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The Zacks Analyst Blog Highlights: Intel, Northrup Grumman and Microchip Tech
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For Immediate Release
Chicago, IL – July 24, 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 Intel (INTC - Free Report) , Northrup Grumman (NOC - Free Report) and Microchip Tech (MCHP - Free Report) .
Big Week for Large-Cap Earnings: Global Week Ahead
In the Global Week Ahead, we will see a top week for USA earnings reports.
A flood of quarterly reports, and guidance on the year ahead, will likely dominate the thinking of both traders and investors.
A few large cap stock reports to watch--
On Tuesday: Lockheed Martin, Eli Lilly, Sherwin Williams
On Wednesday: Ford, General Motors, Fiat Chrysler, Boeing, Visa
On Thursday: McDonalds, Starbucks, Royal Dutch Shell, Celgene, Intel
On Friday: Exxon Mobil, Chevron, Merck
Outside the USA, I listed Reuters’ five big world market themes below.
These are likely to play an added role -- in the thinking of investors and traders -- in the Global Week Ahead.
(1) Mainland China Moves to Stabilize Economy
The world is increasingly uneasy about Beijing’s next moves to support its economy and temper damage from higher U.S. tariffs.
The yuan is at a one year-low — state-run banks finally stepped in to its support, but clearly authorities are prepared to tolerate a weaker currency, which helps exporters.
It could prove tricky, however, to keep conditions supportive while preventing big capital outflows that put the skids on the yuan. Sharp yuan depreciation poses problems for Chinese firms with dollar debt and hurt overall confidence in markets. Also, too much currency weakening will draw the ire of U.S. President Donald Trump who has already complained about the yuan “dropping like a rock.”
Benchmark rate cuts are therefore unlikely. Instead, policymakers are tinkering with liquidity, including initiatives such as incentivizing commercial banks to lend to small business. And after cutting banks’ reserve ratios in March and June, they may cut again, potentially in September.
The rest of emerging Asia is also concerned — a lurch lower by the yuan will mean currencies from the Philippines to India, already at multi-year lows, will have to play catch up.
(2) The European Central Bank (ECB) Meets on Thursday
After the excitement generated at its last meeting by its pledge to keep interest rates unchanged “at least through the summer” of 2019, this will be of great interest to those looking for further guidance.
Some ECB policymakers apparently still want a June 2019 rate rise, while others see trade tensions as a reason to stay loose for longer. But given that ECB President Mario Draghi made it clear the bank had left language “intentionally vague”, he is unlikely to be any more forthcoming on the timing.
But there are other issues to quiz him on. One is on how the central bank plans to deploy redemptions from its outstanding bond holdings once its asset purchase scheme expires at the end of 2018. Reports suggest it will use reinvestments to buy long-dated bonds, thus magnifying the stimulus effect.
Yield curves have already flattened in anticipation, giving borrowers the opportunity to issue more long-dated bonds and lock in low borrowing costs for decades to come. Belgium plans to sell 50-year bonds next week and others could follow.
What of the economy? There are signs momentum is stabilizing after a sudden slowdown earlier this year. Flash euro zone PMI data due on Tuesday should give some indication of how the economy is coping with global trade conflicts, Italian politics and messy Brexit negotiations.
(3) Lots of Emerging Market Central Banks Meet
The central banks of Turkey, Chile, Nigeria, Hungary, Argentina, Colombia and Russia all meet to set interest rates.
The leaders of the BRIC nations also meet in Johannesburg, following G20 finance ministers and central bankers who met in Buenos Aires last weekend.
In short, it’s a big week for emerging markets. As it seems to be every week right now, with the strength of the dollar, rising U.S. interest rates and escalating trade war tensions tightening the squeeze. Emerging stocks, bonds and currencies are falling and investors are pulling cash out of EM funds.
EM central banks are in a bind. Do they cut rates to support growth and domestic asset prices, which would fuel inflationary pressures? Or do they raise rates to track the Fed, fight inflation and support their currencies even though that could choke growth? We’ll find out next week on which side of that fence many of them sit, while the commentary out of Buenos Aires and Johannesburg could also be market moving.
