Yahoo Finance The Zacks Analyst Blog Highlights: Statoil, Micron and DXC Technology
For Immediate Release
Chicago, IL – January 09, 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 Statoil ASA STO, Micron MU and DXC Technology DXC.
Here are highlights from Monday’s Analyst Blog:
The Best Party in a Decade: Global Week Ahead
For this Global Week Ahead, let’s look into Reuter’s Five World themes…
(1) World Stock Markets Party On
World stocks started the year with their best week in over a year.
While it’s tempting to say “same old, same old” as markets smash another host of milestones and records, you still have to take a step back and assess what’s happening.
There are some who will dismiss this as another bout of mindless bubble blowing and insist it will all end in tears. Perhaps it will. But the more sober assessment is that we are going through the first boom in the world economy in over a decade.
Global industrial output raced higher at more than a +5% annualized rate last month and more than +4% for the fourth quarter as a whole.
The G10 economic surprise index – which nets positive over negative hits and misses on incoming data – continues to hover close to its most positive readings in almost 8 years.
(2) The U.S. Q4 Earnings Season Begins
The Q4 earnings season comes back onto the radar, with the big U.S. financials kicking off at the end of the week.
On Friday, JPMorgan Chase and rival Wells Fargo launch the earnings season with reports before the opening bell. Even despite the record low financial market volatility that’s crimping trading revenues, deal making has been super brisk over recent months and overall fee income from banks around the world rose some 16% last year to a record level of more than $100 billion, according to Thomson Reuters data.
The numbers should be good. Blended year-on-year Q4 earnings growth for the S&P 500 overall is expected to be +11.9%, according to Thomson Reuters I/B/E/S estimates, up from +8.5% in Q3. Excluding the energy sector, which benefits from weak year-earlier comparisons, it is seen at +9.5%.
Data -- which runs since 1994 -- shows that in a typical quarter 64% of companies beat estimates and 21% miss estimates. Over the past four quarters, however, 72% have beaten the Street estimates and only 19% have missed them.
(3) North and South Korea Meet
On Tuesday, officials from North and South Korea will meet for their first official talks in more than two years.
Agreeing to the meeting represents a turnaround by Kim Jong-Un’s regime, which has focused in the past 12 months on developing its nuclear arsenal amid bellicose exchanges with U.S. President Donald Trump, raising alarm across the world.
The meeting is expected to focus on the North potentially sending athletes to the Winter Olympics to be held in the South in February as well as on some other inter-Korean relations, according to Seoul.
Geopolitical analysts will scrutinize every word and gesture, as they try to judge if this really is a re-emerging detente between the two nations, not to mention the reaction from Trump’s twitter account.
(4) Mainland China Fundamentals Hit the Tape
A blizzard of data is expected to show China’s economy ended a strong 2017 on a slightly softer note.
However, activity has remained more resilient than expected despite a crackdown on industrial pollution, overzealous lending and a cooling property market.
The week kicks off with forex reserves data and a bunch of inflation numbers, before the focus will switch to trade figures out on Friday. Exports are expected to have jumped more than 9 percent in December after soaring unexpectedly 12.3 percent in November thanks to sustained strength in global demand.
A slight pullback in December industrial growth, producer inflation and investment would all reinforce consensus views that the world’s second-largest economy will slow only marginally in 2018. A more marked loss of momentum may put fears of a sharper slowdown back on the table, unsettle the Yuan and possibly stall the government’s push to reduce rising debt.
(5) Europe’s Clearing Blue Skies
It may be the depths of winter with storms tearing across the euro zone, but the political and economic skies are almost cloudless all of a sudden.
This week, Angela Merkel will try to re-form a “grand coalition,” an effort that could rumble on for a few months.
Campaigning for Italy’s uncertain election in March is also getting underway.
But the rest of the bloc looks buoyant.
Last Friday, perhaps the most eye-catching thing was that crisis poster child Greece’s borrowing costs hit their lowest level in 12 years. Expectations are that the country could conclude its Euro zone/IMF bailout package later this year.
