Week Ahead: Overbought Stocks Likely To Move Higher; USD Could Break Out

Stocks may be showing no sign of slowing down: the , and all finished the trading week at record highs. Nevertheless, an array of red flags should keep investors in check.

, perhaps the ultimate safe haven, moved higher on Friday, even though equities and the U.S. also advanced. As concerning, a well respected sentiment tracker measuring levels of investor euphoria reached an extreme position.

Diminishing Trade Tensions, Central Bank Stimulus Boost Equities

also ended the week with another record, their fourth straight, no doubt fueled in part by positive data from the world’s two largest economies. Additionally, against a backdrop of central bank stimulus and a Fed that’s committed to seem to have left investors with little choice but to keep bidding equities higher.

The S&P 500 and NASDAQ Composite each notched their eighth straight record. For the 30-component Dow, it was the fourth consecutive all-time high.

NDX Weekly

The climbed for its sixth straight week, crossing over the 9,000 level for the first time in its history.

BA Weekly

Conversely, Boeing (NYSE:), the U.S.’s beleaguered aeronautics giant, closed well off its highs, with shares plunging to their lowest since Aug. 14, after Fitch downgraded the stock to A- from A. The move was due to a report of the discovery of new software flaws, further extending the grounding of the company’s 737 MAX.

Technically, the stock inched toward .

VIX Weekly 2017-2020

The volatility index is hovering just above the April low, right before the S&P 500 fell 7%. An inch below that, the VIX’s September low preceded the S&P falling as much as 20%.

The retreated from its highest level since Sept. 20, 2018 to just 1.5% from its Aug. 30 record. The small cap index slipped

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American Express, IBM, Intel, Johnson & Johnson and More Dow Stocks Reporting This Week

Seven of the 30 Dow Jones industrial average components are scheduled to report their latest quarterly reports this week. The Dow keeps hitting all-time highs, and earnings season has only just started, so it’s yet to be seen if the Dow can keep hitting those highs. In the past week, the Dow passed the 29,000 mark, and at this rate 30,000 could be just around the corner.

24/7 Wall St. has put together a preview of those Dow companies scheduled to report their quarterly results this week. We have included the consensus earnings estimates, as well as the stock price and trading history.

For more of what’s expected from this week’s quarterly results, check out our separate preview of other major companies, like Netflix and Starbucks, that are reporting this week as well.

Also note that this week is truncated, with markets closed on Monday for Martin Luther King Day.

International Business Machines Corp. (NYSE: IBM) is set to report its most recent quarterly results after Tuesday’s close. Analysts are looking for $4.69 in earnings per share (EPS) and $21.63 billion in revenue. Shares rose above $138 on Friday, with a consensus price target of $147.68 and a 52-week trading range of $121.54 to $152.95.

Johnson & Johnson’s (NYSE: JNJ) fourth-quarter report is due on Wednesday morning. The consensus estimates call for $1.87 in EPS and $20.78 billion in revenue. Shares traded rose above $149 on Friday. The 52-week range trading range now is $125.00 to $149.41, and the consensus price target is $156.63.

Dow Inc. (NYSE: DOW) will share its latest quarterly earnings early on Thursday. The consensus estimates call for $0.74 in EPS and $10.15 billion in revenue. Shares closed above $53 on Friday, in a 52-week range of $40.44 to $60.52. The consensus analyst target is

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American Airlines, Netflix, Starbucks and More Major Earnings This Week

The fourth-quarter earnings reporting season is ramping up, with many major companies sharing their results in the coming days. This will be a big earnings season as the S&P 500, Nasdaq, and Dow Jones industrial average are near all-time highs. The question is whether earnings can push the markets higher from here.

24/7 Wall St. has put together a preview of the most prominent earnings reports in this truncated trading week. Note the markets are closed Monday in observance of Martin Luther King Day. We have included the consensus earnings estimates, as well as the stock price and trading history. Be advised that the earnings and revenue estimates may change ahead of the formal reports, and some companies may change reporting dates as well.

Also look out for the seven major Dow Jones industrials reporting this week.

Haliburton Co.’s (NYSE: HAL) fourth-quarter report is due early on Tuesday. The consensus estimates call for $0.29 in earnings per share (EPS) and $5.11 billion in revenue. Shares ended the week just below $24. The consensus price target is $27.30, and the 52-week range trading range is $16.97 to $32.71.

Fourth-quarter results for Netflix Inc. (NASDAQ: NFLX) are expected late on Tuesday. The consensus estimates are earnings of $0.52 per share on revenue of $5.45 billion. Shares traded near $340 in recent days, while the consensus price target is $363.18. The 52-week range trading range is $252.28 to $385.99.

