Traders Market Weekly: Valuation Matters in Earnings Season

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  • #39645
    TradersCom
    Keymaster

    Week That Was & Week Ahead for Australian Stocks

    S&P ASX 200 index fell 0.43%, or 28.2 points, to 6539.9 on Friday, a weekly loss of 0.6 per cent.
    Iron ore futures traded in Singapore fell 3.5% to $US114.80 a tonne for the August contract.

    #39691

    HAPPY 4TH JULY! Here are some 4th of July Fun Facts to get the weekend started!
    Happy birthday, America! 4th of July marks the date the Declaration of Independence was signed and birthday of the United States, but here are some other interesting facts.

    1. How many people signed the Declaration of Independence on July 4th?
    TWO – the president of Congress, John Hancock, and its secretary, Charles Thompson. A few months later the 50+ signers would add on

    2. Is there something written on the back of the Declaration of Independence?
    Yes! It’s said the following is written upside down and backwards: “Original Declaration of Independence dated 4th July 1776.”

    3. When did the Fourth of July become a legal federal holiday?
    1870. Then, in 1938, Congress reaffirmed the holiday to make sure all workers received full pay.

    4. When were fireworks first used to celebrate July Fourth?
    1777. Congress chose fireworks as a way to celebrate the first anniversary. They were ignited over Philadelphia.

    ireworks as a way to celebrate the first anniversary. They were ignited over Philadelphia.

    #39693
    Truman
    Participant

    Happy 4th everyone – Enjoy and remember what freedom means – thank you for the facts always a good reminder CI

    #39694
    Truman
    Participant

    Dividend watch:

    Companies forecast to boost their quarterly dividend payout include
    John B Sanfilippo (JBSS) to $0.75 from $0.70,
    Essential Utilities (NYSE:WTRG) to $0.2858 from $0.2682,
    J.M. Smucker (SJM) to $1.05 from $0.99,
    Clorox (NYSE:CLX) to $1.20 from $1.16.

    #39695
    Truman
    Participant

    Corporate events:

    Ford (NYSE:F) will report monthly U.S. sales on July 5. Investors will be watching for the tally of all-electric F-150 Lightnings that were moved.

    Shareholders with Social Capital Suvretta Holdings Corp III (NASDAQ:DNAC) will meet on July 6 to vote on the deal to take ProKidney public in a SPAC deal. Social Capital Suvretta Holdings Corp III has Chamath Palihapitiya as a backer.

    On July 7, Advent Technologies Holdings (NASDAQ:ADN) will host a virtual Investor Day and Cidara Therapeutics (NASDAQ:CDTX) will host a virtual research and development day.

    The twice-delayed Spirit Airlines (SAVE) shareholder vote on the planned sale to Frontier (ULCC) is set for July 8. Watch JetBlue Airways (JBLU) as well as the drama plays out.

    #39696
    Truman
    Participant

    At The Movies:

    The fifth installment in the Universal (CMCSA) Despicable Me/Minions franchise will roll into theaters this weekend, with Minions: The Rise of Gru expected to lead the box office. Romance film Mr. Malcolm’s List from Bleecker Street will also debut, while holdovers Top Gun: Maverick and Elvis are expected to do well over the three-day holiday.

    As of last weekend, the U.S. box office haul was up 263% from last year to $3.63B in ticket sales.

    “Even with a third-less content, summer 2022 is rolling along as audiences and theaters have found their cinematic groove,” noted Exhibitor Relations analyst Jeff Bock. Notably, Maverick has moved up to become the No. 14-grossing domestic film of all time, with its $534.5M total passing Rogue One: A Star Wars Story.

    #39697
    Truman
    Participant

    Barron’s:

    Income investing makes the cover this week. Yields across the board have pushed higher as the market weakness and the Fed’s battle with inflation has sent investors scrambling.

    Some of the stocks of interest to dividend hunters mentioned by the publication include Alerian MLP (NYSEARCA:AMLP), Kayne Anderson NextGen Energy & Infrastructure (KMF), Salient Midstream & MLP (NYSE:SMM), Verizon (VZ), AT&T (T), JPMorgan Chase (JPM), Goldman Sachs Group (GS), Morgan Stanley (MS), and Wells Fargo (WFC).

    Opportunities with junk bonds, REITs, and TIPS are also broken down in the new higher-rate environment.

    “It’s still a challenging macro backdrop, given high inflation, but most of that is priced into the market,” noted Nuveen Chief Investment Officer Anders Persson. “The yield profile is a lot more interesting,” he added.

