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Will a merger send National Express shares on a sentimental journey north?

financialnews1 on December 10, 2021

National Express Group (LSE:NEX) — a well-recognised coach company delivering services in the UK, Continental Europe, North Africa, North America and the Middle East — is flying low, with its shares currently sitting around 230p, more than 50% down from their soaring heights before Covid.

The latest half-year results were ahead of expectations, which is surprising when you consider the UK March lockdown. Profits are not yet back up to pre-pandemic levels but National Express has historically shown resilience, and (largely due to £100m worth of cost savings) it has managed to show a half-year operating profit of £54m. I believe it’s only a matter of time before it demonstrates how recoverable it is, and I believe that end-of-year results will support this prediction. I consider this a potential recovery stock.

5 Stocks For Trying To Build Wealth After 50

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.

Click here to claim your free copy now!

The case for

Understanding that the world into which we’re emerging will not be the same one we left behind a couple of years ago, a world into which our increasingly ageing population are travelling more cautiously, and perhaps do not yet feel ready to venture abroad, gives me confidence in National Express shares. Also air flight is environmentally unpopular and will probably never return to what it once was. Maybe this is a good thing (unless you hold shares in the likes of IAG).

The phrase ”staycation“ was pinned to everyone’s lips last summer, and is likely to stay there for a few summers to come, so coach travel may become the preferred option for many.

Merger with Stagecoach

It’s an ambitious company too. Its restlessness in regards expansion is clear, most recently through the proposed merger with Stagecoach Group announced on 21st September. Both companies’ share prices shot up at the time it was announced, but have since drifted. Now a new deadline has been set for 14th December in order to make clear and final their intention to merge. Such a merger has clear advantages i.e. cutting down on duplicate routes, office space and staff, and adding buying clout for future expansion plans.

Case against

There are potential negatives of course. Firstly the upward travel of the price of fuel, which some expect to reach above $100. There is the potential for another lockdown, which would clearly have an impact on all travel companies, including National Express. Then, even without the lockdown, there is still the chance that people are just more reluctant now to travel by shared means, sitting next to strangers.

Aside from my fond memories of student journeys up the M1, getting home for Christmas for under a tenner, I like this share. It’s a safe buy for my portfolio in my opinion, and if the merger does happen it could trigger a good recovery.

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Alex Crisp 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.

London Markets: U.K. blue chips inch higher after solid week

financialnews1 on December 10, 2021

The leading U.K. stock market index nudged higher Friday to end what’s been a positive week.

The FTSE 100
UKX,
+0.12%
edged up 0.1% to 7327.05, after the release of key U.S. data showing consumer prices jumped 0.8% in November.

The top performing FTSE 100 stocks over the last week have been Flutter Entertainment
FLTR,
+0.45%,
which has climbed 10%, British American Tobacco
BATS,
+2.21%,
which gained 8%, and exhibitions group Informa
INF,
+0.20%,
which also has gained 8%.

Associated British Foods
ABF,
+0.90%
shares edged higher on Friday as it said Primark trading has been ahead of expectations, while grocery, sugar, ingredients and agriculture have been in line with expectations.

Royal Dutch Shell
RDSB,
+0.94%
shares rose 1% as shareholders voted to end the oil giant’s dual-share listing structure and drop “Royal Dutch” from its name.

The U.K. economy grew at a disappointingly slow 0.1% pace in October, below expectations of 0.4%, the Office for National Statistics said Friday.

Economic Report: U.S. inflation rate swells to 39-year high of 6.8%. Americans paying higher prices for almost everything

financialnews1 on December 10, 2021

The numbers: The cost of living climbed again in November and drove the rate of inflation to a nearly 40-year of 6.8%, putting more pressure on households as they confront rising prices of gas, food, cars, rent and so forth.

The consumer price index increased 0.8% last month, the government said Friday. Economists polled by The Wall Street Journal had forecast a 0.7% advance.

The pace of inflation over the past year escalated to 6.8% from 6.2% in the prior month. That’s more than triple the Federal Reserve’s 2% target and is the highest rate since July 1982.

A string of higher-than-expected inflation readings since the summer is likely to push the Fed to speed up plans to phase out stimulus for the economy by the early spring, several months earlier than it had planned.

