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Week Ahead – The great inflation debate

Central banks have a massive dilemma on their hands There’s a clear and unintentional theme to this weeks preview, something that’s increasingly come…

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This article was originally published by Market Pulse

Central banks have a massive dilemma on their hands

There’s a clear and unintentional theme to this weeks preview, something that’s increasingly come to dominate the conversation, drive markets around the globe and across asset class, and that we haven’t had to think about or deal with for a long time; inflation.

Central banks have backed themselves into a corner and for different reasons. Whether that’s through sticking to the “inflation is transitory” line for too long, promising rate hikes and not delivering or cutting rates while inflation is rising at an extraordinary rate. Credibility is the lowest its been in years.

The last week was dominated by the US inflation story as CPI hit a 31-year high. This week will be more broad-based, as more countries release inflation data or hold central bank meetings. The US may be front and centre for obvious reasons, but inflation is a global problem and that’s becoming increasingly clear.

Is the Fed making a policy mistake?

Will CPI data ease pressure on BoE?

CBRT to continue easing despite soaring inflation


US

The focus on Wall Street is all about inflation and whether the Fed is making a policy mistake.  The latest retail sales report will show us how strong the US consumer is despite the recent broad-based pricing pressures.  The October retail sales report is expected to show a resilient consumer is beginning holiday shopping.  Sales at retail stores, restaurants, and online sellers are expected to increase by 1.1%, an improvement over the 0.7% seen in September.  

Given Wall Street’s new stance over pricing pressures, investors will closely listen to a wrath of Fed speakers to find out if some policymakers are abandoning the “inflation is transitory” stance.  On Tuesday, Fed’s Barkin and Daly speak.  Wednesday will have speeches from Fed’s Bowman, Mester, Daly, Waller, Evans, and Bostic.  On Thursday, Fed’s Bostic, Daly, and Waller Speak.  Friday contains appearances by Fed’s Waller and Clarida.       

EU 

Perhaps not the most eventful week ahead, in theory, but as we’ve seen in recent days in the US, these are very sensitive times. The primary takeaway from the ECB meeting a couple of weeks ago was that the markets weren’t buying what Lagarde was selling. Her dovish message fell on deaf ears.

The final CPI number shouldn’t see much of an upward revision if any, but if it does, it will only add to the inflation narrative which could further spook investors.

UK

If there’s one major central bank that’s hoping to catch a break on inflation, the Bank of England is surely it. It’s backed itself into a corner in recent weeks, warning of an impending hike, before bottling the decision last Thursday. Either an increase is nailed on for December or policymakers will be begging for reprieve when the inflation data is released next week. 

Retail sales and labour market figures will also add some context, especially as they’ll account for the end of the furlough scheme at the end of September which the central bank was apparently keenly waiting for. 

Russia

Next week has little on offer from Russia, with PPI data the only release of note.

This week, it was announced that the country will have a prototype of the digital rouble platform early next year and tests will be run before any decision is made. Not market moving at the moment but a potentially important step as central banks further explore the cryptocurrency space.

South Africa

The SARB will make its interest rate announcement on Thursday. The central bank could raise rates but market expectations are pointing to no change this month. Rates will rise over the next couple of years though, with the neutral rate well above the current level. A 25 basis point hike wouldn’t be a total shock.

Turkey

Inflation is close to 20%, USDTRY is within a whisker of 10 for the first time ever and the CBRT is likely to cut interest rates by another 100 basis points next week. Unconventional to put it mildly but with the central bank’s credibility in tatters, there’s little reason to expect its approach to suddenly change now. The situation has deteriorated greatly and the worst is probably yet to come.

China

The week kicks off with a selection of Chinese data releases including retail sales, industrial production and fixed-asset investment. The readings are expected to show some stabilisation after falling sharply over the course of this year. Power outages, Covid outbreaks, property woes, crackdowns and more have dragged on activity this year and while stabilisation is encouraging, many challenges still lie ahead.

