaotic withdrawal.
The events have sparked rare expressions of dissent against President Vladimir Putin from elected representatives in Russia.
Markets are trying to gauge how Russia might react and how the fallout from the latest events could play out in global markets, especially energy prices, with Europe already bracing for a recession.
Zacks #1 Rank (STRONG BUY) Stocks
(1) Berkshire Hathaway: This is a $276 a share Insurance Property and Casualty industry stock, with a market cap of $609B. I see a Zacks Value score of C, a Zacks Growth score of D and a Zacks Momentum score of A.
(2) Tencent: This is a $37 a share Internet Services industry stock, with a market cap of $363.4B. I see a Zacks Value score of F, a Zacks Growth score of F and a Zacks Momentum score of B.
(3) HSBC: This is a $30 a share Foreign Bank industry stock, with a market cap of $124.6B. I see a Zacks Value score of B, a Zacks Growth score of C and a Zacks Momentum score of B.
Key Global Macro
What matters? In this order: The Fed, the Fed and the Fed.
On Monday, the U.S. NAHB housing market index for September came out, posting a 46 as opposed to a consensus 48; 49 happened in the month prior. We hadn’t been far below 50 before, but we may be drifting further from it.
On Tuesday, the People’s Bank of China (PBoC) will come out with a policy rate decision. They are at 3.65% now.
U.S. Building Permits for August should be 1.44M, after 1.45M the month prior. Housing Starts are down -9.6% y/y. We get an update here as well.
On Wednesday, U.S. existing home sales for August should be down to 4.7M from 4.8M the month prior.
The FOMC meeting breaks. We get economic projections and a press conference from Fed Chair Powell.
On Thursday, the Bank of Japan (BoJ) meeting breaks. Keep in mind that the yen has been getting hammered. It trades at 143 to the USD now. 115 was the prior point of reference.
The Bank of England (BoE) should move to 2.25% from 1.75% on their policy rate.
On Friday, the U.S. global manufacturing PMI for September should be 51.2, after a 51.5 print. That is still an expansionary number, albeit barely.
Conclusion
Sincerely, in this Global Week Ahead, the Fed meeting is all a trader, or investor, anywhere, should focus on.
What matters most is not the likely ‘unanimous’ 75 basis point rate FOMC hike that should land.
Real FOMC talks are done behind the scenes.
Possibly, a September meeting conclusion that 100 basis points is warranted, by some.
But that is not what traders should care about.
What matters most is the projected path of 2023 Fed Funds rates. The FOMC sets out in their forward-looking economic projections this month.
That’s a key data event.
Have a great trading week.
Warm Regards,
John Blank Zacks Chief Equity Strategist and Economist
Why Haven’t You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
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 Berkshire Hathaway, Tencent and HSBC
For Immediate Release
Chicago, IL – September 20, 2022 – 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: Berkshire Hathaway (BRK.B - Free Report) , Tencent (TCEHY - Free Report) and HSBC (HSBC - Free Report) .
Here are highlights from Monday’s Analyst Blog:
The Fed Meeting: Global Week Ahead
Across this Global Week Ahead, the world’s major developed country central banks, led by the USA, take center stage.
A line-up of major central bank decisions from the United States, to Japan, Britain and some less important ones, such as Switzerland, Brazil and South Africa, will keep the stock markets focused.
Elsewhere?
Forward-looking purchasing managers' indexes (PMIs) out from a host of countries will provide clues on how global growth is performing under so much stress.
Finally, will Ukraine's counter-offensive change the trajectory of its conflict with Russia?
Here are Reuters’ five world market themes, reordered for equity traders.
(1) The Fed Meeting Matters Most, of Course
A key Fed meeting has become even more important after stronger-than-expected inflation data raised expectations for how aggressive policymakers will need to be to tame consumer prices.
A 75-basis point rate increase is priced in for Wednesday, but some are preparing for a full percentage point hike — a move unthinkable just days ago.
Fed Chair Jerome Powell's take on the pace of monetary tightening, economic resilience and sustainability of inflation will be crucial, as will signs of how the balance sheet unwind is proceeding. Some worry the process, in which the Fed cuts its balance sheet by $95 billion per month, could hurt market liquidity and weigh on the economy.
(2) Bank of Japan to Follow the FOMC
Next up is Thursday's Bank of Japan (BOJ) decision. The rate gap between the U.S. and Japan is set to yawn beyond 3%, with the BOJ universally seen clinging to unprecedented easing.
That level fueled the carry-trade fad before the global financial crisis. Some warn it's set to ramp up again, putting additional pressure on a yen already at 24-year lows, as the proverbial Mrs. Watanabe (Japan’s “household money managers”) unleashes some of the quadrillion yen ($7 trillion) piled under her proverbial mattress.
The currency's precipitous, almost weekly slide against the dollar even provoked the BOJ's weak-yen-proponent Governor, Haruhiko Kuroda, to warn of "unfavorable" rapid moves.
