*Performance since 7/1/2022. For more details on the performance calculation and methodology of Alpha Picks, click here. |
|
|
*Performance since 7/1/2022. For more details on the performance calculation and methodology of Alpha Picks, click here. |
|
|
► Markets were resilient to close out September and the third quarter, registering gains, despite economic and political uncertainties. The S&P 500 and Nasdaq closed Monday, September's last trading day, up 0.4%, and the Dow Jones gained nearly 0.1%. The S&P 500 notched its 42nd all-time high for the year, its best September since 1997, and its best start to an election year ever.
|
|
|
► Iran launched over 200 missiles into Israel, raising concerns of a larger war in the Middle East. Israel's military vows retaliation, and in response, Iran said that any retaliation would invite a "crushing response." Escalating tensions pushed energy markets higher, with crude oil futures surging as much as 5% Thursday, gold continuing to approach record highs, and defense shares rising.
|
|
|
► Hurricane Helene's death toll rose to over 200 since it decimated the Southeastern United States. Disaster relief is underway, and insurance losses are expected to reach $6.4B.
|
|
|
► Key corporate news includes Boeing's persisting worker strike affecting over 33,000 employees. Negotiators reached an agreement with nearly 25,000 ILA dockworkers who also began strikes, demanding higher wages and job protection. It's the first strike of its kind in nearly 50 years and resulted in the closure of major U.S. East and Gulf Coast ports. The disruption to U.S. imports could cost billions, upend the holiday shopping season, and impact supply chains.
|
|
|
► The September Jobs Report crushed expectations, as the unemployment rate fell 4.1% and the labor market added 254,000 nonfarm payrolls, 100,000 more jobs than economists expected.
|
|
|
► U.S. Treasury yields saw notable fluctuations, with the 10-year sliding from 4.48% to 3.66% due to rate cut expectations. However, jobs data and a rise in oil prices nudged yields back up slightly to 3.83% and the 2-year Treasury yield traded at 3.95% on Thursday. Foreign investments continue to exhibit volatility, shaped by geopolitical tensions and domestic economic shifts.
|
|
|
Disruptions Threaten to Reignite Inflation
|
|
|
The Fed signaled its confidence in cooling inflation with its supersized rate cut on September 18th, but that confidence could be tested by a confluence of events in the US and abroad. On Tuesday, dockworkers across the East and Gulf coasts went on strike after they were unable to agree on a new contract that would include higher pay and job protection from increasing automation. The strike was suspended late Thursday evening, and although it was short lived, it could result in temporary shortages, supply chain bottlenecks, and higher prices for consumer goods, potentially impacting short-term inflation figures. Across the world, heightened tensions in the Middle East have moved oil prices sharply higher. Should the conflict further escalate, limiting output by key petroleum-producing countries in the region, higher energy prices could also impact inflation figures, with possible implications for the Fed's planned rate reductions for the remainder of the year and beyond. The S&P 500, Nasdaq, and Dow Jones Industrial Average all closed lower Thursday, but seemed to recover by Friday afternoon. |
|
|
This week, geopolitical concerns centered on the Middle East, particularly after Iran launched nearly 200 missiles toward Israel, escalating tensions in the region. The ensuing complications led to sharp market responses. U.S. stocks experienced a sell-off, crude oil prices rose sharply, and defense sectors saw gains driven by increased demand. The nervousness was further amplified by political events in the U.S., as the presidential race became a focal point amidst assassination attempts on former President Trump and President Biden's withdrawal from the race.
