Connect with us

Economics

Barry Ritholtz’s 10 New Year’s Eve Reads

My last of 2021,  New Year’s Eve reads: • Farewell to 2021, the stupidest year in American history Instead of unity and immunity, this year has brought…

Published

on

This article was originally published by The Big Picture

My last of 2021,  New Year’s Eve reads:

Farewell to 2021, the stupidest year in American history Instead of unity and immunity, this year has brought us stupidity and insanity on an unimaginable scale. In the categories of public health, education policy, fiscal policy and investment options, we appear to have taken leave of our collective senses. (Los Angeles Times)

This is the worst economy we never had For months, the GOP-Fox News axis forecast the bluest of Christmases. House Republican leader Kevin McCarthy joined 159 House Republicans in a letter to President Biden saying his policies “will certainly ensure that this Christmas will not be merry” because of a “supply chain crisis” and inflation. And then — a Christmas miracle! (Washington Post)

Underestimate the U.S. Economy at Your Own Risk People have been betting against the U.S. economy for decades. They’ve never been rewarded for it. Progress is in our DNA. Good luck betting against it. (Wealth of Common Sense)

IPOs Had a Record 2021. Now They Are Selling Off Like Crazy. Threats of higher rates are driving down prices of high-growth stocks; two-thirds of 2021 IPOs now sit below their offer prices (Wall Street Journal)

The Year in Graphics The year 2021 held great promise—for starters, it meant 2020 had finally ended. But dreams of a return to normalcy were quickly dashed by U.S. Capitol riots that threw into question the very survival of American democracy, supply chain issues that snarled global commerce, an uneven rollout of Covid vaccines and new waves of infections, deadly wildfires and extreme market volatility driven by Redditors pushing meme stocks. Here’s how we told some of 2021’s most important stories with charts, maps and visuals. (Bloomberg)

The 5 most undersold political stories of 2021 It’s the most wonderful time of the year: when we recap the political stories of the preceding 12 months that didn’t get their due. We present, as we do most years. (Washington Post)

How Ted Koppel’s trip to ‘Mayberry’ turned into one of 2021’s most striking moments of TV The veteran newsman and “CBS Sunday Morning” contributor explains how a seeming puff piece about “The Andy Griffith Show” turned into an unsettling snapshot of an angry America. (Washington Post)

Champagne bubbles: the science As you uncork that bottle and raise your glass, take time to toast physics and chemistry along with the New Year. (Knowable)

18 Sports Highlights From 2021 Worth Watching Again World records, no-look shots, extraordinary goals, trick base running, come-from-behind victories … we may not know what sports will look like in 2022, but 2021 had it all.  (New York Times)

Boba Fett, Intergalactic Man of Mystery How did this fearsome “Star Wars” bounty hunter go from a peripheral player to the star of “The Book of Boba Fett”? He used the support of fans — and a little brute force. (New York Times)

Be sure to check out our Masters in Business next week with Richard Nisbett professor of social psychology and Co-director of the culture and cognition program at the University of Michigan, focusing on culture and reasoning and basic cognitive processes. Malcolm Gladwell called him “The most influential thinker in my life.” He is the author of numerous research and books, most recently, “Thinking: A memoir.”

 

This year has the second most new highs ever

Source: @ISABELNET_SA

 

Sign up for our reads-only mailing list here.

 

The post 10 New Year’s Eve Reads appeared first on The Big Picture.


Author: Barry Ritholtz

Economics

Temporary reprieve

Equity markets are recovering some of yesterday’s losses but anxiety and uncertainty continue to dominate after a disappointing start to earnings season….

FacebookTwitterEmail

Equity markets are recovering some of yesterday’s losses but anxiety and uncertainty continue to dominate after a disappointing start to earnings season.

Inflation and interest rate concerns are going nowhere soon and with traders now increasingly considering the possibility of hikes larger than 25 basis points, the possibility of more pain in stock markets is very real.

The idea that we could go from rock bottom rates and enormous bond-buying to rapid tapering, 50 basis point hikes, and earlier balance sheet reduction is quite alarming. We’re talking about markets that have become very accustomed to extensive support from central banks and very gentle unwinding when appropriate. This is quite a shock to the system.