United Airlines Holdings Inc. (NASDAQ: UAL) also is scheduled to report its fourth-quarter earnings Tuesday afternoon. The consensus estimates call for $2.65 in EPS and revenue of $10.88 billion. Shares were changing hands below $90 on last look. The $110.94 mean price target is well above the 52-week trading range of $77.02 to $96.03.

BioMarin Pharmaceutical Inc. (NASDAQ: BMRN) is scheduled to report

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The S&P 500 Can Climb Higher, Potentially Reaching 3,540 In 2020

With earnings season quickly approaching, it is perhaps a good time to look at the from a valuation perspective over the longer-term. Recently we have been focusing on the market’s steady advance and ever-mounting sign that the market is getting a bit overheated at current levels. However, over the longer-term, the outlook continues to suggest that the market can rise to even higher levels.

First off earnings growth is expected to see a significant bump in 2020, rising by around 11% to about to $175.30 per share based on estimates from S&P Jones. Then in 2021, it is forecast to grow by roughly 9% more to $191.22 per share.

EPS Estimate Change

Present Values

It leaves the index trading at roughly 19 times 2020 earnings and around 17.5 times 2021 earnings estimates. Which mostly leaves the index trading at fairly valued levels based on the historical average.(S&P Dow Jones)

Operating PE Ratio Of S&P 500

Low Rates

But again, one could easily argue that in a world where the dividend yield of the is basically on par with that of the Treasury, investors would likely be in a mood to take on some additional risk to generate higher returns.

US 10 Yr Treasury Yield – SPDR SP 500 Dividend Yield

The Range

I think it is fair to say in this low-interest-rate environment; the S&P 500 could see its earnings multiple move up to something closer to that of 18 or even 18.5 times one-year forward earnings. At 18 times 2021 earnings estimates, one could get a valuation of 3,441, and at 18.5, it comes to roughly 3,537. It could amount to a gain of as much as 6% from its current levels of 3,329.

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Midcap and Small caps to lead upsurge

Markets began the last week with big gains on Monday and then traded in a narrow range, gaining on four of the five trading sessions.

The BSESENSEX gained 345.65 points or 0.83 per cent to close at 41,945.37 points while NIFTY gained 95.55 points or 0.78 per cent to close at 12,352.35 points. The broader market saw BSE100, BSE200 and BSE500 gain 0.98 per cent, 1.22 per cent and 1.44 per cent respectively. The breadth of the market rose very sharply with BSEMIDCAP gaining 3.63 per cent and BSESMALLCAP gaining 3.97 per cent. This kind of gain in Midcap and Smallcap indices has happened after a very long time.

The Indian Rupee was volatile and lost 14 paisa or 0.20 per cent to close at Rs 71.08 to the dollar. Dow Jones hit yet another lifetime high and gained 524.33 points or 1.82 per cent to close at 29,348.10 points.

Result season is off to a good start with first Infosys declaring a decent set of numbers and now Reliance Industries and HDFC Bank. While the bank has reported a growth of 12.7 per cent in net interest income, it reported a jump of 15.6 per cent in profit before tax and 32.8 per cent in net profit at Rs 7,416 crore. The only point of concern was Gross NPA’s which rose by 4 basis points to 1.42 per cent and 23.2 per cent to Rs 13,427 crore as an absolute number.

Market is expecting changes in DDT or Dividend Distribution Tax with the same likely to be shifted to the recipient instead of the giver. Further there are expectations that there would be changes in individual taxes with the rates and slabs changing. Also, some of the deductions available to individuals may be removed or substantially altered.

The gold

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Visa says reaches 100pc renewable electricity goal

Visa today announced the company has met its goal to use 100 percent renewable electricity by 2020, furthering the company’s commitment to lead responsibly and sustainably across the company’s global operations, including 131 offices in 76 countries and four global processing centres. 

Since setting the 100 percent renewable goal in 2018, Visa achieved quick action across its global facilities portfolio by advancing to a sustainable mix of renewable energy sources such as solar and wind. 

“At Visa, we see both a responsibility and an opportunity to make broad shifts toward a sustainable and inclusive future,” said Al Kelly, chief executive officer of Visa. “I’m proud of the investments we’ve made in our infrastructure to reach this important renewable energy milestone. We will continue to prioritize advancing the role of our business and industry in transitioning to a cleaner global economy.” 

Working with local utilities and competitive electricity market providers, Visa leveraged renewable electricity options available in each market that best fit the country’s approach to renewable electricity. Visa made local renewable electricity investments in markets where the company has major facilities, including four locations in the US and the UK that account for 80 percent of its global electricity use. Specific actions by Visa included enrollments in renewable electricity programs offered by Total Energy in the UK, Xcel Energy in Colorado, Austin Energy in Texas and Peninsula Clean Energy in the San Francisco Bay Area. 