In financial markets, a sudden rally in Chinese stocks is drawing investment back to China, causing shifts in portfolio allocations away from other Asian markets. Analysts note that this movement is a response to recent stimulus measures from the Chinese government aimed at reviving the economy.
|
|
|
In the past four weeks, equity markets in Asia-Pacific have led single-country performance. China recorded its biggest market rally since 2008, following the government's announcement of stimulus measures, specifically by lifting home-buying restrictions. Given its close ties to Mainland China, optimism around the stimulus in China permeated Hong Kong markets. Thailand's markets continued to benefit from the new government's stimulus measures to boost economic growth, especially in tourism and infrastructure. |
|
|
Over The Last 4 Weeks, China's Equity Market Rallied
|
| |
Last week, rapidly escalating tensions in the Middle East drove up oil prices and caused the Energy sector to jump 4%, making it the best-performing sector for the week and lifting its overall performance YTD. Utilities rallied from its lower positioning last week, while Real Estate and Tech finished last as enthusiasm around interest rate cuts and strong earnings faded. |
|
|
Utilities Remain The Best-Performing Sector during a Volatile Month |
|
|
Over the last week, value stocks slightly outperformed growth stocks, as markets turned toward a somewhat risk-off stance amid rising geopolitical tensions. Small-cap growth marginally outperformed small-cap value due to lingering enthusiasm around interest rate cuts. Core value sectors, Energy and Finance, rallied, lifting value performance, while growth sectors such as Real Estate and Technology retreated, impacting performance. |
|
|
Over The Last 4 Weeks, Large-Cap Growth Outperformed Large Cap Value
|
|
|
While Bitcoin enjoyed a broadly positive September, gaining 2.9% for the month, the first week of the fourth quarter brought a repricing of near-term Federal Reserve policy expectations, impacting cryptocurrencies and financial markets. |
|
|
Cryptocurrencies Weaken: BTC/USD Falls with the S&P 500 as the U.S. Dollar Gains
|
|
|
Bitcoin's performance left more to be desired within the context of positive sentiment and interest rate cut expectations. BTC/USD gained just 1.0%, with Ethereum falling behind, dropping -24.2%.
On Tuesday, the job openings and labor turnover survey (JOLTS) showed the number of roles available rising to 8.04m versus 7.64m expected, indicating there were about 1.13 job openings per unemployed person in August, up from 1.08 in July. Meanwhile, ISM non-manufacturing PMIs were released on Thursday, with the headline gauge rising to 54.9. As a result of the positive data, markets priced in fewer interest rate cuts by the end of next year, pushing up Treasury yields and the U.S. Dollar. This directly impacted Bitcoin as the S&P 500 declined in a broader "risk-off" move. |
|
|
In the past month, the dollar has made gains against major global currencies, buoyed in part by increased global volatility, pushing investors to safe-haven assets. The Japanese Yen weakened considerably versus the dollar this week after remarks made by Prime Minister Shigeru Ishiba cautioned that further interest rate hikes would likely not take place. |
|
|
Historical amounts of monetary easing and fiscal stimulus propelled Chinese equities higher as the third quarter of 2024 wrapped up. China's Shanghai Composite soared 12.4% while the Hong Kong Hang Seng Index topped that at +19.3%. The U.S. S&P 500, German DAX 40, UK FTSE 250, and Australian ASX 200 rallied 5.5%, 6.0%, 3.8%, and 6.5%, respectively. |
Gold emerged as another notable standout. A 50-basis point rate cut from the Federal Reserve and the promise of a more well-rounded economy pushed up longer-term inflation expectations. This provided a favorable environment for gold, with XAU/USD rallying 13.2%. These dynamics did not bode well for the U.S. Dollar, with the DXY Index falling -4.8%. |
|
|
Alpha Picks: Did You Know?
|
|
|
Alpha Picks aims to select 'Strong Buy' stocks that, we believe, have the highest probability of capital appreciation based on a proprietary quantitative model. Using a rigorous, data-driven methodology, Alpha Picks' portfolio total return is +141% vs. the S&P 500's +50% since its launch on July 1, 2022. Two 'Strong Buy' rated stocks are selected monthly; one pick is added on the first trading day of the month and the other is added on the 15th or the closest trading day thereafter.
