The numbers: The New York Fed’s Empire State business conditions index rose 1 point to 31.9 in December, the regional Fed bank said Wednesday. Economists had expected a reading of 25, according to a survey by The Wall Street Journal.
Any reading above zero indicates improving conditions.
Key details: The new-orders index slipped 1.7 points to 27.1, and the shipments index fell 1.1 points to 27.1.
Unfilled orders rose 6.3 points to 19 in December while delivery times fell 9.1 points to 23.1.
Both the prices paid and prices received indexes inched lower but remained near record highs in December.
The employment index slipped 4.6 points to 21.4 while the average workweek fell 11 points to 12.1.
Firms remain optimistic about the next six months.
Big picture: Manufacturing appears to be holding its strength in the final month of the year, remaining not far below the all time high reading of 43 in July.
The Empire State index has been volatile recently and economists had expected it would retreat after surging 11 points in November. It looks like firms continue to navigate supply chain disruptions in order to meet strong demand.
Economists use the New York factory data as an early proxy for the closely-watched national factory index released by the Institute for Supply Management on the first work day of the month.
In November, the ISM index rose to 61.1% from 60.8% in the prior month. That’s the 18th straight month the index has been above the 50 level that indicates expansion in the manufacturing sector.
After California passed a law to protect employees’ right to discuss harassment or discrimination experienced at work, activists are asking investors to force large tech companies to extend the protections to their workers across the world.
The Transparency in Employment Agreements Coalition has filed shareholder resolutions at some of the nation’s biggest tech companies — including Facebook parent company Meta Platforms Inc. FB, -0.22%,
Google parent company Alphabet Inc. GOOG, -1.18%
Ifeoma Ozoma, who left Pinterest Inc. PINS, -1.17%
in 2020 after accusing the company of gender and racial discrimination and later became the driving force behind the California law, is part of the effort, along with investors and advocacy groups that routinely submit shareholder resolutions.
“Work has been done through the Silenced No More Act, but we want to make sure workers outside California are protected,” Ozoma told MarketWatch.
The Silenced No More Act, which goes into effect next year in California, gives employees the right to talk about unlawful actions in the workplace without breaking their non-disclosure agreements, or NDAs. Michael Connor, the executive director of Open MIC (Media and Information Companies Initiative), a nonprofit that works on socially responsible investing and is also part of the coalition, said the law is “simply good business.”
“These resolutions are based on a simple premise: Companies benefit from knowing when sexual harassment, discrimination and unlawful behavior are happening in the workplace, which is why employees should be encouraged to speak out about such conduct,” he said.
In the fall, the coalition worked with Nia Impact Capital to file a similar proposal at Apple Inc. AAPL, -0.80%,
setting off a chain of events that resulted in a whistleblower claim against the tech giant. Business Insider reported last month that a former Apple employee filed a complaint with the Securities and Exchange Commission, saying that despite the company’s claims that it does not use concealment clauses in employment agreements, she was limited in what she could say when she left the company after experiencing harassment.
Ozoma said the coalition filed these other resolutions because Meta, Alphabet, Amazon, Twitter, IBM and Salesforce did not respond to the coalition’s efforts to engage. Other companies, including Pinterest, Twilio Inc. TWLO, -1.69%
and Expensify Inc. EXFY, -3.12%,
agreed to include language in their global employment contracts that explicitly states workers’ ability to discuss harassment, discrimination or other unlawful conduct after being approached by the group.
Etsy responded to the group, but said it “respectfully” disagreed with the group’s ultimate goal. In an email to the coalition viewed by MarketWatch, Etsy said its employment agreements already give workers the right to talk about potentially unlawful conduct in the workplace. But the company said adopting the language the coalition is requesting does not “make sense” for Etsy, because it wants to protect the employees who may be accused by those who have left.
“If your priority is people who stay, you’re not getting the point,” Ozoma said, adding that those who stay at companies are, in some cases, “the abusers.”
Etsy did not provide comment to MarketWatch by publication time. IBM and Salesforce did not respond, while representatives for Twitter and Amazon declined to comment.
A spokeswoman for Alphabet — whose handling of previous sexual-harassment cases sparked the famous Google Walkout in 2018 and prompted changes including waiving mandatory arbitration of harassment, discrimination and retaliation claims — said the company is still evaluating the coalition’s proposal.
A spokesman for Meta said “Meta employee contracts do not include concealment clauses or language preventing them from speaking publicly about concerns,” but prohibits them from talking about proprietary information.