And so far earnings season is not providing investors the comfort they were hoping for. Significant compensation increases and lower trading revenues hurt JP Morgan and Goldman Sachs, and higher wage demands are likely to be a common theme throughout the next few weeks which will put a dampener on the bottom line and not alleviate concerns about persistent and widespread price pressures.

UK inflation jumps again ahead of Bailey appearance

The CPI data from the UK this morning compounded inflation concerns, hitting a 30-year high and once again surpassing expectations in the process. And it’s highly unlikely we’re seeing the peak, with that potentially coming around April when the cap on energy tariffs is lifted considerably to reflect higher wholesale prices. Other aspects will also contribute to higher levels of inflation at the start of the second quarter, at which point we may have a better idea of how fast it will then decline.

Of course, the Bank of England can’t just turn a blind eye until then. The MPC may be willing to overlook transitory inflationary pressures but the rise in CPI has proven to be neither temporary nor tolerable. Instead, it’s become more widespread and the central bank is being forced to act and may do so again next month after raising interest rates for the first time since the pandemic in December. A few more hikes after that are also priced in for this year but if pressures continue to mount, traders may begin to speculate about the possibility of larger hikes, as we’ve seen starting in the US.

All of this should make Andrew Bailey’s appearance before the Treasury Select Committee later today all the more interesting. The central bank has warned of higher inflation and possible interest rate hikes for months but delayed doing so after initial hints ahead of the November meeting. Given what’s happened since, the decision looks all the more strange. Of course, it’s easy to say that with 20/20 hindsight.

Consolidation continues

Bitcoin appears to have gotten lost in the noise of the last few weeks. It’s not falling too hard despite risk assets getting pummelled but it’s not recovering to any great extent either. Instead, it’s floating between support at USD 40,000 and resistance around USD 45,000 and showing no signs of breaking either at this point.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/





Author: Craig Erlam

Continue Reading

Precious Metals

Oil posts gains, gold calm

Oil gathering momentum as USD 100 oil looks increasingly likely Oil prices are continuing to climb on Wednesday and find themselves only a little shy of…

FacebookTwitterEmail

Oil gathering momentum as USD 100 oil looks increasingly likely

Oil prices are continuing to climb on Wednesday and find themselves only a little shy of USD 90 a barrel. This happened as IEA confirmed that the market looks tighter than previously anticipated as a result of stronger demand, despite omicron, and the inability of OPEC+ to hit its monthly increased production targets. This imbalance has led to surging prices which will further pressure households and businesses already fighting high inflation.

What’s more, not only does the rally not appear to be losing steam, it may have even generated fresh momentum. While USD 90 could have triggered some profit-taking and a minor cooling of prices, this suggests they’ll see no reprieve and we could realistically see USD 100 oil soon.

Can gold break higher as traders speculate about more rate hikes?

Gold is marginally higher again after the easing over the course of the last week. The yellow metal is continuing to struggle around USD 1,833 which has been a surprisingly strong level of resistance over the last six months. But support is returning after it came close to USD 1,800 so a break to the upside remains a strong possibility.

Given the calls for even more rate hikes this year than markets are pricing in, not to mention larger individual increases than we’ve seen for many years, perhaps we are seeing some inflation hedging from traders that don’t think central banks are doing enough to bring price pressures down.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/



Author: Craig Erlam

Continue Reading

Economics

Here’s What Triggered Yesterday’s Selloff

Well, the stock market sure woke up on the wrong side of the bed this morning!

Source: ventdusud / Shutterstock.com

After a long holiday weekend, investors…

Well, the stock market sure woke up on the wrong side of the bed this morning!

Source: ventdusud / Shutterstock.com

After a long holiday weekend, investors were greeted with a more than 1% drop in the major indices. The NASDAQ was hit particularly hard, down as much as 2% earlier in the trading day. The fact of the matter is Wall Street was cranky because the 10-year Treasury surged to a two-year high today.

The 10-year Treasury yield now sits at about 1.85%. That’s up from 1.51% on December 31, 2021. That’s a fairly dramatic rise in the 10-year Treasury, and it’s a big reason for why we saw a massive rotation out of the tech-heavy index today.