(4) U.S. GDP Growth Could Hit +4.0% on Friday
Economists polled by Reuters reckon U.S. gross domestic product (GDP) expanded a scintillating 4 percent in the April-June quarter, or double the first quarter’s output. The data is due on Friday.
One of the main drivers of the robust expansion was, possibly, a rush by U.S. exporters to get their products to markets before tariffs and counter-tariffs kicked in and full-fledged trade war broke out.
U.S. farmers probably stuffed the export channel (think soybeans to China) before the tariffs. But while that probably contributed to overall growth, economists warn the spike higher in GDP, either from net exports or increased business spending (see defense, or oil drilling) may not last. So even if Q2 growth turns out to be a barn-burner, it is likely to back off in the second half of the year as tariffs bite harder and both imports and exports ease.
(5) Important European Auto Earnings Reports Come Out
Second quarter results stream in next week from big European carmakers Peugeot, Fiat, Daimler and Renault.
Shares in the sector, under immense pressure from the threat of higher U.S. import levies, are down almost 10 percent this year, and the results could give the selloff extra mileage should companies downgrade earnings outlooks.
Autos are likely to be high on the agenda for trade talks between European Commission President Jean-Claude Juncker and Trump next Wednesday too, after the industry blasted tariff plans in a U.S. Department of Commerce hearing.
But many investors are simply looking for some clarity. For the sector, 12-month earnings growth forecasts have come down from 13 percent to six percent over the past year. Since January, though, estimates have stalled, as analysts see no end to the fog surrounding tariff threats.
Top Zacks #1 Rank (STRONG BUY) Stocks--
(1) Intel: This is a $51 stock now. The market cap is $242B. The long-term Zacks VGM score is a solid A.
We get an INTC earnings report this week.
(2) Northrup Grumman: This is a $323 stock now. The market cap is $57B. The long-term Zacks VGM score is F. We get an earnings report here, too.
It will be interesting to watch. Is a NOC beat going to move an overpriced stock like this much?
(3) Microchip Tech: This is a lesser-known $94 chip stock. It is $22B in market cap. The long-term Zacks VGM score is B.
Can a chip stock like MCHP get moving again, given all of the building trade tension with China?
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: Intel, Northrup Grumman and Microchip Tech
For Immediate Release
Chicago, IL – July 24, 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 Intel (INTC - Free Report) , Northrup Grumman (NOC - Free Report) and Microchip Tech (MCHP - 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:
Big Week for Large-Cap Earnings: Global Week Ahead
In the Global Week Ahead, we will see a top week for USA earnings reports.
A flood of quarterly reports, and guidance on the year ahead, will likely dominate the thinking of both traders and investors.
A few large cap stock reports to watch--
On Tuesday: Lockheed Martin, Eli Lilly, Sherwin Williams
On Wednesday: Ford, General Motors, Fiat Chrysler, Boeing, Visa
On Thursday: McDonalds, Starbucks, Royal Dutch Shell, Celgene, Intel
On Friday: Exxon Mobil, Chevron, Merck
Outside the USA, I listed Reuters’ five big world market themes below.
These are likely to play an added role -- in the thinking of investors and traders -- in the Global Week Ahead.
(1) Mainland China Moves to Stabilize Economy
The world is increasingly uneasy about Beijing’s next moves to support its economy and temper damage from higher U.S. tariffs.
The yuan is at a one year-low — state-run banks finally stepped in to its support, but clearly authorities are prepared to tolerate a weaker currency, which helps exporters.
It could prove tricky, however, to keep conditions supportive while preventing big capital outflows that put the skids on the yuan. Sharp yuan depreciation poses problems for Chinese firms with dollar debt and hurt overall confidence in markets. Also, too much currency weakening will draw the ire of U.S. President Donald Trump who has already complained about the yuan “dropping like a rock.”
Benchmark rate cuts are therefore unlikely. Instead, policymakers are tinkering with liquidity, including initiatives such as incentivizing commercial banks to lend to small business. And after cutting banks’ reserve ratios in March and June, they may cut again, potentially in September.
The rest of emerging Asia is also concerned — a lurch lower by the yuan will mean currencies from the Philippines to India, already at multi-year lows, will have to play catch up.