The companies have not announced dates for their annual general meetings next year, but they usually are held in the spring and summer.
The Transparency in Employment Agreements Coalition is made up of Ozoma’s company Earthseed, Whistle Stop Capital, Open MIC and Frontier Technology, and represents investors, civil society organizations and others. The coalition worked with Clean Yield Asset Management to file the resolution at IBM, and with Nia Impact Capital to file at Etsy.
This morning, the UK CPI inflation number for November was released. It was expected to be 4.7%, already a jump from the 4.1% number from the previous month. But the inflation figure beat expectations, showing a year-on-year gain of 5.1%. This is the highest number in a decade, and means that my cash in the bank is being eroded in value. Here’s how I’m planning on investing in stocks to try and reduce the negative drag.
Making use of dividends
One way I can try to beat inflation via stocks is by targeting dividends. When I buy a stock that pays out a dividend, I can calculate the dividend yield. Essentially, this looks at the annual dividend per share relative to the share price when I invested. Using this, I can get a percentage yield, which is a comparable number to other income-generating investments.
Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.
But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.
Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…
We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.
In this case, I can look to invest my spare cash in stocks that offer me a yield in excess of the rate of inflation. Even though the FTSE 100 average dividend yield is only 3.55%, there are some options with yields above 5%. For example, insurance companies such as Aviva and Legal & General both fit the bill. In the world of finance, money managers Abrdn and M&G also offer me a net positive inflation return currently.
So in order to beat the current level of inflation, I can consider investing in such stocks. There are a few risks that I need to be aware of. Firstly, inflation changes each month. It’s been rising over the past few months, so there’s no guarantee that it won’t keep heading higher. In this case, even my dividend yield might not be enough to exceed inflation next year.
Secondly, dividends aren’t guaranteed. If one of the dividend shares that I buy cuts the payout next year, my real return versus inflation could be negative.
Using high-growth stocks to offset inflation
The way I can go is putting my spare money in high-growth stocks. Such companies haven’t performed well over the past month or so. I recently wrote about how some of the top EV stocks have fallen over 30%. Souring sentiment around Omicron and high valuations have unsettled some popular stocks. Although this is an ongoing risk, the potential rewards are also high.
By investing in growth stocks, my unrealised gains from the share price moving higher should enable me to offset inflation in the long run. For example, let’s say annualised inflation stays at 5% for the next couple of years. If I can invest in high-growth stocks that see a share price gain of 10%+ over this period, I’ll beaten the inflation erosion.
I think this second option is more risky than the dividend strategy. However, to spread my risk, I can look to split my money between dividend and growth stocks. That way, I give myself some different angles to try and offset inflation via investing in stocks.
Some people are running scared, but there’s one thing we believe we should avoid doing at all costs when inflation hits… and that’s doing nothing.
Money that just sits in the bank can often lose value each and every year. But to savvy savers and investors, where to consider putting their money is the million-dollar question.
That’s why we’ve put together a brand-new special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation…
…because no matter what the economy is doing, a savvy investor will want their money working for them, inflation or not!
Best of all, we’re giving this report away completely FREE today!
Jon Smith and The Motley Fool UK have no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
There aren’t nearly as many tech companies listed in the UK as there are in the US. So an investor looking for UK tech shares to buy now doesn’t have a big choice.
One popular UK tech stock, accounting software firm Sage(LSE: SGE), has seen its share price increase more than 40% over the past year, at I write. I’m not surprised by that. Back in July, I explained why I would consider investing £1,000 in Sage. If I had done so the day that article was published, my stake would now be worth £1,175.
Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.
But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.
Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…
We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.
But would I still invest today, given the steep increase we’ve already seen in the Sage share price?
Why I like Sage
I continue to like the economic characteristics of Sage’s business.
It supplies accounting software to small and medium-sized firms. Many such businesses are fairly reliable customers. They are required to keep books from one year to the next. Having set up a piece of software to help them do so and trained staff on it, there would be switching costs and other inconveniences if they moved to a different supplier. That gives a company such as Sage pricing power. In other words, it is able to keep raising its prices over time. That can help support profit margins even in the face of inflation.
I also like the company’s focus on small and medium-sized enterprises. Many software firms focus on large customers like multinational firms. Sage’s focus allows it to develop the right solutions for a user group that has budget to spend on this type of software but doesn’t always feel valued by tech giants.
Is the Sage share price undervalued?
