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.
Volatile activity that has marked September, so far, may not let up any time soon.
Investors are on edge — ahead of more key macro events — that could shape the tone for trading in the weeks ahead.
Next are Reuters’ five world market themes, reordered for equity traders—
(1) On Wednesday at 8:30 am EST, August U.S. CPI Data Lands.
Investors’ focus may have shifted to U.S. employment and economic growth, but the upcoming consumer price data — due on Sept. 11th — could still cause a stir.
The markets are still gaming out how much the Federal Reserve will need to cut rates at its Sept. 17th - 18th meeting, heightening the importance of every data report.
Evidence that inflation remains relatively robust could argue against a 50-basis point rate cut — currently seen as a less likely scenario than the Fed reducing rates by just 25 basis points.
A sharp drop in consumer prices, on the other hand, could be interpreted as a sign economic growth has begun to slow more than expected, tipping the scales towards a jumbo cut.
Economists polled by Reuters expect U.S. inflation to have risen by +0.2% m/m in August, matching the rise the previous month.
(2) Is the “Smart Money” in Bonds or Stocks? What About Oil & Gold Prices?
Investors are struggling to decide if the bond or stock market is right about the economy.
Bonds point to oncoming recession, while stocks — this most recent selloff notwithstanding — have vaulted to yet more record highs, reflecting a sense of confidence in a benign landing.
The problem is, only one can be right.
Enter the gold/oil ratio.
This metric, which reflects how many barrels of crude it takes to buy one ounce of gold, is at its highest since 2020. The ratio drops when confidence in the economy increases, as it assumes energy demand will improve, and rises when concern about growth and recession — and therefore the prospect of gold-friendly rate cuts — sets in.
Gold is trading close to record highs around $2,500 an ounce, while oil is struggling to stay above $70 a barrel.
Once again, only one can be right.
(3) What’s the European Central Bank’s (ECB) Next Move?
The European Central Bank is all but certain to deliver its second rate cut this cycle, so what matters more is any clue on what's next.
Traders now fully price another cut after September and close to a 50% chance of an additional move this year.
In mid-July, they saw less than a full chance of a post-September cut.
With a December move seen as likely, investors are eager to hear whether an October cut is a possibility too.
Once bitten, twice shy: ECB policymakers are wary of making any promises. Some hawks are still declining to commit to September.
They are at odds with doves over whether a weak growth outlook is enough to put inflation worries to rest.
Inflation fell to just above the ECB's target at +2.2% in August, but sticky services and core measures mean some policymakers want more evidence that +2% is in reach before going all-out.
(4) The Bank of England (BoE) Will Watch Their Macro Data Closely, Too.
The Bank of England (BoE) was quicker than its peers to raise interest rates in 2021 and is expected to cut them more slowly, unless important data such as the Sept. 10th monthly wages report proves reassuring.
When the BoE implemented its first rate cut of this cycle on Aug. 1st, in a move traders do not expect to happen again until November, it said it would closely watch pay growth, a major inflation factor.
U.K. wages rose at their slowest in nearly two years in the quarter to June 30, but unemployment dropped unexpectedly and the working population rose by significantly more than forecast.
A soft jobs report could benefit borrowers, but weaken the pound, which has boomed on bets the BoE will keep rates relatively high.
Bullish positions in sterling are mostly held by debt-funded speculators, who are motivated to sell at signs of trouble rather than risk margin calls.
(5) Japan Picking a New Prime Minister.
Japan's next prime minister will take over the push for better corporate governance that propelled stocks to record highs this year, support for the Bank of Japan's tightening campaign after decades of deflation, and responsibility for an ever-expanding debt pile that is by far the biggest in the industrialized world.
Incumbent Fumio Kishida is stepping down over a slush-fund scandal. The field of hopefuls to replace him could reach around 10 by the time campaigning starts on Sept. 12th, ahead of a party vote on Sept. 27th.
Shinjiro Koizumi, the son of a former prime minister, is a fan of deregulation, while
Perennial runner-up Shigeru Ishiba pushed for policy normalization before the BOJ's controversial rate hike last month and
Sanae Takaichi, the frontrunner among female candidates, is a reflationist
The BOJ is independent, but the government can exert pressure. With the central bank's next meeting one week before the ruling party's vote, timing is tricky.
Zacks #1 Rank (STRONG BUY) Stocks
I chose the three biggest, by market capitalization, stocks in our #1 Ranking order.