Evergrande avoided default by the skin of its teeth again this week which keeps the party going a little longer. Other developers have been dragged into the firing line in recent weeks, including Kaisa Group which also has offshore payments due in the short-term, and may not have the same luck. It’s still not clear how this mess will be cleared up and how bad it will get for the sector or the broader credit markets. But every last minute payment buys time which investors are hoping leads to a relatively pain-free resolution.

India

A very light data week for India, with WPI inflation on Monday the only standout release. Stagflation is a word repeatedly thrown out when discussing India’s outlook at the moment and Monday’s data could further fuel it.

Australia

RBA minutes and a speech from Governor Lowe will be front and centre for Australia next week as investors try to make sense of the inflation situation and what central banks are actually going to do. The RBA isn’t alone in this but it certainly contributed to it when it abandoned its yield targeting days before its last meeting. With markets seemingly going it alone on rate expectations when it comes to some central banks, it’s critical that policymakers rebuild bridges and regain trust quickly.

New Zealand

For New Zealand, inflation expectations looks like the standout release on Thursday, although the house price index on Wednesday may also attract some interest. 

Japan

A plethora of economic data coming out of Japan next week and it’s hard to know where to start. The economy is likely to have contracted in the third quarter due to the state of emergency but it should rebound in the current quarter as Covid measures were lifted. Fiscal stimulus is also on the way which should help the economy bounce back.

Japan is one country where inflation metrics are not making for ugly reading. Yes, low to no inflation is far from ideal. But at least it’s not putting the BoJ under enormous pressure to raise rates when the economy isn’t ready for it. Other releases this week include industrial production and capacity utilization on Monday, and trade balance and machine orders on Tuesday.


Key Economic Events

Saturday, Nov. 13

COP26 ends

Economic Data/Events

China medium-term lending

Sunday, Nov. 14

Hungary PM Orban holds its annual congress

Monday, Nov. 15

Energy ministers, policymakers and leading industry executives attend the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC)

US Secretary of Commerce Raimondo makes her first official visit to Asia, where she will meet with government officials and business leaders in Japan, Singapore and Malaysia.  

India will allow foreign visitors into the country for the first time in 18 months due to the pandemic.

US Trade Representative Tai travels to Asia for meetings with officials in Tokyo, Seoul and New Delhi.

In a joint EU session, foreign affairs and defence ministers review the first draft of the bloc’s Strategic Compass.

UK PM Johnson delivers the annual Lord Mayor’s Banquet speech.

BOE Haskel speaks at the Resolution Foundation.

Economic Data/Events

US Nov Empire Manufacturing: 20.1 v 19.8 prior

Japan GDP

Thailand GDP

Poland CPI

Canada existing home sales

China property prices, retail sales, industrial production, surveyed jobless

New Zealand performance services index, net migration

Indonesia trade

India trade, wholesale prices

Turkey home sales, budget balance

Japan industrial production, tertiary index, capacity utilization

UK Rightmove house prices, Bloomberg economic survey

Tuesday, Nov. 16

Fed Presidents Barkin, George and Bostic take part in a discussion about racism and the economy with a focus on financial services, hosted by the Minneapolis Fed.

Fed’s Harker speaks at Philadelphia Fed Annual Fintech Conference

Reserve Bank of Australia Governor Lowe speaks to the Australian Business Economists Webinar.

Economic Data/Events

US business inventories, cross-border investment, retail sales, industrial production

Eurozone GDP

Hungary GDP

Poland CPI

Canada housing starts

Australia ANZ Roy Morgan consumer confidence, RBA minutes of policy meeting

Hong Kong jobless rate

Japan tertiary industry index

UK jobless claims, unemployment

Turkey house price index

Wednesday, Nov. 17

SEC Chair Gensler and the presidents of the Fed in New York and San Francisco speak at the US Treasury Market Annual Conference.

European Central Bank Financial Stability Review.

Bank of Russia Governor Nabiullina speaks at an industry forum.