Just liking a company doesn’t mean that I would buy its shares, though. Whether or not I would purchase Sage for my portfolio depends on its valuation.
After its recent rise, the Sage share price is trading close to the levels at which it peaked in 2018 and again in 2019. The only time in its history it’s traded substantially above its current level was over 20 years ago in the dotcom boom.
The current price-to-earnings ratio for Sage is in the 30s. That means that if I bought the shares today it would take over 30 years for the earnings per share to add up to the current purchase price (if the firm’s earnings stayed static throughout that period). Like their American counterparts, UK tech shares often trade at a high P/E ratio. But Sage is not a start-up business with dynamic growth prospects. It is a well-established, profitable B2B supplier with decent but modest growth prospects. Earnings per share this year, for example, were actually lower than three years ago.
In the absence of a compelling new growth story, I do not see Sage shares as undervalued at present.
My next move
On top of that, there are some risks with Sage. A broad-based tech sell-off could drag down the share price. A move to cloud computing has added costs at the company and dissatisfied some customers too. That could hurt profit margins in the short term.
So although I like the Sage business, I would not add its shares to my portfolio at the moment.
Christopher Ruane has no position in any of the shares mentioned. The Motley Fool UK has recommended Sage Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
When Mark Michaelson purchased what he considered the holy grail of comic books — Superman No. 1, dating from 1939 — he wasn’t thinking about it as an investment. Instead, the comics fan says he bought it from a private collector in 1979 for somewhere between $1,000 and $2,000 simply because he wanted it.
“Everyone sets a little goal for themselves,” said Michaelson, a Houston resident who has worked as a health-care executive.
Michaelson’s goal is now likely to result in a huge payoff. The comic is currently up for auction and is already receiving bids above $2 million. The online event, which is being run by auction house ComicConnect, ends Thursday.
Such eye-popping figures are becoming the norm in the comic-book world. This year has already seen sales of $3-million plus for two comics — an Amazing Fantasy No. 15, from 1962, which features the first appearance of Spider-Man, went for $3.6 million and an Action Comics No. 1, from 1938, which features the first appearance of Superman (before the character had his own book), went for $3.25 million.
“The U.S. may be printing more money to reduce the blow of the health crisis, but ‘they’re not creating more Superman No. 1s.’”
— Stephen Fishler, chief executive of ComicConnect and its affiliated Metropolis Collectibles
Comics of more recent vintage are also selling for significant sums. A Teenage Mutant Ninja Turtles No. 1, from 1984, sold for $245,000.
In short, these relics of our youth are “now being recognized as a legitimate alternative investment,” said Matt Nelson, president of Sarasota, Fla.-based CGC, a company that grades the condition of comic books, trading cards and other collectibles.
Various factors are playing into the comic-book boom, industry experts say. Some note that even as the stock market surges, investors are looking for tangible assets, especially given all the financial uncertainty caused by the pandemic. Stephen Fishler, chief executive of ComicConnect and its affiliated Metropolis Collectibles, an online shop, said the U.S. may be printing more money to reduce the blow of the health crisis, but “they’re not creating more Superman No. 1s.”
Another critical element is the growing popularity of comic-book characters in the broader entertainment world. Hardly a month goes by that doesn’t see the release of a major superhero flick with a prominent cast. Coming up this Friday from Columbia Pictures and Marvel Studios: Spider-Man: No Way Home, starring Tom Holland, Zendaya, Marisa Tomei and Benedict Cumberbatch, among others.
““Superman is not going to disappear.””
— Comic-book industry veteran Stephen Fishler
With Hollywood so invested in the success of these pictures, it only stands to reason the characters will remain as relevant as ever, says Fishler. “Superman is not going to disappear,” he said.
Still, those looking to make money from comic books need to be versed in the dynamics of the market. As is the case with other collectibles — think baseball cards, a category that has also boomed of late — it comes down to finding the right item in the right condition.
Naturally, the first book in any series — or a book with the first appearance of a major character — will command a premium, experts say. But condition can’t be ignored. “A defect can be the difference of thousands of dollars,” said Nelson, pointing to a half-inch corner crease as an example.
Attendees browse comic books during Comic Con Special Edition in San Diego on Nov. 26, 2021.
