Mizuho says OPEC+ supply cut confirms “naked desire for price hikes”
The decision by OPEC and its allies to cut production by 2 million barrels a day confirms the group’s “naked desire for price lift, not just support,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank.
A supply cut of around 1 million barrels a day would have resulted in price gains without compromising volumes, but a larger cut shows the alliance’s “disregard for economic issues and geopolitical focus on global partners,” he wrote.
“What has been argued as an opportunistic gamble, exploiting geopolitical supply difficulties to self-interest, now risks being interpreted as an affront to the US and its allies (in protest at Russian price cap plans) allying with Russia,” he added.
— Abigail of
The Chinese electric vehicle battery maker opens its market debut in Hong Kong
Electric vehicle battery maker China Aviation Lithium Battery (CALB) traded flat in its first session after raising HK$9.86 billion ($1.26 billion) in its IPO, a filing showed.
The offer price was HK$38 ($4.84) per share.
Shares allotted to retail investors in Hong Kong were underwritten, with only 21% being bought – representing 1% of the total supply.
Leapmotor and Onewo, which made their commercial debut last week, were also signed.
— Abigail of
CNBC Pro: “There’s a lot to buy in China,” says the fund manager, naming these two EV stocks
Despite miserable returns in Chinese stock markets this year, one fund manager believes there are pockets of value in certain “core” sectors, even when financial conditions are tight.
Edmund Harris, Head of Asian & Emerging Market Investments at Guinness Asset Management, says companies in electric vehicles, factory automation and sustainable energy are likely to outperform their global peers over the next 5 to 20 years.
He has named two stocks likely to benefit from this theme.
CNBC Pro subscribers can read more here.
— Ganesh Rao
October could be the start of a bullish rally, says Detrick
Although stocks retreated on Wednesday, halting a major two-day winning streak, October could still be the start of a new bull market rally, according to Ryan Detrick, chief market strategist at Carson Group.
“We think this could be the start of a pretty decent year-end rally,” Detrick said during CNBC’s Closing Bell: Overtime.
That’s because stock performance traditionally improves in October during the mid-election years, Detrick said.
He also noted that although markets ended the day lower, stocks staged a large rally in the afternoon, making up much lost ground. According to Detrick, this is positive.
– Carmen Reinicke
CNBC Pro: Time to buy the dip? Some stocks are still trading at lows with plenty of upside potential ahead
The start of this week has provided a relief rally of sorts for stocks. Nevertheless, both the global and Wall Street indices are still clearly in the red since the beginning of the year.
This could present an opportunity for investors looking for quality stocks and future upside potential in a volatile environment.
CNBC Pro has examined stocks trading within 10% of their 52-week low, but has a buy rating of more than 50% of the Wall Street analysts who cover them. The stocks have an average price target of 20% or more and an earnings growth expectation of at least 10% in 2022.
Here are the stocks that have surfaced. CNBC Pro subscribers can read more here.
— Wheat Tan
The Fed’s Bostic says these are just the “early days” of the inflation war
Atlanta Federal Reserve Chairman Raphael Bostic spoke harshly about inflation in a speech Wednesday, saying the central bank still has work to do before it can announce victory.
“We have to remain vigilant because this inflation battle is probably still in its infancy if the projections from me [Federal Open Market Committee] Colleagues are right,” Bostic said in a speech to Northwestern University’s Institute for Policy Research.
Bostic added that bringing inflation back towards the Fed’s 2% target will likely “take some time” as “we are still decidedly in the inflation forest, not outside”.
From a rates perspective, Bostic said he envisions the Fed’s interest rate hike rising to 4% to 4.5% before policymakers can take a step back to assess progress. The fed funds rate is currently in a range of 3% to 3.25%; Forecasts released by the FOMC in September call for interest rates to rise to 4.6% in 2023, putting Bostic slightly on the dovish side of the committee.
However, he added that he would say to anyone expecting the Fed to cut rates next year, “Not so fast.”
Bostic is not a voting member of the FOMC this year or next, although he can express his political stance during meetings.
– Jeff Cox
The trade deficit narrowed more than expected in August
The US trade deficit fell slightly more-than-expected in August to its lowest level in more than a year, the Bureau of Economic Analysis reported on Wednesday.
The trade deficit narrowed to $67.4 billion, down $3.1 billion from the previous month, which was slightly better than the Dow Jones estimate of $67.7 billion. That was the lowest level since May 2021. In March 2022, the deficit had reached a record $106.9 billion.
A $3.4 billion contraction in the trade deficit contributed most of the contraction as the economy shifts back to higher demand for services.
– Jeff Cox
CNBC Pro: NYU’s Aswath Damodaran names big tech stocks as better picks than “traditionally safe havens.”
NYU’s Aswath Damodaran loves companies that “can withstand a hurricane, a disaster if it happens.”
The New York University finance professor, sometimes dubbed the “Dean of Valuation,” believes big tech stocks can do just that, revealing the stocks he owns.
Pro subscribers can read more here.
– Zavier Ong
Comments are closed.