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The Zacks Analyst Blog Highlights: Tencent Holding, Boeing and NVIDIA
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For Immediate Release
Chicago, IL – Feb 27, 2018 – 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 Tencent HoldingTCHEY, Boeing (BA - Free Report) and NVIDIA (NVDA - Free Report) .
As I like to do with some regularity, let’s take a look at London-based Reuters five big world market themes. These are likely to dominate the thinking of investors and traders in the Global Week Ahead.
(1) The Powell Era Begins at the Fed
Jerome Powell had quite a welcome when he took over the reins of the U.S. Fed on Saturday, Feb. 3rd. It was the day after the initial -2% equity tumble — triggered by jobs data that stoked inflation fears. That data had pushed up bond yields.
The following Monday, Powell’s first weekday in the job, the S&P 500 dropped -4% as volatility spiraled, and then entered so-called correction territory with a -10%-plus tumble before starting to recover.
The question for investors: Whether there will be a Powell ‘put’ for stocks in case things get ugly again. The assumption under previous Fed bosses being that the central bank would always be there to prop up markets.
So far, he has only pledged to “remain alert to any developing risks to financial stability,” and investors hope his debut testimony to Congress will offer clues. Most reckon, however, that he is most likely to reinforce the message from this week’s Fed meeting minutes that inflation and interest rates will continue to rise.
(2) Italy’s March 4th Election Creeps into View
For months, markets have happily ignored the approach of Italy’s March 4th election. Now investors are starting to sit up.
Their creeping nervousness has pushed Italy’s 10-year bond yield spread over German peers to the widest since January, while the cost of insuring exposure to Italian sovereign debt is at its highest in more than five weeks.
Some see pre-election volatility as an opportunity to snap up Italian debt. Others caution against complacency — the election in the Eurozone’s third-biggest economy is expected to produce a hung parliament. And if parties cannot agree on a coalition, fresh elections cannot be ruled out.
Polls point to a strong result for the anti-establishment 5-Star Movement, while Silvio Berlusconi’s center-right bloc could also deliver a surprise. But success for the League, which calls the euro a “failed currency,” will revive euro break-up fears and further widen the gap between Italian and German yields.
(3) Trader Eyes Stay Focused on the Euro
The euro bulls rampaged for most of 2017 and January this year, recently taking the currency to three-year highs above $1.25. But markets have become cautious: There is next weekend's potential double whammy from Italian elections and the German vote on forming a coalition government, while the dollar is finally gaining traction from rising Treasury yields. That has put the euro on course for its second weekly loss in four months.
Currency derivative markets are implying there could be more weakness: two-week implied volatility EUR2WO=FN, a gauge for expected swings in the value of the euro, has risen to levels not seen since the French elections last year. The preference for buying euro puts EUR2WRR=FN, or options to sell at a set price, has also grown. Traders reported strong demand for strikes — the price at which they can exercise the option — around $1.21.
(4) Bank of Korea (BoK) Rate-Setters Meet
To hike or not to hike is the South Korean central bank’s dilemma. At its Feb. 27th meeting, it is expected to hold its main interest rate at 1.5% but could follow up on November’s rate rise — its first in six years — later in 2018.
On the one hand, South Korean households’ record $1.3 trillion debt (90% of GDP) means the bank must do something to discourage further lending.
But raising rates might further boost the won, which is near three-year highs. That is a problem for exporters, the backbone of the economy, who are also grappling with U.S. protectionism; anti-dumping duties have been slapped on Korean steel and transformers, while tariffs have been imposed on solar panels and washing machines.
Inflation, meanwhile, remains below the central bank’s target.
(5) Watch European Banks Earnings Reports
Buying shares in European banks to benefit from “monetary normalization” became a hot trade in early 2017 but withered somewhat as central banks stayed in the slow lane.
But the U.S. Fed is now expected to raise interest rates three times in 2018 and the Bank of England (BoE) possibly twice, while the European Central Bank (ECB) is set to end quantitative easing by the end of the year. So “go long on European banks” is back as a consensus bet among equity strategists.
As longer-dated bond yields rise, banks which borrow short-term money and lend it on longer-term tend to benefit. February’s equity sell-off meant bank shares missed out on the recent rise in yields on 10-year German bonds.
After the UK’s HSBC, Lloyds and RBS Barclays revealed results, it is the turn of several euro zone banks, with the Bank of Ireland, Allied Irish Banks, Bankia, Erste Group Bank and ABN AMRO all reporting earnings next week. Their figures should help analysts assess what kind of shape the sector is in, and to pick the stocks likely to benefit most from rising bond yields.
After all, Eurozone banks should benefit from equity portfolios rotating towards cyclical shares to capture the so-called “euro boom.” Economic recovery has also buoyed banks’ retail activity and helped reduce bad loans.
Top Zacks #1 Rank (STRONG BUY) Stock Picks—
The three biggest Zacks #1 Rank stocks — by market capitalization — are as follows:
Tencent Holding: This is a big mainland China Internet services giant. The long-term Zacks VGM score is F.
Boeing: This is the U.S. aerospace-defense giant. The long-term Zacks VGM score is D.
NVIDIA: This is the big U.S.-based semiconductor firm. The long-term Zacks VGM score is D.
As the awful long-term Zacks VGM scores show, any stock buyers here still pay up for growth, even after the latest market correction.