Top central bank officials meet next week to plot their next step.

Worried about the economic and political consequences, the White House has also moved to try to help untangle knots in the U.S. supply chain that are contributing to high inflation. Many goods and materials are in short supply and prices have risen as a result.

Another closely watched measure of inflation that omits volatile food and energy costs jumped 0.5% last month. This so-called core rate is closely followed by economists as a more accurate measure of underlying inflation.

The 12-month increase in the core rate climbed to 4.9% from 4.6% and remained at a 30-year peak. The last time the core rate reached 5% was in mid-1991.

Big picture: The stunning surge in U.S. prices this year could peak in the next few months as supply-chain bottlenecks are gradually undone, but high inflation is likely to last well into 2022.

Rents are moving up again, for one thing, and wages are rising at the fastest pace in decades and adding the underlying cost of doing business.

The big unknown if how much inflation slows. The Fed predicts the rate of price increases will fall below 3% toward the end of 2022, but some economists think inflation won’t recede so quickly.

So far most investors are siding with the Fed. Stocks are rising and Treasury yields are still extremely low. Bond yields would likely rise a lot higher if investors were very worried about inflation.

Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX were higher in preopen trades. The yield on the U.S. 10-year Treasury BX:TMUBMUSD10Y edged down to 1.49% after the report.

Tesla stock just hit $1,000 again. Should I buy now?

financialnews1 on December 10, 2021

The Tesla (NASDAQ: TSLA) share price fell by 6% to $1,000 on Thursday, on the day that CEO Elon Musk sold another $1bn of Tesla stock to meet tax obligations.

Mr Musk’s disposals have now totalled nearly $12bn in five weeks. But the electric car boss still owns around $165bn of Tesla shares, according to my estimates. I’m not worried about his commitment to the business. Indeed, with the shares down by around 20% from their October peak, I’m wondering whether I should be buying Tesla stock.

5 Stocks For Trying To Build Wealth After 50

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.

Click here to claim your free copy now!

A world-changing business

Tesla attracts some strong views in the market, not all of them positive. However, I’m not here to bash the company or pick holes in its accounting.

I think there are probably still some rough edges to this business. And I’m a little sceptical about Tesla’s self-driving claims. But overall, I think that what Elon Musk has achieved is very impressive. In my view, it’s probably fair to say that Tesla cars have had a global impact in terms of speeding up the transition to electric vehicles.

In 2016, Tesla produced 84,000 cars. Over the 12 months to 30 September, the company built 804,339 cars. At the same time, the business has become much more profitable. Further expansion is underway, with new factories being built in both Europe and the US.

Here’s what worries me

Back in 2000, internet boom was in full swing. Companies such as Cisco Systems were playing a similar role to EV companies like Tesla today. Cisco was shaking up the markets with game-changing technology. Established competitors (including the company I worked for) were trying desperately to catch up.

While some dotcom businesses have since disappeared, Cisco has been very successful. The network equipment manufacturer’s sales have risen from $19bn in 2000 to $50bn today. Annual profits have risen from $2.7bn to $11bn over the same period.

The only problem is that Cisco’s share price today is still lower than it was when prices peaked in March 2000. Investors who bought near the top and decided to hold onto their Cisco stock have spent 20 years waiting to get back to breakeven. I think there’s a risk something similar could happen to Tesla shares.

Will I buy Tesla stock?

I expect Tesla’s sales to continue rising as demand for EVs increases. I also think that Tesla’s profitability should continue to improve. City forecasts suggest profit margins could rise over 10% next year.

However, Tesla’s share price has risen by 1,500% over the last two years. The company’s revenue has only risen by 100% over this period. 

Broker forecasts now show Tesla shares trading on 130 times 2022 forecast earnings. That’s based on earnings growth of 35% in 2022.

In my view, this valuation is probably already pricing in around five more years of strong growth. Although it’s possible that Tesla’s profits will grow much faster than anyone expects — justifying a higher valuation — I think it’s unlikely. It’s certainly not something I’d stake my own cash on.

I suspect that conventional car manufacturers will become much tougher competitors for Tesla over the next few years. Although I admire Tesla’s achievements, I don’t think the stock’s valuation is justified by fundamentals. For this reason, I won’t be buying the shares today.

Roland Head 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.