That would cap a slowly strengthening recovery eight years after Greece lurched on the brink of defaulting on its debt and risked being kicked out of the single currency bloc.
Top Zacks Stocks---
Statoil ASA: This is Norway’s $75 billion market cap integrated oil and gas company. With oil prices moving higher, these types of stocks are in a Momentum Trading pattern. The long-term Zacks VGM score is A here, too.
Micron: It’s a New Year. Can memory chip stock like this stay on a roll? Zacks #1 Rank here says YES. Micron’s Zacks long-term VGM score of A, with an A for Value and an A for Growth, also says “party on.”
DXC Technology: The other hot spot in the Info Tech space, after chips, is the Computer – IT Services and Software space. This company is worth taking a look at. This $27 billion market cap stock continues to carry a long-term Zacks VGM score of A.
DXC computer services fall into these buckets: Analytics, Application, Business Process, Cloud, Consulting, Enterprise and Cloud Applications, Security, Workplace and Mobility, and Other Industries.
Let’s move on -- to the most compelling global macro fundamentals to focus on this week.
Key Global Macro--
In many parts of the globe, the biggest macro lands together -- on Friday.
On Friday, the core U.S. consumer inflation rate, the CPI (ex-food and energy) comes out.
After five consecutive months of 1.7% y/y core CPI inflation readings, October showed a glimmer of hope for Fed watchers when it climbed a tick. Then November dipped back to the sixth 1.7% y/y reading.
Regardless, the Fed’s preferred inflation gauge is the PCE price deflator. This arrives on January 29th. That core inflation reading has been trending very gently higher since August.
On Friday, watch out for India’s CPI, too. The Reserve Bank of India is on inflation watch and will therefore have a keen eye on next Friday’s report. The November CPI print climbed to 4.9% y/y and inflation has trended upward since hitting a low of 1.5% y/y in June. The RBI’s inflation target range is 4% +/-2%. So, their CPI remains within the band.
Mainland China will update export and import trade growth figures towards the end of the week (also out on Friday in the USA).
On Monday, the Eurozone Business Climate (at 1.49), Consumer Sentiment (+0.5), Industrial Sentiment (at 8.2) and Economic Confidence (at 114.6) indexes come out. These should show a stronger expansion, overall.
Eurozone retail sales also come out. The annual growth rate has been running at +0.4% y/y. That looks anemic, still.
On Tuesday, the 7-day repo rate (the monetary policy rate) for Argentina gets set. The prior was 28.75%. The new rate should be 28%.
In Australia, the ANZ says job additions are running +1.5% m/m and building approvals are at +0.9% m/m.
The U.S. NFIB small business optimism index should move from 107.5 to 107. Those numbers well above 100 are positive.
Brazil’s retail sales come out. The prior was +7.5% y/y and the forecast is for +5.2% y/y.
Mexico’s bi-weekly CPI is forecast to rise from +6.69% to 6.91% y/y. That is not good, and it is related to a weaker peso exchange rate, making imports more expensive.
The Eurozone unemployment rate comes out. It has been at 8.8%.
On Wednesday, the Polish Central Bank should leave rates at 1.5%.
The U.K.’s industrial production looks to fall to +2.8% y/y from +3.6% y/y.
On Thursday, Germany’s GDP growth (not seasonally adjusted) should be +1.9% y/y.
The Eurozone industrial production growth rate comes out. The prior was +3.7% y/y.
Greece’s unemployment rate comes out. 20.5% is the last reading.
U.S. initial claims should be low again. The last week was 250K.
Mexico’s industrial production comes out. It looks worrisome. The last reading was -1.1% y/y, and the new reading could be -1.2% y/y. NAFTA fear and Trump tax changes weigh heavily.
On Friday, Mainland China’s exports and imports come out. The last figures showed +12.3% y/y growth in exports and +17.7% y/y growth in imports.
India’s CPI should get to +5.1% y/y from +4.88% y/y.
The U.S. CPI comes out and the Fed will be watching closely. The last reading was +0.1% m/m and the new reading should add +0.2% m/m.
The Fed’s Rosengren speaks in San Diego.
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