The central bank recently called lenders to ask about exchange rates, considered one of the final steps before a currency intervention. Analysts see little chance this would succeed though, with yen weakness very much of the BOJ's own making.
The Swiss National Bank meets also on Thursday and is expected to deliver another big rate hike — a move that could see Swiss rates turn positive for the first time in eight years.
(3) Bank of England Will Also Follow the FOMC
The ability of the Bank of England (BoE) and Britain's new finance minister, Kwasi Kwarteng, to manage an economy in decline faces a major test.
The BoE is set to raise interest rates on Thursday — by 50 bps or maybe even 75 bps — to fight inflation.
On Friday, Kwarteng is expected to deliver his first fiscal statement to deliver new Prime Minister Liz Truss' pledge to reverse April's increase in social security contributions and a planned corporation tax rise. Tax cuts could stoke price rises.
Opposing directions of monetary and fiscal policy underscore the challenges for Britain, which has the highest inflation rate among the world's big rich countries, and faces a recession. Traders, who recently pushed sterling to a near four-decade low, are watching closely.
(4) On Friday, the First Batch of “Flash” September PMIs Land
The first snapshot of business activity in September across the world is out on Friday. No doubt closely watched PMIs from a host of major economies will likely confirm what many now suspect: The world economy is careering towards a recession.
Eurozone PMI is already below the 50-marker that separates contraction from expansion — a sign the bloc may enter a recession earlier than previously thought, as the energy shock and tighter monetary policy bite. With Italy's Sept. 25 election looming, the bloc's economic outlook is much in focus.
Governments' efforts to soften the blow of soaring energy prices may help ease recession worries.
Then again, for some observers, markets need to start taking recession risks more seriously.
(5) Ukraine’s Military Success: Where Does It Go Now?
Ukraine's recent lightning counter-offensive — which according to Kyiv has liberated some 8,000 square km of territory — brought fresh momentum to Europe's first war in seven decades.
Russian forces suffered a stunning reversal with Ukraine's special forces in the northeastern region of Kharkiv forcing them into a sometimes rushed and chaotic withdrawal.
The events have sparked rare expressions of dissent against President Vladimir Putin from elected representatives in Russia.
Markets are trying to gauge how Russia might react and how the fallout from the latest events could play out in global markets, especially energy prices, with Europe already bracing for a recession.
Zacks #1 Rank (STRONG BUY) Stocks
(1) Berkshire Hathaway: This is a $276 a share Insurance Property and Casualty industry stock, with a market cap of $609B. I see a Zacks Value score of C, a Zacks Growth score of D and a Zacks Momentum score of A.
(2) Tencent: This is a $37 a share Internet Services industry stock, with a market cap of $363.4B. I see a Zacks Value score of F, a Zacks Growth score of F and a Zacks Momentum score of B.
(3) HSBC: This is a $30 a share Foreign Bank industry stock, with a market cap of $124.6B. I see a Zacks Value score of B, a Zacks Growth score of C and a Zacks Momentum score of B.
Key Global Macro
What matters? In this order: The Fed, the Fed and the Fed.
On Monday, the U.S. NAHB housing market index for September came out, posting a 46 as opposed to a consensus 48; 49 happened in the month prior. We hadn’t been far below 50 before, but we may be drifting further from it.
On Tuesday, the People’s Bank of China (PBoC) will come out with a policy rate decision. They are at 3.65% now.
U.S. Building Permits for August should be 1.44M, after 1.45M the month prior. Housing Starts are down -9.6% y/y. We get an update here as well.
On Wednesday, U.S. existing home sales for August should be down to 4.7M from 4.8M the month prior.
The FOMC meeting breaks. We get economic projections and a press conference from Fed Chair Powell.
On Thursday, the Bank of Japan (BoJ) meeting breaks. Keep in mind that the yen has been getting hammered. It trades at 143 to the USD now. 115 was the prior point of reference.
The Bank of England (BoE) should move to 2.25% from 1.75% on their policy rate.
On Friday, the U.S. global manufacturing PMI for September should be 51.2, after a 51.5 print. That is still an expansionary number, albeit barely.
Conclusion
Sincerely, in this Global Week Ahead, the Fed meeting is all a trader, or investor, anywhere, should focus on.
What matters most is not the likely ‘unanimous’ 75 basis point rate FOMC hike that should land.
Real FOMC talks are done behind the scenes.
Possibly, a September meeting conclusion that 100 basis points is warranted, by some.
But that is not what traders should care about.
What matters most is the projected path of 2023 Fed Funds rates. The FOMC sets out in their forward-looking economic projections this month.
That’s a key data event.
Have a great trading week.
Warm Regards,
John Blank
Zacks Chief Equity Strategist and Economist
Why Haven’t You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Zacks Investment Research
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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.