UK PM Johnson speaks to the Liaison Committee

Economic Data/Events

US housing starts

Eurozone CPI

UK CPI

Canada CPI

South Africa CPI

Russia GDP, CPI

Italy trade

Japan machinery orders, trade

New Zealand PPI

Australia Westpac leading index, wage price index, Bloomberg economic survey

Singapore electronic exports, non-oil domestic exports

Mexico international reserves

South Africa retail sales

EIA Crude Oil Inventory Report

Thursday, Nov. 18

IMF Managing Director Georgieva speaks at the fund’s Statistical Forum – ‘Measuring Climate Change: The Economic and Financial Dimensions’.

Economic Data/Events

US Conference Board leading index, initial jobless claims

Singapore GDP

South Africa (SARB) Rate decision: Expected to keep Interest Rate at 3.50%

Turkey (CBRT) Rate decision: Expected to cut One-Week Repo Rate 100 bps to 15.00%

Eurozone new car registrations

Australia RBA FX transactions

China Swift global payments CNY

New Zealand two-year inflation expectations

Thailand car sales

South Korea short-term external debt

Russia gold and forex reserves

Friday, Nov. 19

BOE Chief Economist Huw Pill speaks in Bristol.

Fed’s Richard Clarida and Mary Daly speak at Asia Economic Policy Conference.

EU Justice Commissioner Didier Reynders visits Warsaw amid the escalating judicial row between Poland and the bloc.

Economic Data/Events

Norway GDP

Japan CPI

Canada retail sales

France unemployment

UK GfK consumer confidence, retail sales, public sector net borrowing

New Zealand credit-card spending

Thailand foreign reserves, forward contracts

China FX net settlement

Sovereign Rating Updates:

Switzerland (Fitch)

South Africa (S&P)

Greece (Moody’s)

South Africa (Moody’s)

Denmark (DBRS)









Author: Craig Erlam

Economics

MicroVision Is Only a Speculative Play After Another Torrid Quarter

Autonomous-driving tech company MicroVision (NASDAQ:MVIS) had been a darling of the Reddit trading crowd. However, the enthusiasm surrounding the stock…

Autonomous-driving tech company MicroVision (NASDAQ:MVIS) had been a darling of the Reddit trading crowd. However, the enthusiasm surrounding the stock was short-lived as MVIS stock has shed more than 45% of its value since May this year.

MVIS stock: Concept image of a self-driving car lidar system.Source: temp-64GTX/Shutterstock.com

Most recently, the stock took a massive hit from posting disappointing earnings around the end of October. Moreover, significant revenue is still years away, and with the rising competition in the sector, MVIS stock is more of a speculative play.

MicroVision has been in the game for a significant time, and the journey hasn’t been easy. It has incurred colossal losses due to the insufficient demand for its core products. However, the consensus is that the development of automotive LiDAR sensors can effectively turn things around for the company. At this stage, though, MicroVision is a long way from achieving its objectives and achieving profitability.

Another Tough Quarter

MicroVision recently reported a whopping net loss of $9.4 million, with a negative operating cash flow of $10 million at the end of the third quarter. Moreover, it reported revenues of $718,000, a 12% improvement from the prior-year period.

The company continues to burn through a massive amount of cash without a source of incoming revenues. Investors are hopeful that it becomes the leading LiDAR systems provider for autonomous vehicles, but things look dreary with no firm deals in place and plenty of competition.

It appears that the path for significant revenue gains and profits is incredibly murky. CEO Sumit Sharma indicated that the company wouldn’t generate substantial sales for at least the next four years. Surprisingly, during the quarter, he remarked that requesting additional information about the company was a major win.

Nevertheless, despite the weak operating performance, the management is ecstatic about the future. Mr. Sharma states that, “No lidar company has yet secured an OEM deal that is recorded on its financial statements as meaningful backlog. I believe MicroVision is ahead of all our
competitors in several key areas.” Furthermore, he also believes that the next 16 months will be critical, as several original equipment manufacturers (OEMs) may partner with the company is launching their new EV models.

Outlook

Analysts estimate that the MicroVision could generate over $70 million by 2030. Much of its sales growth will be led by automotive LiDAR sales. The cost of sales will be linked to the sale of the company’s long-range LiDAR (LRL) sensors. Moreover, as production starts to ramp up next year after validation testing, gross margins may turn positive.