Chris Delmas/AFP via Getty Images
While attention is often paid to the comics of older vintages — the Golden Age (roughly 1938-1956) and Silver Age (1956-1970) eras — experts say that doesn’t mean more recent releases aren’t worth seeking out, especially for investors and collectors with fewer bucks to spend. Nelson says comics from the ‘70s and ‘80s are an up-and-coming category and there are books selling for $1,000 and under from that period worth considering. (He likes G.I. Joe comics, for example.)
Should comics be taken seriously as an investment like stocks and bonds? Some financial advisers say even the most valuable of collectibles can’t be considered that way. Patrick Lach, an adviser with his own firm in Louisville, Ky., points to an obvious negative — collectibles don’t generate cash the way, say, a stock pays dividends or real estate generates rent payments.
“The only way Person A can make money from a collectible is if Person B is willing to pay more for it,” Lach said.
But there’s no denying there are a lot of Person B’s out there for the right collectibles, others note. Bart Brewer of California-based Global Financial Advisory Services says collectibles can have a small role in a balanced portfolio. He suggests committing no more than 5% of total assets to it and considering it an “exotic” investment. “I view this like emerging-markets stuff,” he said.
Meanwhile, Michaelson is waiting to see what his Superman comic will net. Then, he can move on to the rest of his collection of 50,000 books. “My wife wants her garage back,” he said.
Oil futures lost ground for a third straight day Wednesday as worries remain over the impact on energy demand from the spread of the omicron variant of the coronavirus that causes COVID-19, while traders also await an official read on U.S. crude inventories.
West Texas Intermediate crude for January delivery CL00, -1.16%
CLF22, -1.16%
fell 83 cents, or 1.2%, to $69.90 a barrel on the New York Mercantile Exchange. February Brent crude BRN00, -0.96%
BRNG22, -0.96%,
the global benchmark, was down 82 cents, or 1%, at $72.98 a barrel on ICE Futures Europe.
A report by the International Energy Agency on Tuesday cut the demand outlook for crude in the first quarter of 2022 as a result of the spread of the omicron variant, but said the effect would be short-lived. Nonetheless, the monthly update projected a market that would be substantially oversupplied in the first half of 2022. The cut to the demand outlook contrasted with the monthly update from Organization of the Petroleum Exporting Countries a day earlier, which boosted the outlook for demand growth in the first quarter of 2022 while leaving its full-year forecasts for 2021 and 2022 unchanged.
“The market’s response shows that the market attributes more weight to the IEA’s forecast,” said Carsten Fritsch, analyst at Commerzbank, in a note. “That said, the IEA also expects the demand weakness to be short-lived. Its forecasts for the subsequent quarters remained unchanged or were even revised slightly upwards. Nonetheless, the IEA is predicting a substantial oversupply in 2022, which is due to the steeply rising oil supply.”
Meanwhile, new modeling analyzed by the Centers for Disease Control and Prevention warns of an imminent surge in cases driven by the omicron variant, according to a report in The Washington Post. The report comes after the World Health Organization warned that omicron was spreading faster than any prior variant and could overwhelm health systems, even if cases remain milder.
The WHO, in its weekly epidemiological update, also said preliminary evidence “suggests that there may be a reduction in vaccine efficacy and effectiveness against infection and transmission associated with omicron, as well as an increased risk of reinfection.”
The American Petroleum Institute reported late Tuesday that U.S. crude inventories fell by 815,000 barrels for the week ended Dec. 10, according to sources. The API also reportedly showed a weekly inventory climb of 426,000 barrels for gasoline and a fall of 1 million barrels for distillate stockpiles. Crude stocks at the Cushing, Okla., delivery hub rose by nearly 2.3 million barrels last week, sources said.
Inventory data from the Energy Information Administration will be released Wednesday. On average, the EIA is expected to show crude inventories down by 1.7 million barrels, according to a survey of analysts conducted by S&P Global Platts. The survey also calls for a weekly supply increase of 200,000 barrels for gasoline, but distillate stocks are forecast to reveal a decline of 400,000 barrels.
Consumer goods giant Reckitt (LSE: RKT) has had a challenging several years. Like its competitors, it has been wrestling with input cost inflation, which continues to threaten profit margins. But it has also been dealing with some problems of its own making, notably its ill-fated acquisition of an infant formula business a few years ago. The Reckitt share price has fallen 4% over the past year, as I wrote this article earlier today.
But just last year, these shares traded above £77. Could they get back above £70 in the coming year?
Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.
But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.
Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…
We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.
To consider where the Reckitt share price is going, it is instructive to reflect on where it has come from. The reason for its fall in 2020 was fairly simple. Investors were concerned that mounting cost inflation would hurt its profit margins. They also continued to have concerns about the long-term impact of the infant formula business on Reckitt’s results.