(1) Prosus N.V. (PROSY - Free Report) : This is a $7 a share stock with a market cap of $199K. It is found in the Internet Commerce industry. I see a Zacks Value score of D, a Zacks Growth score of D and a Zacks Momentum score of B.
Prosus N.V. provides e-commerce and internet businesses. It operates principally in the Americas, Africa, Central and Eastern Europe and Asia.
The group's expansion into Internet platforms began in the 1990s, spanning various tech investments, including:
Social – Tencent (26.16%)
Classifieds – OLX (100%), EPMG
Fintech – PayU (98.8%), Remitly, Red Dot Payment, BUX
Other -- Airmeet, WayflyerProsus N.V. is based in Amsterdam, the Netherlands
(2) Intuitive Surgical (ISRG - Free Report) : This is a $469 a share stock with a market cap of $169.3K. It is found in the Medical Instruments industry. I see a Zacks Value score of F, a Zacks Growth score of D and a Zacks Momentum score of F.
Image Source: Zacks Investment Research
Headquartered Sunnyvale, CA, Intuitive Surgical, Inc. designs, manufactures and markets the da Vinci surgical system, Ion endoluminal system and related instruments and accessories.
The da Vinci surgical system is an advanced robot-assisted surgical system. The surgical system comprises a surgeon’s console, patient-side cart, 3-D vision system, da Vinci Skills Simulator and Firefly Fluorescence Imaging.
Intuitive Surgical’s robot-based da Vinci surgical system enables minimally-invasive surgery that reduces the trauma associated with open surgery.
The da Vinci System is powered by robotic technology which has provided the company with a solid exposure to Mechatronics, Robotocs and Artificial Intelligence for healthcare. The system provides 3-D High Definition vision, which helps surgeons gain superior visual clarity of target tissue and anatomy. Ion endoluminal system is a flexible, robotic-assisted, catheter-based platform that utilizes instruments and accessories for minimally invasive biopsies in the lung. The system can be used beyond surgery into diagnostic, endoluminal procedures as well.
It also manufactures EndoWrist instruments, such as forceps, scissors, electrocautery tools, scalpels, and other surgical tools, which incorporate wrist joints for natural dexterity for various surgical procedures. Additionally, the company sells various accessories comprising sterile drapes for ensuring sterile field during surgery; and vision products that include replacement 3D stereo endoscopes, camera heads, light guides, and other items that facilitate use of the da Vinci Surgical System, as well as Ion endoluminal system for biopsies.
The company operates through three segments: Instruments and Accessories, Systems and Services.
2023 Results at a Glance
Intuitive Surgical’s 2023 revenues totaled $7.12 billion, up +14.5% from 2022.
The company’s:
Instruments & Accessories sales were $4.28 billion (60% of net revenues)
Systems revenues were $1.68 billion (23.6%) and
Services revenues grossed $1.17 billion (16.4%)
(3) Unilever plc (UL - Free Report) : This is a $65 a share stock with a market cap of $163.1K. It is found in the Soap and Cleaning Materia ls industry. I see a Zacks Value score of D, a Zacks Growth score of B and a Zacks Momentum score of B.
Image Source: Zacks Investment Research
Unilever plc is engaged in manufacturing of branded and packaged consumer goods, including food, detergents and personal care products.
The company also has interests in specialty chemicals.
Unilever sells its products internationally.
Key Global Macro
Wednesday’s U.S. August CPI report is the main macro reporting event.
On Tuesday, Mainland China’s export data for August comes out. The prior reading is +7% y/y. The import data was up +6.6% in the prior month.
Mainland China’s FDI data for August comes out. -29.6% y/y was the prior reading. Yikes!
There is a U.S. Presidential debate.
On Wednesday, the U.S. August CPI data comes out. +0.2% m/m is what to expect. That is in-line with the prior +0.2% m/m reading. The broad U.S. CPI was +2.9% in a prior reading. Core CPI was +3.2% y//y.
On Thursday, U.S. weekly initial jobless claims come out. A low 227K was the prior reading.
The U.S. PPI data for August come out. +2.2% y/y was the prior month’s reading.
On Friday, the preliminary U of Michigan consumer sentiment index for SEP comes out. Expect 68 to follow a 67.9 reading.
Conclusion
Zacks Research Director Sheraz Mian’s latest Sept. 5th, 2024 update led with these 2 key points:
(1) Zacks S&P500 index earnings estimates for Q3-24 have come down, with the magnitude of estimate cuts significantly bigger than what we had seen in the comparable periods of the first two quarters of the year.
This negative shift in the revisions trend reverses the prior favorable development on this front that had been in recent quarters.