Moreover, as the company achieves scale, its gross margins will stabilize over 50% by 2026.  However, operational expenses are likely to outpace revenues through 2027 to support production ramp-up. Additionally, the company will be generating profits after 2029.

Hence, it’s a long wait before MicroVision will be in the green regarding profitability. Its competition, including Luminar Technologies (NASDAQ:LAZR) and Velodyne Lidar (NASDAQ:VLDR), are also in their early stages of production — but could pose a serious threat down the road. Therefore, there are a lot of ifs and buts at this stage which limits MVIS stock’s attractiveness.

Bottomline On MVIS Stock

MicroVision hopes to establish a strong presence in the promising automotive LiDAR market. Though, as its recent results suggest, it is still years away from achieving its goals. Those who believe in its long-term case should wait for a better entry point, as its currently trading at a price-to-sales ratio of over 470 times. However, at this point, it’s more of a speculative play that is ideal for short-term gains.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.  

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The post MicroVision Is Only a Speculative Play After Another Torrid Quarter appeared first on InvestorPlace.

Author: Muslim Farooque

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Economics

Euro rebounds as inflation climbs

The euro has rebounded in the Tuesday session. In North American trade, EUR/USD is trading at 1.1365, up 065% on the day. Eurozone inflation hits record…

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The euro has rebounded in the Tuesday session. In North American trade, EUR/USD is trading at 1.1365, up 065% on the day.

Eurozone inflation hits record high

Eurozone inflation surged to a new high in November. On an annualized basis, inflation is projected to have climbed to 4.9%, up from 4.1% in October and higher than expected. Core CPI showed a similar trend, rising from 2.0% in October to 2.3% in November. Energy prices, which jumped 27%, were the key driver of the rise in inflation.

The headline reading is more than double the ECB’s inflation target of 2 per cent, which raises further doubts in the narrative championed by ECB President Christine Lagarde that high inflation is being driven by temporary factors and will ease in the coming months. Some ECB Governing Council members have expressed concern as inflation continues to accelerate, and this should make for an interesting policy meeting on December 16th. The bank will likely upwardly revise its inflation projections at the meeting, and policy makers may signal their plans for the emergency pandemic program (PEPP). Unlike the BoE and the Fed, the ECB appears far away from any rate moves, but may provide some signals at the meeting about scaling back QE.

The Omicron variant of Covid-19 has caused plenty of volatility on global financial markets, and investors are looking to Fed Chair Jerome Powell for some insights. Powell will speak before US senators later in the day, and his prepared testimony stated that Omicron could hurt the US employment market and exacerbate supply chain disruptions. Powell reiterated that he expects inflation to ease sometime in 2022, but admitted that inflation will remain well above the Fed’s target of 2 per cent. With inflation current galloping at a worrying clip of 6 per cent, Powell may find that lawmakers are skeptical about his assurances that inflation is transitory.

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 EUR/USD Technical

  • EUR/USD has support at 1.1229. This is followed by support at 1.1135
  • EUR/USD is putting strong pressure on 1.1373. Above, there is resistance at 1.1423




Author: Kenny Fisher

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Economics

Hot Gold Stocks To Add To Your Watchlist In December 2021

Trading gold stocks next month? Check these three out Recently, gold stocks…
The post Hot Gold Stocks To Add To Your Watchlist In December 2021 appeared…

Trading gold stocks next month? Check these three out

Recently, gold stocks have been some of the most fascinating assets to keep an eye on in the market. Fears of inflation and an increase in pandemic infections as a result of new virus variants have caused a lot of volatility in gold. The new Omicron variant of the virus has created a new level of volatility as not many know about its attributes yet. Because of the unique position that gold plays in the economy, no matter what sort of trader you are, there are always several possibilities to earn in the gold market.

Gold, being one of the oldest forms of currency, has cemented its position in the financial world. As a result, the gold market attracts a wide range of investors. There are several methods to invest in gold, including actual gold, options, futures, and stocks. Today, though, we will just look at gold stocks.