How to Holiday Shop at the Last Minute

financialnews1 on December 10, 2021

Supply chain snags. Sold-out merchandise. Empty shelves. Hefty shipping fees. Inflation. There are plenty of complications working against you this holiday shopping season.

And despite warnings to shop early because of pandemic-related delays, some of us didn’t prioritize holiday shopping in October and November.

But all hope isn’t lost. Here’s what to do if you still have gifts left to purchase this month.

Watch for restocks

Keep checking back with retailers — both online and in stores — over the next few weeks, and you could be pleasantly surprised.

“Typically retailers get multiple deliveries in throughout a holiday season, so even if something is sold out earlier in the season, there’s always a chance that it could come back in stock in December,” says Katherine Cullen, senior director of industry and consumer insights for the National Retail Federation.

And remember all of those deliveries that were supposed to arrive weeks ago? Well, they may finally make their way onto U.S. soil — and onto store shelves in the weeks ahead.

“With some of these delays that are impacting retailers at ports, we need to consider those holiday shipments they’ve scheduled for November. Maybe they’ll be coming in December,” Cullen says.

Besides physically visiting stores or manually checking websites for product availability, you can also let technology do the work for you. On many retail sites, you can enter your email address and sign up to be notified when a particular item comes back in stock.

Check delivery deadlines

Once you find something you want to buy, make sure you’ll get it in time for holiday gatherings. If you’re unsure if something will arrive when you need it, Cullen recommends checking a retailer’s website and social media accounts, or calling your local store.

Cullen says retailers typically advertise order-by deadlines on their websites. These are the last days to order if you want your online purchases to come by Christmas. If you pass the deadline, you may have to pay extra for expedited shipping. Or, you could miss Christmas delivery altogether.

The United States Postal Service has already announced its holiday shipping deadlines. Dec. 15 is the cutoff for retail ground shipping in the contiguous U.S. for delivery before Christmas. You can expect major retailers to advertise a similar date.

Sometimes, specific products are backordered or have shipping estimates that differ from the overall website. Always pay attention to notes about the product as well as the estimated delivery date when you’re navigating the online checkout process.

If you don’t want to cut it too close, you could always shop in person at a local small business instead. And if something you ordered doesn’t arrive when expected, consider taking a picture of the gift and giving that as a place holder for the forthcoming physical product.

Buy a gift card

While gift cards aren’t the most personal gift, they may be the most practical gift of 2021.

“If there’s any year to give a gift card, this is it,” says Darrin Duber-Smith, senior lecturer of marketing at Metropolitan State University of Denver.

Gift cards allow for digital delivery, which can circumvent shipping logistics completely. And there’s little to no risk of a gift card being out of stock.

But while gift cards and certificates will be less of a headache for the gift giver, they could present limitations for the recipient — particularly if empty shelves persist into January. Those you give gift cards to might have to hang onto them for a while before cashing them in.

“Consumers are going to have to be patient in terms of redeeming their gift cards,” Duber-Smith says.

Wait until the very last minute

If you’re not the type of person who gets stressed out by waiting until the very, very, very last minute, there’s one more path to securing presents — and at a discount.

Super Saturday is the nickname for the last Saturday before Christmas. This year, that’s Dec. 18. Cullen expects stores to host sales on this major shopping day, just as they do every other year.

Last year, department stores, makeup brands, shoe stores and more offered discounts as high as 70% off.

If you go this route, be aware that you’ll likely need to go to the store or order online for store pickup. And inventory may be low, reducing your choices.

This article was written by NerdWallet and was originally published by The Associated Press. 

Deep Dive: Here’s a list of favored dividend stocks with room to pay more for investors worried about 2022

financialnews1 on December 10, 2021

This is the time of the year when Wall Street prognosticators do their best to entertain investors with predictions.

But after two excellent years for U.S. stocks, maybe it’s time to position yourself to enjoy high and well-supported dividends if the market turns sour in 2022.

Many companies have rebounded this year from low sales during the pandemic doldrums of 2020, or in the case of banks, enjoyed a massive bump to earnings as they released loan-loss reserves. So the following dividend-stock screen looks forward, using consensus estimates for 2022.