With a commitment to support the broader renewable electricity transition, Visa also joined and followed the guidelines of RE100, a global collaborative of influential businesses committed to 100 percent renewable power led by The Climate Group in partnership with CDP; became a member of the Renewable Energy Buyers Alliance (REBA); and signed the Renewable Energy Buyers’ Principles.

By purchasing 100 percent renewable electricity, Visa mitigates

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U.S. shares rise

U.S. shares rise

Jan 19, 2020 (MENAFN via COMTEX) —

(MENAFN)

U.S. shares increase in the week after the U.S. and China have singed phase one of their trade deal, the publishing of corporate earnings and economic data.

The Dow added 1.82 percent, the S&P 500 increased 1.97 percent and the Nadaq rose 2.29 percent in the week ending on the 17th of January.

Market data published by the Dow Jones showed that all of the three benchmark indexes have increase the most since the 30th of August in the earlier year in the week.

China and the United States have signed their phase one of economic and trade deal in Washington on Wednesday which resulted in the stock market increasing, the Dow has ended over 29,000 for the first time on Wednesday.

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Extreme valuation cases wanted for a red-hot rally in equities

By Sarah Ponczek

Stack up US equities next to almost anything that is used to measure value right now, and the picture can elicit anxiety. Up 13 of the past 15 weeks, the S&P 500 is trading at historically high levels versus earnings, expected profits and sales.

Does that mean there’s no way to justify putting more money into a market where the Dow Jones Industrial Average has surged almost 4,000 points since August? No. Or at least, not theoretically.

Persistently low interest rates remain an inducement for many analysts and investors. While prices are stretched by historical standards, they say, it’s a mistake to use valuation as a signal for jumping in and out of the market.

“The potential is very high that we run with higher P/Es for longer than people think,” said Jim Tierney, AllianceBernstein’s chief investment officer of US concentrated growth. “Those that are going into this year saying, ‘Well we’re at 18.5 times earnings, P/Es have to come down,’ I think they’re going to be wrong in that assessment.”

In May, Warren Buffett said shares looked “ridiculously cheap” when viewed alongside very low borrowing costs and inflation, interpreted by many as a warning that interest rates would rise. What the Berkshire Hathaway chief executive ended up getting right was stocks, which rallied. Nine months and 15 per cent later on the S&P 500, do the same conditions make it safe to jump into equities now?

Investors can be forgiven for approaching the question nervously. More pundits are equating the latest leg of the bull run to the one that occurred in the late 1990s, which ended with the eruption of the dot-com bubble. At the same time, the hazards of market timing are well known. Cash out now, or go all in? Always the big question.

According to AllianceBernstein’s Tierney, whose fund

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4 Central Bank Meetings Featured In The Upcoming Week

The U.S. dominated the news stream at the start of 2020. The spasm in the U.S.-Iran confrontation has quickly subsided. The much-heralded U.S.-China Phase 1 trade deal has been signed. The U.S. has completed the ratification process of the U.S. Mexico Canada Free-Trade Agreement. The early signs from the economic entrails suggest the world’s largest economy continues to enjoy a record-long, even if not robust, expansion.

The focus shifts elsewhere in the week ahead, for which the U.S. sees a relatively light calendar of economic reports in a holiday-shortened week. Then again, the recent , , , and data offer valuable insight. The course is set, and the Fed seems inclined to look beyond the near-term economic fluctuations, ensuring that the meeting at the end of the month is as close to a non-event as an FOMC meeting and a Powell press conference can be.

There are four central bank meetings to note, and none are likely to do anything, so the words are more important than the actions. The begins with Governor Kuroda holding at the conclusion of the two-day meeting on January 21. Under the yield-curve control initiative, it puts the deposit minus 10 bp and targets the yield at zero =/+ 20 bp. Global tensions have eased, and the has weakened to the lower end of where it has been in the past six months. Prime Minister Abe’s fiscal support (~$122 bln) and preparation for the Olympics may also help the BOJ’s efforts to support the economy.

The BOJ will provide updated forecasts. In October, it anticipated growth of 0.7% in FY20 and 1.0% in FY21. Core inflation, which excludes the price of fresh food, was forecast to rise by 1.1% in FY20 and 1.5% in FY21. The forecast seems optimistic. The Bloomberg economists survey found median

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Amazon to use “hand wave” payments – Report

Amazon.com Inc. is planning to create terminals which would allow customers to make payments in-store with a wave of the hand, Dow Jones reports citing people familiar with the matter.

The company plans to pitch the terminals to coffee shops, fast-food restaurants and other merchants and has recently began working with Visa Inc., according to the report.

Amazon is also in discussions with Mastercard Inc., and several card issuers have expressed interest in the project, including JPMorgan Chase & Co., Wells Fargo & Co.

Payments would be made by linking clients’ credit card information to their hands, allowing them to use their palms, not their phones or cards, at the checkout.

Amazon declined to comment to Dow Jones.

Now read: SpaceX to face one last test

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