I think inflation remains a risk. But the company owns in-demand brands such as Dettol. That means it doesn’t necessarily need to compete on price alone. That gives it pricing power, which can support profit margins. In its most recent quarterly trading statement, the company maintained its guidance on profit margins. In other words, it seems to have the inflation challenge under control – for now at least.
I also think the company has been making the right moves when it comes to its infant formula business. It took a massive writedown on its book value last year and has since exited a large part of the business, notably in China. That has been painful and casts a shadow on the judgement of previous management. But looking forward, it suggests that those infant formula woes should no longer dog the company.
So, I think both the key drivers for the share price fall are being well handled.
Upside price drivers
But is that enough to push the Reckitt share price further upwards in 2022?
For that, I think the company needs not only to show that it is managing its challenges but also that it is producing growth. Again, I think the company’s strong recent performance gives grounds for optimism here. In the parts of the business that it is keeping, the company saw growth in all of its operating areas in its third quarter. That is despite high demand the prior year making for a tough comparative baseline.
With its health and hygiene focus, I think the company is well-positioned to capitalise on long-term concerns brought about by the pandemic. That should help both revenues and profits.
Some people are running scared, but there’s one thing we believe we should avoid doing at all costs when inflation hits… and that’s doing nothing.
Money that just sits in the bank can often lose value each and every year. But to savvy savers and investors, where to consider putting their money is the million-dollar question.
That’s why we’ve put together a brand-new special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation…
…because no matter what the economy is doing, a savvy investor will want their money working for them, inflation or not!
Best of all, we’re giving this report away completely FREE today!
Christopher Ruane has no position in any of the shares mentioned. The Motley Fool UK has recommended Reckitt plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Many top FTSE 350 shares pay dividends to shareholders year in, year out. Indeed, it can be a great way to create additional income and I have found this a useful strategy in recent years. Unilever(LSE: ULVR) is one of the top dividend shares that has paid consistent dividends to shareholders. A leader in the fast-moving consumer goods (FMCG) market, Unilever has an average dividend yield of 3.04% over the past five years, although this has declined slightly since 2019.
If I had £10,000 to invest, what amount of dividend payments would I have received from 2016 to 2020 from Unilever shares? In total, I would have received £1,520 in dividends over those five years – equivalent to 15.2% of the original holding itself. This, together with any growth in the share price, tells me that this is a low-risk investment. Personally, I would not be directing £10,000 to Unilever shares, because I think I can get better returns elsewhere. With a much larger sum of money, however, this dividend yield becomes a more attractive option. If I were considering a £100,000 investment, for example, Unilever may be one of the better destinations.
Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.
But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.
Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…
We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.
If this level of dividend yield is not attractive for me, where else could I put my £10,000? Instead of focusing on income, I could find a smaller-scale accumulation stock with big potential. Molten Ventures(LSE: GROW) is a FTSE 250 stock that gives investors exposure to private tech companies. This company does not pay a dividend and instead retains its earnings. These retained earnings may be found in company annual reports and Molten Ventures figures show impressive growth over the last five years – about 77.2% year-on-year. Together with other fundamental factors, retained earnings may give clues about how well an accumulation stock is actually growing. Essentially the main question to consider is whether a stock like Molten Ventures is putting the earnings to good use or is it preferable to have this money paid out of the stock to shareholders.
If I decided to choose an accumulation stock, I would first need to ask myself a number of questions. Am I confident in the company’s leadership? Is the leadership following through on promises? Is the company growing? In Molten Ventures’ case, only two years ago the then-AIM 100 listed company publicly stated its desire to enter the FTSE 250, which was achieved this year. Furthermore, a number of private companies funded by Molten Ventures have gone public, including Cazoo, Trustpilot and UiPath. For me, both these factors are strong indications that Molten Ventures is deploying retained earnings effectively and I think my £10,000 would be better invested in this stock rather than in Unilever for its dividends. My decision might be different if the amount available to invest was much greater, when I might deem the dividend yield to be significant.
Markets around the world are reeling from the coronavirus pandemic…
And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.
But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.
Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…
You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.
Andrew Woods has no position in any of the shares mentioned. The Motley Fool UK has recommended Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Treasury yields nudged higher Wednesday as traders awaited a decision by the Federal Reserve that’s expected to see policy makers agree to more quickly wind down monthly asset purchases, setting the stage for a potential interest rate increase by spring.