(2) Total S&P500 earnings are currently expected to be up +3.9% from the same period last year on +4.7% higher revenues.
Estimates have steadily come down since the start of the period, with the current +3.9% growth pace down from +6.9% at the start of July.
Hmmm...
Enjoy this trading week!
Warm Regards,
John Blank, PhD. Zacks Chief Equity Strategist and Economist
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
August U.S. CPI Data: Global Week Ahead
Volatile activity that has marked September, so far, may not let up any time soon.
Investors are on edge — ahead of more key macro events — that could shape the tone for trading in the weeks ahead.
Next are Reuters’ five world market themes, reordered for equity traders—
(1) On Wednesday at 8:30 am EST, August U.S. CPI Data Lands.
Investors’ focus may have shifted to U.S. employment and economic growth, but the upcoming consumer price data — due on Sept. 11th — could still cause a stir.
The markets are still gaming out how much the Federal Reserve will need to cut rates at its Sept. 17th - 18th meeting, heightening the importance of every data report.
Evidence that inflation remains relatively robust could argue against a 50-basis point rate cut — currently seen as a less likely scenario than the Fed reducing rates by just 25 basis points.
A sharp drop in consumer prices, on the other hand, could be interpreted as a sign economic growth has begun to slow more than expected, tipping the scales towards a jumbo cut.
Economists polled by Reuters expect U.S. inflation to have risen by +0.2% m/m in August, matching the rise the previous month.
(2) Is the “Smart Money” in Bonds or Stocks? What About Oil & Gold Prices?
Investors are struggling to decide if the bond or stock market is right about the economy.
Bonds point to oncoming recession, while stocks — this most recent selloff notwithstanding — have vaulted to yet more record highs, reflecting a sense of confidence in a benign landing.
The problem is, only one can be right.
Enter the gold/oil ratio.
This metric, which reflects how many barrels of crude it takes to buy one ounce of gold, is at its highest since 2020. The ratio drops when confidence in the economy increases, as it assumes energy demand will improve, and rises when concern about growth and recession — and therefore the prospect of gold-friendly rate cuts — sets in.
Gold is trading close to record highs around $2,500 an ounce, while oil is struggling to stay above $70 a barrel.
Once again, only one can be right.
(3) What’s the European Central Bank’s (ECB) Next Move?
The European Central Bank is all but certain to deliver its second rate cut this cycle, so what matters more is any clue on what's next.
Traders now fully price another cut after September and close to a 50% chance of an additional move this year.
In mid-July, they saw less than a full chance of a post-September cut.
With a December move seen as likely, investors are eager to hear whether an October cut is a possibility too.
Once bitten, twice shy: ECB policymakers are wary of making any promises. Some hawks are still declining to commit to September.
They are at odds with doves over whether a weak growth outlook is enough to put inflation worries to rest.
Inflation fell to just above the ECB's target at +2.2% in August, but sticky services and core measures mean some policymakers want more evidence that +2% is in reach before going all-out.
(4) The Bank of England (BoE) Will Watch Their Macro Data Closely, Too.
The Bank of England (BoE) was quicker than its peers to raise interest rates in 2021 and is expected to cut them more slowly, unless important data such as the Sept. 10th monthly wages report proves reassuring.
When the BoE implemented its first rate cut of this cycle on Aug. 1st, in a move traders do not expect to happen again until November, it said it would closely watch pay growth, a major inflation factor.
U.K. wages rose at their slowest in nearly two years in the quarter to June 30, but unemployment dropped unexpectedly and the working population rose by significantly more than forecast.
A soft jobs report could benefit borrowers, but weaken the pound, which has boomed on bets the BoE will keep rates relatively high.
Bullish positions in sterling are mostly held by debt-funded speculators, who are motivated to sell at signs of trouble rather than risk margin calls.
(5) Japan Picking a New Prime Minister.
Japan's next prime minister will take over the push for better corporate governance that propelled stocks to record highs this year, support for the Bank of Japan's tightening campaign after decades of deflation, and responsibility for an ever-expanding debt pile that is by far the biggest in the industrialized world.
Incumbent Fumio Kishida is stepping down over a slush-fund scandal. The field of hopefuls to replace him could reach around 10 by the time campaigning starts on Sept. 12th, ahead of a party vote on Sept. 27th.
The BOJ is independent, but the government can exert pressure. With the central bank's next meeting one week before the ruling party's vote, timing is tricky.
Zacks #1 Rank (STRONG BUY) Stocks
I chose the three biggest, by market capitalization, stocks in our #1 Ranking order.
