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For Immediate Release
Chicago, IL – November 30, 2021 – 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: The Home Depot, Inc. HD, JD.com, Inc. JD and EssilorLuxottica Société anonyme ESLOY.
Here are highlights from Monday’s Analyst Blog:
Will Bond Tapering Speed Up? Hold? Global Week Ahead
Entering the Global Week Ahead, fresh COVID fears — fueled by a new South African variant — have ripped through risk markets.
Stock (and oil) traders now head towards the year-end.
Macro data out in the Global Week Ahead could provide the spark: one that re-ignites risk-free U.S. Treasury bond market rates, heedless of this fresh COVID variant worry.
Something like a combination of:
- Above-forecast European consumer price inflation. This is out on Tuesday.
- A blowout U.S. nonfarm jobs print for November. This is out on Friday.
What if both macro prints hit a strong note?
That may offer fodder. To those arguing that major U.S. banks and the European Central Bank (ECB) need to hurry up and unwind their extraordinary bond-buying stimulus.
Next are Reuters’ five world market themes, reordered for equity traders.
(1) Renewed COVID Fears to Bring Back Monetary Policy Doves?
COVID-19 fears and inflation data are looming large over policy makers, who have to decide the fate of two ECB bond-buying schemes in just three weeks.
Tuesday brings November flash Eurozone inflation. October's print was 4.1% and many see it staying above the ECB's 2% target next year. German, Spanish and French CPI data are out Monday and Tuesday.
As inflation surges, ECB hawks warn against keeping monetary policy too loose for too long. A new German government, meanwhile, could raise the minimum wage by around 25%.
Their message has resonated with edgy markets. But resurgent COVID strengthens the ECB doves as Europe battles a fresh surge, and news of a new virus variant spreading from South Africa triggers alarm.
Renewed economic uncertainty means investors are again scaling back rate-hike bets for the U.S., euro area and Britain. The doves, it appears, have fresh ammunition to push back against those clamoring for an early end to stimulus.
(2) U.S. Nonfarm Payrolls for November Out Friday
With the Federal Reserve's taper underway, a strong November employment report could bolster the case for those arguing its $120 billion-a-month bond-buying should be unwound faster.
While the Fed projects the unwinding to be complete in mid-2022, robust economic growth and inflation running at more than twice the 2% flexible average goal have sparked bets on a faster unwind and earlier rate rises.
Payroll expectations were boosted by weekly data showing jobless benefits claims at the lowest since 1969. Employers are forecast to have added 563,000 jobs, and any figure more than that could revive recent bond market ructions and mean another leg higher for the dollar.
(3) OPEC+ Meets Wednesday, Thursday
The OPEC+ oil producers' group has stuck to monthly output increases of 400,000 barrels per day (bpd) since August, defying consumer nation’s pleas for more oil to cool $80-plus prices. Its Dec. 1-2 meeting will come just after the U.S. decision to release 50 million barrels of oil from strategic reserves.
The prospect of extra oil hasn’t faxed oil markets; Goldman Sachs called it a "a drop in the ocean.” Yet an OPEC+ source said the oil release by the United States and several other countries, while smaller than anticipated, would complicate its calculations.
OPEC+ production cuts will amount to 3.8 million bpd by end-December, about 4% of global consumption. Sources say there are no discussions yet about responding to the U.S. move by pausing output increases. But the group has warned the move could cause an oil glut next year.
(4) Will There Be Signs of Fresh China Credit Growth?
New mortgage growth is underpinning hopes the trough might be in for Chinese credit, and that the economic drag from a feared real estate calamity is starting to fade.
There are signs of a drift toward policy easing. While benchmark rates have not changed, banks are being prodded to lend to developers, authorities are seeking to cut funding costs for small business and have moved to buttress yuan stability.
Tuesday's Purchasing Managers' Indexes could show if the tide is indeed turning. But keep an eye on Chinese port city Dalian, where COVID is on the rise.
(5) Turkish Lira Spiraling Out of Control?
Turkey just served up (another) reminder that prudent monetary policy does matter — all the more so in emerging markets during times of high inflation.
President Tayyip Erdogan has doubled down on his view that double-digit inflation can be tamed by cutting interest rates. The lira has responded with a 15% plunge on Tuesday that's left it in uncharted waters.
The currency has partly recovered, but the central bank may deliver another rate cut at its Dec. 16 meeting.
Monetary policy worries are stirring in Mexico, too. The peso has taken a hit after the president unexpectedly ditched his nominee for central bank governor, instead nominating a deputy finance minister.
A strengthening dollar, rising inflation and a Fed in taper mode leaves emerging market central banks precious little room for error.
(1 euro = 14.0991 liras)
Top Zacks #1 Rank (STRONG BUY) Stocks
Look at the Zacks metrics tied to a top retailer in the USA, in China and in Europe.
(1) Home Depot : This is a $404 a share stock, making for a market cap of $430B. I see a Zacks Value score of F, a Zacks Growth score of D and a Zacks Momentum score of B.
(2) JD.com : This is a $87 a share stock, making for a market cap of $119.7B. I see a Zacks Value score of D, a Zacks Growth score of C and a Zacks Momentum score of A.
(3) EssilorLuxottica : This is a $101 a share stock, making for a market cap of $93.4B. I see a Zacks Value score of D, a Zacks Growth score of D and a Zacks Momentum score of D.
None of the metrics look very good, do they? Just saying.
Both Zacks Value and Growth scores are weak, across the board.
Zacks Investment Research
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