(2) The European Central Bank (ECB) Meets on Thursday
After the excitement generated at its last meeting by its pledge to keep interest rates unchanged “at least through the summer” of 2019, this will be of great interest to those looking for further guidance.
Some ECB policymakers apparently still want a June 2019 rate rise, while others see trade tensions as a reason to stay loose for longer. But given that ECB President Mario Draghi made it clear the bank had left language “intentionally vague”, he is unlikely to be any more forthcoming on the timing.
But there are other issues to quiz him on. One is on how the central bank plans to deploy redemptions from its outstanding bond holdings once its asset purchase scheme expires at the end of 2018. Reports suggest it will use reinvestments to buy long-dated bonds, thus magnifying the stimulus effect.
Yield curves have already flattened in anticipation, giving borrowers the opportunity to issue more long-dated bonds and lock in low borrowing costs for decades to come. Belgium plans to sell 50-year bonds next week and others could follow.
What of the economy? There are signs momentum is stabilizing after a sudden slowdown earlier this year. Flash euro zone PMI data due on Tuesday should give some indication of how the economy is coping with global trade conflicts, Italian politics and messy Brexit negotiations.
(3) Lots of Emerging Market Central Banks Meet
The central banks of Turkey, Chile, Nigeria, Hungary, Argentina, Colombia and Russia all meet to set interest rates.
The leaders of the BRIC nations also meet in Johannesburg, following G20 finance ministers and central bankers who met in Buenos Aires last weekend.
In short, it’s a big week for emerging markets. As it seems to be every week right now, with the strength of the dollar, rising U.S. interest rates and escalating trade war tensions tightening the squeeze. Emerging stocks, bonds and currencies are falling and investors are pulling cash out of EM funds.
EM central banks are in a bind. Do they cut rates to support growth and domestic asset prices, which would fuel inflationary pressures? Or do they raise rates to track the Fed, fight inflation and support their currencies even though that could choke growth? We’ll find out next week on which side of that fence many of them sit, while the commentary out of Buenos Aires and Johannesburg could also be market moving.
(4) U.S. GDP Growth Could Hit +4.0% on Friday
Economists polled by Reuters reckon U.S. gross domestic product (GDP) expanded a scintillating 4 percent in the April-June quarter, or double the first quarter’s output. The data is due on Friday.
One of the main drivers of the robust expansion was, possibly, a rush by U.S. exporters to get their products to markets before tariffs and counter-tariffs kicked in and full-fledged trade war broke out.
U.S. farmers probably stuffed the export channel (think soybeans to China) before the tariffs. But while that probably contributed to overall growth, economists warn the spike higher in GDP, either from net exports or increased business spending (see defense, or oil drilling) may not last. So even if Q2 growth turns out to be a barn-burner, it is likely to back off in the second half of the year as tariffs bite harder and both imports and exports ease.
(5) Important European Auto Earnings Reports Come Out
Second quarter results stream in next week from big European carmakers Peugeot, Fiat, Daimler and Renault.
Shares in the sector, under immense pressure from the threat of higher U.S. import levies, are down almost 10 percent this year, and the results could give the selloff extra mileage should companies downgrade earnings outlooks.
Autos are likely to be high on the agenda for trade talks between European Commission President Jean-Claude Juncker and Trump next Wednesday too, after the industry blasted tariff plans in a U.S. Department of Commerce hearing.
But many investors are simply looking for some clarity. For the sector, 12-month earnings growth forecasts have come down from 13 percent to six percent over the past year. Since January, though, estimates have stalled, as analysts see no end to the fog surrounding tariff threats.
Top Zacks #1 Rank (STRONG BUY) Stocks--
(1) Intel: This is a $51 stock now. The market cap is $242B. The long-term Zacks VGM score is a solid A.
We get an INTC earnings report this week.
(2) Northrup Grumman: This is a $323 stock now. The market cap is $57B. The long-term Zacks VGM score is F. We get an earnings report here, too.
It will be interesting to watch. Is a NOC beat going to move an overpriced stock like this much?
(3) Microchip Tech: This is a lesser-known $94 chip stock. It is $22B in market cap. The long-term Zacks VGM score is B.
Can a chip stock like MCHP get moving again, given all of the building trade tension with China?
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.