    #39728
    Truman
    Participant

    The global equity markets are mostly lower. S&P Futures are down about 21 points to trade around the 3805 area. The market was stagnant through the Sunday-Monday holiday trade but saw a the range expand as Asia got underway last night. This enabled spoos to tag 3857.75 as the session high. The S&P has softened since then, coming back in to challenge the 3800 area. The low was established early in the holiday portion at 3793.00

    Market Updates

    S&P Futures vs Fair Value: -23.0
    10 yr Note: 2.890%
    USD/JPY: 135.75 +0.05
    EUR/USD: 1.0318 -0.0107
    Europe: FTSE: -1.3% DAX: -1.0% CAC: -1.1%
    Asia: Hang Seng: +0.1% Shanghai: 0.0% Nikkei: +1.0%
    Gold (1801.30 -0.20) Silver (19.80 +0.13) Crude (108.87 +0.44)

    #39729
    Truman
    Participant

    In Asia, China closed flat while Japan rose 1.0%. The Shanghai Composite tussled with the neutral zone for the bulk of the session and finished right around the flat-line. The Chinese benchmark was unable to benefit from better than expected Caixin Services PMI data. The June print surged to 54.5, well above the consensus of 49.7 and up from the May reading of 41.4. In Japan, the Nikkei was led higher by heavyweights Fast Retailing and SoftBank, which rallied 4% and 2%, respectively. Meanwhile, shipping stocks Kawasaki Kisen Kaisha and Mitsui O.S.K. Lines sank 3-4%.

    In Europe, the major bourses are down on the day. Financials are off to a weak start with lenders such as Deutsche Bank, Societe Generale and Credit Agricole falling 2-3%. Despite metal futures having a muted day, mining stocks are under pressure. Names such as Glencore, Anglo American and Antofagasta have shed 3-4%.
    Market Updates

    #39730
    Truman
    Participant

    S&P futures vs fair value: -24.00. Nasdaq futures vs fair value: -121.00.

    #39739
    Truman
    Participant

    Equity indices in the Asia-Pacific region ended Tuesday on a mostly higher note.

    A former Bank of Japan chief economist said that he expects the BoJ to increase its inflation forecast and maintain ultra-loose policy.
    South Korea’s CPI increased at its fastest yr/yr pace since late 1998 in the June reading.
    The Biden administration is expected to reverse tariffs on imports from China.
    The Reserve Bank of Australia raised its cash rate by 50 bps to 1.35%, as expected.

    —Equity Markets—

    Japan’s Nikkei: +1.0%
    Hong Kong’s Hang Seng: +0.1%
    China’s Shanghai Composite: UNCH
    India’s Sensex: -0.2%
    South Korea’s Kospi: +1.8%
    Australia’s ASX All Ordinaries: +0.3%

    #39740
    Truman
    Participant

    China’s June Caixin Services PMI 54.5 (expected 49.7; last 41.4)
    Japan’s June Services PMI 54.0 (last 54.2). May Overtime Pay 5.5% yr/yr (last 5.9%). May Overall Wage Income 1.0% (last 1.3%)
    South Korea’s June CPI 0.6% m/m (expected 0.5%; last 0.7%); 6.0% yr/yr (expected 5.9%; last 5.4%)
    India’s June Nikkei Services PMI 59.2 (expected 58.7; last 58.9)
    Singapore’s May Retail Sales 1.8% m/m (last 1.1%); 17.8% yr/yr (last 12.1%)
    Australia’s June AIG Construction Index 46.2 (last 50.4) and June Services PMI 52.6 (last 53.2). May Retail Sales 0.9% m/m, as expected (last 0.9%)
    New Zealand’s Q2 NZIER Business Confidence -65% (last -40%)

    #39741
    Truman
    Participant

    Major European indices trade in the red amid ongoing worries about global growth.

    Dutch farmer protests against stricter environmental rules grew over the weekend.
    Norwegian oil and gas workers went on strike, demanding higher pay.
    NATO allies signed accession protocols for Finland and Sweden.
    European Central Bank policymaker De Guindos said that the size of the September rate hike will depend on the updated medium-term inflation outlook.

    —Equity Markets—

    STOXX Europe 600: -1.8%
    Germany’s DAX: -2.5%
    U.K.’s FTSE 100: -2.1%
    France’s CAC 40: -2.6%
    Italy’s FTSE MIB: -2.3%
    Spain’s IBEX 35: -1.8%

    #39742
    Truman
    Participant

    Eurozone’s June Services PMI 53.0 (expected 52.8; last 56.1)
    Germany’s June Services PMI 52.4, as expected (last 55.0)
    U.K.’s June Services PMI 54.3 (expected 53.4; last 53.4)
    France’s June Services PMI 53.9 (expected 54.4; last 55.0). May Industrial Production 0.0% m/m (expected 0.2%; last -0.3%)
    Italy’s June Services PMI 51.6 (expected 51.5; last 53.7)
    Spain’s June Services PMI 54.0 (expected 53.5; last 56.5)

    #39743
    Truman
    Participant

    Occidental Petroleum (OXY 60.91, +0.47, +0.8%): 10% owner Berkshire Hathaway (Warren Buffett) bought 9,887,040 shares worth ~$582.4mln
    Cowen Group (COWN 27.78, +3.74, +15.6%): Toronto-Dominion Bank (TD) is considering possible bid for COWN, according to Bloomberg
    Tesla (TSLA 674.06, -7.73, -1.1%): In the second quarter, co produced over 258,000 vehicles and delivered over 254,000 vehicles; June 2022 was the highest vehicle production month in Tesla’s history

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