The financial media would have you believe higher rates will hurt tech stocks, but that’s simply not true. Here’s the reality: The global pandemic accelerated technological change, with many folks working and studying remotely. And this technological change boosted productivity in the U.S., with several industries leading the productivity miracle. So, tech stocks, especially semiconductor companies, will have some of the best quarterly results in mid-January through mid-February. And wave-after-wave of positive results will not only help these stocks firm up but also drive their shares higher. It’s one reason why I’m betting big on 5G.

Tech stocks aside, this earnings season should also trigger rebounds in fundamentally superior stocks that were hit during today’s selling. I expect Wall Street to become laser-focused on earnings over the next five weeks, and after all the reports are out, we’ll see who’s left standing. I anticipate the winners will be those with superior fundamentals, i.e., my Breakthrough Stocks. My Buy List companies have 57.2% average forecasted annual sales growth and 231% average forecasted annual earnings growth. They should also issue positive forward guidance.

Now, due to more difficult year-over-year comparisons, my Breakthrough Stocks are actually “decelerating” from the previous 78.2% average annual sales growth and 724.8% average annual earnings growth. However, my Buy List stocks are still set to achieve earnings and sales growth well above the average S&P 500 company. According to FactSet, the S&P 500 is anticipated to achieve 21.8% average earnings growth and 12.9% average revenue growth.

The Bellwether Steps Up to the Earnings Bat

We’ve heard from a few companies so far, including the Big Banks (I’ll review their quarterly results later in the week, so stay tuned for that!), but I’m most excited to hear from Alcoa Corporation (NYSE:AA), which will report its fourth-quarter earnings results tomorrow afternoon. As you probably know, Alcoa is known for establishing the aluminum industry more than 130 years ago. The company primarily manufactures and sells bauxite, the primary source of aluminum, as well as alumina, aluminum, cast products, energy and rolled products. Alcoa actually is one of the largest bauxite producers in the world with seven active mines, as well as is the leading producer of alumina.

Alcoa is also considered a “bellwether” for earnings season, as it’s a stock investors have turned to in the past as an indicator for how the coming earnings season will shake out. Currently, analysts expect Alcoa’s earnings to surge 653.8% year-over-year to $1.96 per share, up from earnings of $0.26 per share a year ago. Revenue is estimated to climb 40.5% year-over-year to $3.36 billion.

I should note that analysts have lowered earnings estimates in the past three months, following the company’s announcement that it will temporarily halt production at its Spain plant due to rising energy costs. Alcoa noted that the production halt would reduce earnings by $0.32 per share, which is why analysts have lowered earnings estimates initially. Interestingly, in the past week, analysts have increased estimates by nearly 11%.

Personally, I believe Alcoa will post impressive fourth-quarter results. The reality is that aluminum prices are trekking higher again. The World Bank revealed that aluminum prices jumped from $2,004 per tonne in January 2021 to more than $2,900 per tonne in January 2022. Prices are anticipated to rise 6% this year, thanks to ongoing demand from the auto industry, rising energy prices and supply shortages.

Suffice it to say, Alcoa is the stock to watch tomorrow.

But for today, don’t be discouraged by today’s wild market gyrations. The reality is that earnings work 70% of the time, so given that earnings momentum has tapped the brakes a bit due to tougher year-over-year comparisons, I think companies that achieve better-than-expected results will see their shares climb higher as investors celebrate their results.

It’s why now is the time to make sure you’ve filled your portfolio with fundamentally superior stocks. If you’re not sure where to look, you might want to review my Breakthrough Stocks Buy List. As I mentioned, my stocks should post much strong earnings than the average S&P 500 company. I should also note that I recently created a special model portfolio I call the 5G Hypergrowth Portfolio: Six Stocks to Incredible Wealth. Each company is directly in line to profit from 5G.

I will be recommending another 5G stock on Thursday, after the market close. So, if you join Breakthrough Stocks today, you’ll have access to this new recommendation as soon as it’s released.

For full details, click here.

Sincerely,

Louis Navellier

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Alcoa Corporation (AA)

Louis Navellier, who has been called “one of the most important money managers of our time,” has broken the silence in this shocking “tell all” video… exposing one of the most shocking events in our country’s history… and the one move every American needs to make today.

More From InvestorPlace

The post Here’s What Triggered Today’s Selloff appeared first on InvestorPlace.


nasdaq

Author: Louis Navellier

Continue Reading

Trending