OK, maybe that’s too negative. The scores used to be F, and now they are D!
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
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: Tencent Holding, Boeing and NVIDIA
For Immediate Release
Chicago, IL – Feb 27, 2018 – 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 Tencent Holding TCHEY, Boeing (BA - Free Report) and NVIDIA (NVDA - Free Report) .
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Monday’s Analyst Blog:
New Fed Era Begins: Global Week Ahead
As I like to do with some regularity, let’s take a look at London-based Reuters five big world market themes. These are likely to dominate the thinking of investors and traders in the Global Week Ahead.
(1) The Powell Era Begins at the Fed
Jerome Powell had quite a welcome when he took over the reins of the U.S. Fed on Saturday, Feb. 3rd. It was the day after the initial -2% equity tumble — triggered by jobs data that stoked inflation fears. That data had pushed up bond yields.
The following Monday, Powell’s first weekday in the job, the S&P 500 dropped -4% as volatility spiraled, and then entered so-called correction territory with a -10%-plus tumble before starting to recover.
The question for investors: Whether there will be a Powell ‘put’ for stocks in case things get ugly again. The assumption under previous Fed bosses being that the central bank would always be there to prop up markets.
So far, he has only pledged to “remain alert to any developing risks to financial stability,” and investors hope his debut testimony to Congress will offer clues. Most reckon, however, that he is most likely to reinforce the message from this week’s Fed meeting minutes that inflation and interest rates will continue to rise.
(2) Italy’s March 4th Election Creeps into View
For months, markets have happily ignored the approach of Italy’s March 4th election. Now investors are starting to sit up.
Their creeping nervousness has pushed Italy’s 10-year bond yield spread over German peers to the widest since January, while the cost of insuring exposure to Italian sovereign debt is at its highest in more than five weeks.
Some see pre-election volatility as an opportunity to snap up Italian debt. Others caution against complacency — the election in the Eurozone’s third-biggest economy is expected to produce a hung parliament. And if parties cannot agree on a coalition, fresh elections cannot be ruled out.
Polls point to a strong result for the anti-establishment 5-Star Movement, while Silvio Berlusconi’s center-right bloc could also deliver a surprise. But success for the League, which calls the euro a “failed currency,” will revive euro break-up fears and further widen the gap between Italian and German yields.
(3) Trader Eyes Stay Focused on the Euro
The euro bulls rampaged for most of 2017 and January this year, recently taking the currency to three-year highs above $1.25. But markets have become cautious: There is next weekend's potential double whammy from Italian elections and the German vote on forming a coalition government, while the dollar is finally gaining traction from rising Treasury yields. That has put the euro on course for its second weekly loss in four months.
Currency derivative markets are implying there could be more weakness: two-week implied volatility EUR2WO=FN, a gauge for expected swings in the value of the euro, has risen to levels not seen since the French elections last year. The preference for buying euro puts EUR2WRR=FN, or options to sell at a set price, has also grown. Traders reported strong demand for strikes — the price at which they can exercise the option — around $1.21.
(4) Bank of Korea (BoK) Rate-Setters Meet
To hike or not to hike is the South Korean central bank’s dilemma. At its Feb. 27th meeting, it is expected to hold its main interest rate at 1.5% but could follow up on November’s rate rise — its first in six years — later in 2018.
On the one hand, South Korean households’ record $1.3 trillion debt (90% of GDP) means the bank must do something to discourage further lending.
But raising rates might further boost the won, which is near three-year highs. That is a problem for exporters, the backbone of the economy, who are also grappling with U.S. protectionism; anti-dumping duties have been slapped on Korean steel and transformers, while tariffs have been imposed on solar panels and washing machines.
Inflation, meanwhile, remains below the central bank’s target.
(5) Watch European Banks Earnings Reports
Buying shares in European banks to benefit from “monetary normalization” became a hot trade in early 2017 but withered somewhat as central banks stayed in the slow lane.
But the U.S. Fed is now expected to raise interest rates three times in 2018 and the Bank of England (BoE) possibly twice, while the European Central Bank (ECB) is set to end quantitative easing by the end of the year. So “go long on European banks” is back as a consensus bet among equity strategists.
As longer-dated bond yields rise, banks which borrow short-term money and lend it on longer-term tend to benefit. February’s equity sell-off meant bank shares missed out on the recent rise in yields on 10-year German bonds.
After the UK’s HSBC, Lloyds and RBS Barclays revealed results, it is the turn of several euro zone banks, with the Bank of Ireland, Allied Irish Banks, Bankia, Erste Group Bank and ABN AMRO all reporting earnings next week.
Their figures should help analysts assess what kind of shape the sector is in, and to pick the stocks likely to benefit most from rising bond yields.
After all, Eurozone banks should benefit from equity portfolios rotating towards cyclical shares to capture the so-called “euro boom.” Economic recovery has also buoyed banks’ retail activity and helped reduce bad loans.
Top Zacks #1 Rank (STRONG BUY) Stock Picks—
The three biggest Zacks #1 Rank stocks — by market capitalization — are as follows:
As the awful long-term Zacks VGM scores show, any stock buyers here still pay up for growth, even after the latest market correction.
OK, maybe that’s too negative. The scores used to be F, and now they are D!
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1 Stock of the Day pick for free.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.See these high-potential stocks free >>.
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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.