(1) Prosus N.V. (PROSY - Free Report) : This is a $7 a share stock with a market cap of $199K. It is found in the Internet Commerce industry. I see a Zacks Value score of D, a Zacks Growth score of D and a Zacks Momentum score of B.
Prosus N.V. provides e-commerce and internet businesses. It operates principally in the Americas, Africa, Central and Eastern Europe and Asia.
The group's expansion into Internet platforms began in the 1990s, spanning various tech investments, including:
(2) Intuitive Surgical (ISRG - Free Report) : This is a $469 a share stock with a market cap of $169.3K. It is found in the Medical Instruments industry. I see a Zacks Value score of F, a Zacks Growth score of D and a Zacks Momentum score of F.
Image Source: Zacks Investment Research
Headquartered Sunnyvale, CA, Intuitive Surgical, Inc. designs, manufactures and markets the da Vinci surgical system, Ion endoluminal system and related instruments and accessories.
The da Vinci surgical system is an advanced robot-assisted surgical system. The surgical system comprises a surgeon’s console, patient-side cart, 3-D vision system, da Vinci Skills Simulator and Firefly Fluorescence Imaging.
Intuitive Surgical’s robot-based da Vinci surgical system enables minimally-invasive surgery that reduces the trauma associated with open surgery.
The da Vinci System is powered by robotic technology which has provided the company with a solid exposure to Mechatronics, Robotocs and Artificial Intelligence for healthcare. The system provides 3-D High Definition vision, which helps surgeons gain superior visual clarity of target tissue and anatomy. Ion endoluminal system is a flexible, robotic-assisted, catheter-based platform that utilizes instruments and accessories for minimally invasive biopsies in the lung. The system can be used beyond surgery into diagnostic, endoluminal procedures as well.
It also manufactures EndoWrist instruments, such as forceps, scissors, electrocautery tools, scalpels, and other surgical tools, which incorporate wrist joints for natural dexterity for various surgical procedures. Additionally, the company sells various accessories comprising sterile drapes for ensuring sterile field during surgery; and vision products that include replacement 3D stereo endoscopes, camera heads, light guides, and other items that facilitate use of the da Vinci Surgical System, as well as Ion endoluminal system for biopsies.
The company operates through three segments: Instruments and Accessories, Systems and Services.
2023 Results at a Glance
Intuitive Surgical’s 2023 revenues totaled $7.12 billion, up +14.5% from 2022.
The company’s:
(3) Unilever plc (UL - Free Report) : This is a $65 a share stock with a market cap of $163.1K. It is found in the Soap and Cleaning Materia ls industry. I see a Zacks Value score of D, a Zacks Growth score of B and a Zacks Momentum score of B.
Image Source: Zacks Investment Research
Unilever plc is engaged in manufacturing of branded and packaged consumer goods, including food, detergents and personal care products.
The company also has interests in specialty chemicals.
Unilever sells its products internationally.
Key Global Macro
Wednesday’s U.S. August CPI report is the main macro reporting event.
On Tuesday, Mainland China’s export data for August comes out. The prior reading is +7% y/y. The import data was up +6.6% in the prior month.
Mainland China’s FDI data for August comes out. -29.6% y/y was the prior reading. Yikes!
There is a U.S. Presidential debate.
On Wednesday, the U.S. August CPI data comes out. +0.2% m/m is what to expect. That is in-line with the prior +0.2% m/m reading. The broad U.S. CPI was +2.9% in a prior reading. Core CPI was +3.2% y//y.
On Thursday, U.S. weekly initial jobless claims come out. A low 227K was the prior reading.
The U.S. PPI data for August come out. +2.2% y/y was the prior month’s reading.
On Friday, the preliminary U of Michigan consumer sentiment index for SEP comes out. Expect 68 to follow a 67.9 reading.
Conclusion
Zacks Research Director Sheraz Mian’s latest Sept. 5th, 2024 update led with these 2 key points:
(1) Zacks S&P500 index earnings estimates for Q3-24 have come down, with the magnitude of estimate cuts significantly bigger than what we had seen in the comparable periods of the first two quarters of the year.
This negative shift in the revisions trend reverses the prior favorable development on this front that had been in recent quarters.
(2) Total S&P500 earnings are currently expected to be up +3.9% from the same period last year on +4.7% higher revenues.
Estimates have steadily come down since the start of the period, with the current +3.9% growth pace down from +6.9% at the start of July.
Hmmm...
Enjoy this trading week!
Warm Regards,
John Blank, PhD.
Zacks Chief Equity Strategist and Economist