Read: ‘Proceed with caution’: Here’s what Wall Street analysts see for the U.S. stock market in 2022

If you look at the headline link above — maybe investors should always proceed with caution. Despite good economic news — the latest being the lowest number of weekly unemployment claims since 1969 — stock-market performance in 2022 could be tamped-down by another coronavirus variant or high inflation, if it turns out to be a longer-term phenomenon.

The benefit of dividend stocks is obvious to investors who need current income, but it may also be soothing for any investor to be paid to wait if the market is weak for a while.

High-yielding dividend stocks with ‘headroom’

A stock with a high dividend yield has its attractions, but you probably want some comfort that the dividend won’t be cut — that means excess cash flow beyond what it is already paying out.

One way to measure dividend-paying ability is to look at a company’s free cash flow yield. Free cash flow is remaining cash flow after planned capital expenditures. This money can be used to pay dividends, buy back shares (which can raise earnings and cash flow per share), or fund acquisitions, organic expansion or for other corporate purposes. If we divide a company’s annual free cash flow per share by its current share price, we have its free cash flow yield. If we compare the free cash flow yield to the current dividend yield, we may see “headroom” for cash to be deployed in ways that can benefit shareholders.

For the following screen, we began with the S&P 1500 Composite Index
SP1500,
-0.78%,
which is made up of the S&P 500
SPX,
-0.72%,
the S&P 400 Mid Cap Index
MID,
-1.45%
and the S&P Small Cap 600 Index
SML,
-1.65%.

Here are the criteria for the screen:

  • Dividend yield of at least 3.00%, which is more than twice the current yield on 10-year U.S. Treasury notes
    TMUBMUSD10Y,
    1.515%    .

  • “Headroom,” based on consensus estimates for free cash flow per share for calendar 2022, among analysts polled by FactSet. These estimates are not available for most companies in the financial sector, so the screen for that group was done using earnings-per-share estimates. For real estate investment trusts, the headroom screen is based on consensus 2022 estimates for funds from operations (FFO) per share, which is a non-GAAP calculation commonly used in the REIT industry to measure dividend-paying ability.

  • Majority “buy” or equivalent ratings among analysts polled by FactSet, with a minimum of five analysts covering each company.

Of course, companies for which the appropriate estimate for 2022 wasn’t available were excluded from the screen.

Dividend-stock screen results

The following 17 companies among the S&P Composite 1500 made the cut, excluding financials and REITs, which are listed separately below:

Company

 Ticker

 Estimated 2022 FCF yield

 Dividend yield

 Estimated “headroom” for 2022

 Estimated FCF per share – 2022

 Closing price – Dec. 8

 Share “buy” ratings
Devon Energy Corp.

 DVN,
-3.97% 		15.26%

 4.39%

 10.88%

 $6.86

 $44.91

 85%
Bristol-Myers Squibb Co.

 BMY,
-0.10% 		13.66%

 3.40%

 10.26%

 $7.87

 $57.60

 64%
LyondellBasell Industries N.V.

 LYB,
-0.61% 		15.25%

 4.99%

 10.25%

 $13.80

 $90.50

 52%
NRG Energy Inc.

 NRG,
-0.88% 		13.47%

 3.35%

 10.12%

 $5.23

 $38.81

 58%
Chemours Co.

 CC,
+2.12% 		11.15%

 3.11%

 8.04%

 $3.59

 $32.15

 57%
EOG Resources Inc.

 EOG,
-1.33% 		11.10%

 3.33%

 7.77%

 $10.00

 $90.08

 80%
Phillips 66

 PSX,
+0.63% 		12.56%

 5.12%

 7.44%

 $9.03

 $71.85

 79%
Marathon Petroleum Corp.

 MPC,
-1.12% 		11.01%

 3.62%

 7.38%

 $7.05

 $64.06

 84%
Valero Energy Corp.

 VLO,
-0.58% 		12.80%

 5.54%

 7.26%

 $9.06

 $70.72

 81%
Kontoor Brands Inc.

 KTB,
-1.60% 		8.97%

 3.40%

 5.57%

 $4.86

 $54.19

 75%
Chevron Corp.

 CVX,
-0.26% 		9.53%

 4.53%

 5.01%

 $11.29

 $118.45

 68%
Merck & Co. Inc.

 MRK,
-0.48% 		8.21%

 3.77%

 4.44%

 $6.01

 $73.21

 67%
Hanesbrands Inc.