What are yields doing?
The yield on the 10-year Treasury note TMUBMUSD10Y, 1.450%
rose to 1.446%, up from 1.437% at 3 p.m. Eastern on Tuesday.
The 2-year Treasury yield was at 0.669%, compared with 0.657% late Tuesday.
The 30-year Treasury bond TMUBMUSD30Y, 1.847%
yielded 1.83%, up from 1.819%.
What’s driving the market?
Investors widely expect the Fed to cut its monthly asset purchases more aggressively than previously planned, bringing its buying program to a halt by March rather than June. That would allow the Fed, which isn’t expected to raise interest rates until it has halted the purchases, to begin the hiking process earlier than expected.
As a result, investors will also be paying close attention to the so-called dot plot that tracks rate expectations of individual policy makers and is expected to show a consensus for multiple rate increases in 2022. In September, the dot plot penciled in only one rate rise next year, though the majority of market participants in surveys expect two hikes. The projections showed a gradual hike in the fed-funds rate to only 1.8% at the end of 2024.
The Fed will release a policy statement at 2 p.m. Eastern, followed by Chairman Jerome Powell’s news conference at 2:30 p.m.
Ahead of the Fed decision, investors will get a reading on U.S. November retail sales at 8:30 a.m., which are expected to show a 0.8% rise. Excluding autos, sales are seen up 1%. The November import-price index and the New York Fed’s December Empire State manufacturing index are also due at 8:30 a.m.
A December home builders’ index is slated for release at 10 a.m.
What are analysts saying?
“Faster tapering opens up the possibility of earlier rate hikes, but there is probably still some way to go before the Fed can claim ‘maximum employment’ (a precondition for the first rate hike) has been reached,” wrote analysts at UniCredit, in a note. “We think the ‘dot plot’ will indicate two 25 [basis point] hikes next year (which contrasts with September, when the FOMC was split between one hike and none by the end of 2022), while keeping three hikes in each of 2023 and 2024.”
Lucid(NASDAQ: LCID) stock exploded after the company was made public via a SPAC (special purpose acquisition company) earlier this year. But the share price has crashed by over 25% in December alone. I want to revisit the investment case here now that the company’s market value has fallen by so much.
Is Lucid stock now a buy for my portfolio? I still don’t think so, and here’s why.
Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.
But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.
Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…
We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.
Before I get to Lucid itself, I recognise how exciting the electric vehicle (EV) market is today. Indeed, sales have surged in 2021, and I expect this to grow further from here.
There are going to be many opportunities for investors to benefit from this sector. Lucid may well be a good way to gain exposure to the growth in EV numbers. It’s not the only way, though. I wrote about a ‘picks and shovels’ approach to the EV market here.
Lucid released its third-quarter results ending 30 September last month, and there were some positive signs. Firstly, customer reservations for its EVs rose to 13,000 in the quarter, which represents sales of approximately $1.3bn. Reservations increased further to over 17,000 by the time the results were announced, which would mean sales reaching $1.7bn.
The company also said vehicle production started in the third quarter. This is vital if Lucid is to meet customer demand for the 17,000 EVs that have already been reserved.
Why I’m still not buying Lucid stock, yet
The results release wasn’t all positive. For one, revenue was only $232,000 and missed analysts’ expectations of $1.3m. The loss was also 43 cents per share, and investing in any loss-making company is always higher-risk, in my view.
However, I’m not so concerned about the financial results as it stands. It’s well understood that Lucid’s investment case is all about the potential for its EVs in the (hopefully) near future. Therefore, it wasn’t likely to generate significant revenue in this quarter.
One reason I’m not buying Lucid stock today though is its high valuation. If it generates the expected $1.7bn of revenue next year, the share price today is valued on a price-to-sales ratio of 39. I think this is a sky-high valuation. Lucid is going to have to execute flawlessly to make those sales, and there’s no guarantee it will.
The next reason is the announcement that Lucid is being investigated by US regulators over its forecasts it made when it listed via the SPAC. At this stage, it’s difficult to know if this will amount to anything. But at the very least, it makes a potential investor like myself question the validity of forecasts in the quarterly earnings releases. Until I know if the US regulator is satisfied with Lucid’s projections, I’m staying away.
So, for now, I’m going to keep Lucid stock on my watchlist. There could be huge potential here, but I feel there are better shares to buy today.
Dan Appleby has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
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