In the past, you’ve seen how news may affect the price of gold stocks. This was especially true in 2020, a year with more news than ever before. Mining resources increased to unprecedented levels as a result of the epidemic. For example, the price of gold surpassed $2,000, setting a new high for the precious metal. Keeping up with global news, corporate news, and industry news may all be beneficial when investing in gold stocks.

Top Gold Stocks To Watch

Harmony Gold Mining Company Limited (NYSE: HMY)

On November 29th, Harmony Gold Mining Company Limited had a 4.66 percent boost in its stock price. In South Africa and Papua New Guinea, this company looks for, extracts, and processes gold. The company also looks for silver, copper, and uranium in addition to gold. In South Africa, Harmony operates nine subsurface operations and many surface treatment activities.

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The company’s earnings and revenues increased year over year in fiscal year 2021. This occurred as a result of rising metal costs and the company’s rapid growth. Given that Harmony hasn’t issued any updates in quite some time, it’ll be interesting to see what they have in store for their shareholders before the year is through.

HMY’s stock price moves up and down in tandem with the price of gold. As a result, when gold prices rise sharply, HMY stock often follows suit. When gold, on the other hand, falls sharply, the HMY stock normally falls with it. Harmony is, of course, influenced by its own performance. Higher volumes are common when the firm provides quarterly results and mine updates. Noting this info, will HMY be on your list of gold stocks to watch in December?

Royal Gold Inc. (NASDAQ: RGLD)

Royal Gold Inc. is a gold stock based on royalties and metal streams that it purchases and administers. This is done for stream or royalty interests by the corporation. Gold, silver, copper, zinc, nickel, lead, and cobalt are Royal Gold’s target minerals. Currently, the corporation operates 189 sites across five continents. Royal Gold manages 41 mines and 17 projects in various stages of development.

On November 16th, the company announced its 21st consecutive annual increase in its common stock dividend to $1.40 per share for 2022. This was in total a 17% increase over 2021’s dividend. 2021’s dividend price was at $1.20 per share. The first quarterly dividend at this increased rate is payable on January 21st, 2022, to shareholders on record as of January 7th, 2020 at the close.

The CEO and President of the company, Bill Heissenbuttel said, “Paying a growing and sustainable dividend is a core strategic objective for Royal Gold. Recent record revenue from strong portfolio performance combined with further revenue growth from our newest producing assets give us confidence in the outlook for our business.” The company has paid $680 million in dividends since 2000. Noting this new update, will RGLD make your gold stock watchlist?

Hecla Mining Company (NYSE: HL)

Hecla Mining Corp. buys, finds, develops, and manufactures precious and base metal assets. It sells raw gold and silver bullion bars, as well as lead, zinc, and bulk concentrates. The corporation holds a 100 percent stake in the Greens Creek, Lucky Friday, Casa Berardi, and San Sebastian mines. It also has a stake in a number of other assets throughout North America.

On November 4th, released its third-quarter 2021 results. Hecla reported $193.6 million in revenue this quarter, which was the same as the previous quarter. It also earned $42.7 million in cash from operating activities and $26.9 million in asset additions. Hecla announced a quarterly exploration spend of $13.7 million, a record.

President and CEO of Hecla, Phillips S. Baker Jr. said, “This operational performance allowed us to enhance our silver-linked dividend for the second time this year and return about 20% of our free cash flow to shareholders while having our largest exploration program in the company’s history.” HL stock is up 0.36% on November 29th. Noting this info, will HL stock be on your watchlist as we move into December?

Best Gold Stocks For Your Watchlist?

Choosing which mining stocks and gold assets to invest in might be difficult. Developing an investing strategy is an effective way to mitigate some of the risks. When investing, keeping up with the latest news, whether it’s company-specific, global, or sector-specific, is quite useful. Examining charts, volume, and other statistics might be useful as well. So, which gold mining stocks will you be watching before the end of 2021?

The post Hot Gold Stocks To Add To Your Watchlist In December 2021 appeared first on Gold Stocks to Buy, Picks, News and Information | GoldStocks.com.








Author: Jon Phillip

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