 HBI,
-1.47% 		7.32%

 3.40%

 3.91%

 $1.29

 $17.63

 57%
Williams Companies Inc.

 WMB,
-2.24% 		9.00%

 5.93%

 3.07%

 $2.49

 $27.64

 72%
DT Midstream Inc.

 DTM,
-1.16% 		6.84%

 5.05%

 1.79%

 $3.25

 $47.49

 78%
Coca-Cola Co.

 KO,
-0.25% 		4.05%

 3.05%

 1.00%

 $2.23

 $55.00

 61%
Newmont Corp.

 NEM,
-0.27% 		4.76%

 3.90%

 0.86%

 $2.68

 $56.36

 57%
Source: FactSet

The list is sorted by estimated “headroom,” and includes the FCF estimate and the closing prices on Dec. 8, on which the FCF yields are based. There is great variance in estimated “headroom” for these companies.

Any stock screen has its limitations. If you are interested in stockslisted here, it is best to do your own research, and it is easy to get started by clicking the tickers in the table for more information about each company. Click here for Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.

Financials

Companies in the financial sector were excluded from the list above, because FCF estimates aren’t available for most of them. So here is an earnings-per-share dividend “headroom” screen, with 10 companies making the cut:

Company

 Ticker

 Estimated 2022 EPS yield

 Dividend yield

 Estimated “headroom” for 2022

 Estimated EPS – 2022

 Closing price – Dec. 8

 Share “buy” ratings
Citigroup Inc.

 C,
-0.51% 		12.75%

 3.27%

 9.48%

 $7.96

 $62.46

 62%
MetLife Inc.

 MET,
+0.43% 		11.79%

 3.17%

 8.62%

 $7.15

 $60.62

 81%
Valley National Bancorp

 VLY,
-1.13% 		8.49%

 3.12%

 5.37%

 $1.20

 $14.12

 63%
Citizens Financial Group Inc.

 CFG,
-0.48% 		8.36%

 3.28%

 5.08%

 $3.98

 $47.60

 80%
First Horizon Corp.

 FHN,
-1.27% 		8.64%

 3.58%

 5.05%

 $1.45

 $16.75

 80%
F.N.B. Corporation

 FNB,
-0.33% 		8.96%

 3.98%

 4.99%

 $1.08

 $12.07

 80%
New York Community Bancorp Inc.

 NYCB,
-0.49% 		10.33%

 5.52%

 4.80%

 $1.27

 $12.31

 57%
James River Group Holdings Ltd.

 JRVR,
-2.32% 		9.02%

 4.51%

 4.50%

 $2.40

 $26.58

 75%
Pacific Premier Bancorp Inc.

 PPBI,
-1.68% 		7.75%

 3.35%

 4.40%

 $3.05

 $39.38

 57%
Ellington Financial Inc.

 EFC,
-0.11% 		11.36%

 10.24%

 1.12%

 $2.00

 $17.57

 75%
Source: FactSet

REITs

For REITs, we screened for FFO yields and “headroom,” as explained above. Here are the 23 REITs in the S&P Composite 1500 that made the cut:

Company

 Ticker

 Estimated 2022 FFO yield

 Dividend yield

 Estimated “headroom” for 2022

 Estimated FFO – 2022

 Closing price – Dec. 8

 Share “buy” ratings
Corporate Office Properties Trust

 OFC,
-1.76% 		8.42%

 3.94%

 4.48%

 $2.35

 $27.92

 85%
Hudson Pacific Properties Inc.

 HPP,
-2.48% 		8.08%

 3.82%

 4.27%

 $2.12

 $26.19

 54%
Highwoods Properties Inc.

 HIW,
-0.43% 		8.65%

 4.50%

 4.15%

 $3.84

 $44.44

 56%
Kite Realty Group Trust

 KRG,
-1.65% 		7.35%

 3.30%

 4.05%

 $1.60

 $21.83

 73%
RPT Realty

 RPT,
-3.36% 		7.54%

 3.51%

 4.04%

 $1.03

 $13.68

 56%
Cousins Properties Inc.

 CUZ,
-1.33% 		6.98%

 3.12%

 3.86%

 $2.78

 $39.79

 67%
Medical Properties Trust Inc.