Alpha Picks Winners: Eight out of 36 Alpha Picks have returned over 100% to the portfolio. In addition, 33 out of 36 Alpha Picks met or beat recent EPS earnings expectations. Alpha Picks have outperformed the market by using a systematic stock selection process that combines the expertise of Seeking Alpha's Quantitative Team, unique data, and the computational power of the systems we have built. Historically, Alpha Picks has maintained both Revenue and Earnings growth rates that are far superior to the S&P 500.
|
|
|
Alpha Picks Outpaces S&P 500 In Revenue Growth
|
|
|
(as of September 16, 2024) |
|
|
Simultaneously, the valuation framework on the Alpha Picks portfolio is far cheaper than the S&P 500. In a nutshell, investors can achieve stronger growth at a better valuation than the S&P 500. Alpha Picks' 11.75% forward revenue growth from February 2023 through August 2024 is outperforming the S&P 500's 6.67%. |
|
|
Alpha Picks Offers A Significantly Cheaper Valuation than the S&P 500 |
|
|
► FOMC lowered rates by half a percentage point (0.5%) in one of the most aggressive tightening campaigns in 40 years. The Fed's confidence surrounding recent economic data and that inflation is on a sustainable path has taken a front seat. Barring major disruptions, including intensification of worker strikes that could reignite inflation, Fed Chair Jerome Powell signaled he'll likely cut the Fed funds rates by another half percentage point in 2024. He anticipates four additional cuts in 2025 and two in 2026. |
|
|
► The inflation backdrop of the port strikes that threatened to reignite inflation and cause supply chain shortages has agreed to table strikes until January. The U.S. has moderated in recent months, with CPI up 2.5% for the 12 months ending in August. Food, shelter, and energy prices rose, and signs of 'moderating inflation' appear to be a positive sign that the Fed is getting closer to its 2% target. September CPI data is scheduled to be released on October 10, 2024.
|
| |
► U.S. jobs report: Futures surged on strong September Jobs Report. The U.S. added 254,000 nonfarm jobs in September, topping estimates by 100,000. The unemployment rate ticked lower by 4.1% from 4.2% in August, creating optimism of the labor market's health one month before the U.S. Presidential Election.
|
|
|
| PepsiCo, Inc. (PEP), IDT Corporation (IDT) |
|
|
| AZZ Inc. (AZZ),
Applied Digital Corporation (APLD)
|
|
|
| Consumer Price Index (CPI) report release
Delta Air Lines, Inc. (DAL) |
|
|
| JPMorgan Chase & Co. (JPM), Wells Fargo & Company (WFC), BlackRock, Inc. (BLK)
|
|
|
Investors crave certainty. However, only three things in life are certain: Death, taxes, and market uncertainty. Seeking Alpha's Quant Ratings offers an objective, unemotional evaluation of securities based on hundreds of metrics. The Alpha Team believes that a core reason for Alpha Picks' outperformance is its diversified approach, not limited to a single investing style like Value or Growth. We look for the most attractive opportunities in the market by identifying 'Strong Buy' stocks that are collectively attractive on a combination of value, growth, profitability, momentum, and revised forward-looking earnings estimates. We have many top stocks with strong buy recommendations. If you're looking for a select number of Quant Strong Buy recommendations every month, explore Alpha Picks. |
|
|
Written by Steven Cress VP of Quantitative Strategy at Seeking Alpha |
| |
Download Seeking Alpha for your Phone or Tablet: |
|
|
*Performance is as of October 3, 2024. Alpha Picks adds two stocks per month - on the closest business day to the 1st & 15th. Alpha Picks removes stocks based on rating thresholds (i.e., when a rating changes to a sell). Performance is calculated and reported daily using time-weighted returns. For more details on the performance calculation and methodology of Alpha Picks, click here.
Past performance is no guarantee of future results. Alpha Picks does not take account of your objectives or your financial situation and does not offer any personalized investment advice. Any content and tools on the platform are offered for information purposes only. Any views or opinions expressed may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker, U.S. investment adviser, or investment bank. |
Sent by Seeking Alpha, 244 5th Ave, Suite 2705, New York, NY 10001 Why are you receiving this? You subscribed to Seeking Alpha's Exclusive Offers & Tips. |
|
|
https://email-st.seekingalpha.com/oc/629888ce0c4303264f02dffem0d3t.1sw4h/2f909e0b |
|
|
|
No comments:
Post a Comment