good morning. I would appreciate it if you could take a rest. If you are following Asian stock trading or US stock index futures trading, you saw this coming on Sunday evening. If not, probably sit down. That tank on Sunday will probably pay a little more than you have until this morning.
Monday. Markets are currently at higher oil prices, higher natural gas prices, increased potential for global stagflation (a period of high inflation with little economic growth), and globally … for financial budget defense costs. It needs to be reworked with emphasis.
The realization that Europe has once again become the forefront of the global (and hopefully) “Cold War” has become a reality. Oh, the misfortune of Russia to Ukraine is a very hot war. There is no doubt in it. (For now?) One dangerous giant deliberately left its citizens in the dark by the government, deliberately leaving fragments from the chessboard to the masses supported by the regional and world powers. A hot war fighting? Cod War?
What’s the news?
Secretary of State Antony Blinken told the media Sunday morning that he was discussing Russia’s oil ban with President Biden and his US allies. Britain’s Foreign Secretary Liz Truss was investigated by Europe and other partners without giving details while asking British authorities to investigate the “upper limit” on Russia’s imports of energy goods.
Then, late Sunday, according to Bloomberg News, Speaker of the House Pelosi, in a letter to U.S. lawmakers, was a strong ban on Russia’s oil and energy product imports, among other measures to (further) isolate Russia. I wrote that I am considering a law. From the world economy.
Almost at the same time, in response to a personal request made by French President Emmanuel Macron on the phone to Russian President Vladimir Putin … Russia declared a temporary suspension starting at 10 am Moscow time on Monday. Created an escape corridor for Ukrainian civilians living in the city The problem with this is that all the corridors created by the Russian army lead to Russia, Belarus, or part of Ukraine under Russian control. That is. It seems very unlikely that so many Ukrainians will flee in the next direction. And seek the support or protection of those responsible for the bombing and destruction of their neighborhood and the killing of their families.
Brent crude was trading as high as $ 139 a barrel in early Asian trading before moderation. Brent futures traded at $ 124 and WTI futures traded at $ 122 last month. Interestingly, WTI futures, which expire each month for the rest of 2022, are currently trading at a lower price (backward) than the previous month, with a barrel of WTI crude priced at 100 for November delivery. It is below the dollar. Natural gas futures are trading at high prices, but in the United States after a surge in Europe, this commodity is less important as it cannot easily move between continents without going through a liquefaction process. In Europe, wholesale natural gas futures surged on Monday morning, rising from E193 by Friday to a record high of E239 per megawatt hour, up from E16 a year ago.
Exacerbate the problem …
On Monday, after Beijing set its 2022 economic growth (GDP) target at 5.5%, China’s Foreign Minister Wang Yi called it Russia Beijing’s most important strategic partner. Prime Minister Lee told reporters that Beijing “maintains a strategic focus and promotes the development of a comprehensive China-Russia partnership in the new era.” United States for current conflict.
The scary thing here is not that China wants to buy discounted energy commodities, but more for China and Russia to win markets and other markets while the rest of the globe is on the highway. It means that you may be planning a step (opinion) Markets within the impact range away from using the US dollar (or euro or pound) as a reserve currency for cross-border commerce.
An even more frightening idea is that China (still an opinion) may have some misfortune in their hearts, at least the lack of mutual criticism between the United Nations and Russia on the world stage if something happens. You may want to expect that idea.
Where is the market?
The S & P 500 fell 1.27% last week, down 9.18% year-to-date, down 10.2% from a record high. The S & P500 is 14.6% (2/24/22) below the record high (1/04/22).
The Nasdaq Composite gave up 2.78% last week, down 14.9% year-to-date, below record highs (11 /) by 22.4% (2/24/22) and then below record highs by 17.9%. 22/21).
Russell 2000 surrendered 1.96% last week, down 10.89% year-to-date, 18.6% below record highs and finished the five days. R2K is 22.9% (2/24/22) below all of them. The best time (11/08/21).
Stock index futures on all three indexes are trading more than 1.5% lower than those that came out on Friday night. Yes, it takes hours from writing these morning notes to the opening bell ringing on 11 Wall Street. But without a positive catalyst, it’s not surprising to see both the Nasdaq Composite and Russell 2000 re-entering the “bare market” territory earlier this week, or the S & P 500 re-entering the “correction” territory.
Of course, the definition of both textbooks, both modifications and those that make up the bare market, becomes obsolete in the fast era of algorithmic electronic order execution. Half of the goal (again, opinion) is to cause a market overshoot, but the point market is skating on thin ice and the temperature is rising. It’s probably a better idea to trade than to invest, as it’s been trading since November.
Monday: Coles (KSS) is hosting Investor Day and Pfizer (PFE) is attending Cowen’s 42nd Annual Medical Conference.
Tuesday: Microsoft (MSFT) participates in the Morgan Stanley Technology, Media & Telecom Conference. Apple (AAPL) is hosting its first product event in 2022.
Wednesday: The US Treasury will auction $ 34 billion worth of 10-year bonds.
Thursday: BLS will release CPI data for February. General Electric (GE) will host Investor Day. Airbnb (ABNB) will attend the Morgan Stanley Technology Media Telecom Conference. The US Treasury will auction $ 20 billion worth of 30-year bonds.
Friday: AT & T (T) will webcast analysts and investors prior to the planned WarnerMedia spin-off.
About corporate performance
The fourth quarter report season is almost complete. Major banks will not start reporting first quarter results for about five weeks. However, consider the origin of the land, as investors and traders have paused and the reality of geopolitics and human suffering is now central.
In the fourth quarter, the S & P 500 constituents recorded a profit growth rate of 31.4% with a profit growth rate of 16.1%. These results easily surpassed the analyst’s consensus view as the quarter ended (December 31st) with a 12.8 earnings growth rate of 21.3%. %. The total profit margin of the S & P 500 printed for the quarter was 12.5%, which is 11% higher than expected. For the full year 2021, S & P 500 revenue increased by 47.7% with a revenue growth rate of 16.5%.
Despite the good quarters and years, the ratings have risen dramatically and are no longer “outline” in reality. The S & P 500 entered the weekend trading with 19x expected earnings. The S & P 500 has a 5-year average of 18.6 trades and a 10-year average of 16.8 trades.
Only the materials sector is currently trading below both of these averages for that sector. The sector is currently trading at 15.3x future-proof earnings, compared to a 5-year average of 17.7x and a 10-year average of 16.1x. The group still has room for execution. The energy sector trades at 12.9 times its forward-looking earnings, well below the 10-year average of 15.8 times, but well above the 5-year average of just 7 times. After all this bloodshed, Tech is trading at 23.6x, but the 5-year average is 21.4x and the 10-year average is 17.9x.
Looking to the future, drawing my information from the good people at FactSet, the analyst community said that this quarter’s S & P 500 revenue growth was only 4.8% compared to 10.4% revenue growth. I’m watching it. Consumer staples, telecommunications services, consumer discretion, and the financial sector are all struggling to shrink revenue year after year while Energy is experiencing revenue growth of over 200%.
Helmet, flak jacket, two water sources, gas mask on the waist. Please wait. I’m going out this morning.
At this point…
… miners, drillers, and defense industry contractors still seem to be whereabouts from a fairness standpoint. Everything else is trade.
economic (All Times Eastern)
15: 00-Consumer Credit (January): The last $ 18.9 billion.
Federal Reserve Board (All Times Eastern)
Federal Reserve Blackout Period.
Today’s earnings highlights (Expectations for consensus EPS)
Before opening: (CIEN) (.45)
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