 MPW,
-1.30% 		8.58%

 5.04%

 3.54%

 $1.91

 $22.23

 85%
Sabra Health Care REIT Inc.

 SBRA,
-1.23% 		11.98%

 8.70%

 3.28%

 $1.65

 $13.79

 64%
Simon Property Group Inc.

 SPG,
-2.28% 		7.42%

 4.19%

 3.22%

 $11.68

 $157.45

 52%
Urban Edge Properties

 UE,
-2.42% 		6.33%

 3.22%

 3.11%

 $1.18

 $18.63

 60%
Armada Hoffler Properties Inc.

 AHH,
-1.59% 		7.24%

 4.51%

 2.73%

 $1.09

 $15.09

 71%
CareTrust REIT Inc.

 CTRE,
-0.84% 		7.09%

 4.68%

 2.41%

 $1.61

 $22.65

 89%
National Retail Properties Inc.

 NNN,
-2.06% 		6.37%

 4.55%

 1.82%

 $2.97

 $46.56

 57%
Essential Properties Realty Trust Inc.

 EPRT,
-3.31% 		5.41%

 3.62%

 1.79%

 $1.55

 $28.72

 83%
Community Healthcare Trust Inc.

 CHCT,
-1.21% 		5.39%

 3.80%

 1.58%

 $2.44

 $45.34

 63%
Healthpeak Properties Inc.

 PEAK,
-1.13% 		5.04%

 3.48%

 1.56%

 $1.74

 $34.53

 58%
Agree Realty Corp.

 ADC,
-4.61% 		5.38%

 3.82%

 1.56%

 $3.84

 $71.34

 85%
Easterly Government Properties Inc.

 DEA,
-0.36% 		6.14%

 4.81%

 1.34%

 $1.35

 $22.06

 83%
Realty Income Corporation

 O,
-2.16% 		5.60%

 4.29%

 1.31%

 $3.85

 $68.85

 57%
Four Corners Property Trust Inc.

 FCPT,
-1.97% 		5.69%

 4.60%

 1.09%

 $1.64

 $28.90

 71%
Iron Mountain Inc.

 IRM,
-1.31% 		6.16%

 5.16%

 1.00%

 $2.95

 $47.91

 75%
American Campus Communities Inc.

 ACC,
-1.16% 		4.38%

 3.40%

 0.97%

 $2.42

 $55.23

 70%
Crown Castle International Corp.

 CCI,
-1.01% 		3.84%

 3.07%

 0.77%

 $7.35

 $191.55

 57%
Source: FactSet

Don’t miss: A sales surge might make this industry your best stock market play for 2022

Metals Stocks: Gold prices slip ahead of U.S. consumer inflation data

financialnews1 on December 10, 2021

Gold prices were headed lower on Friday, even though data that could show U.S. consumer prices hitting the highest level in about 40 years is due during the session, but rising U.S. bond yields and a firmer dollar have limited the precious metals value as an inflation hedge.

February gold 
GCG22,
-0.21%

GC00,
-0.21%
declined by $3.60, or 0.2%, to $1,773.10 an ounce. The metal slipped 0.5%, to settle at $1,776.70 an ounce on Thursday, and is down 0.6% in the week so far. Meanwhile, March silver 
SIH22,
-0.70%
dropped 0.7% to $21.82 an ounce, following a 1.9% slide on Thursday.

November consumer price inflation is expected to rise 6.7% on an annual basis, according to a poll of economists by Dow Jones Newswires and The Wall Street Journal. That would mark the fastest annual rate since the 1980s.

The data will be closely watched by markets and if hotter-than-expected, will increase expectations of a faster Federal Reserve tapering of its bond purchases, with the central bank due to meet next week.

“The metals are lower as the greenback stays firm with yields ticking higher ahead of the consumers inflation data,” said Peter Cardillo, chief market economist at Spartan Capital, in a note to clients.

The U.S. dollar was up 0.1% at 96.372, as measured by the ICE U.S. Dollar Index 
DXY,
+0.10%,
 a gauge of the buck against a half-dozen rivals. The yield on the 10-year Treasury note
TMUBMUSD10Y,
1.515%
rose 3 basis points to 1.509%.

In other Comex dealings, March copper 
HGH22,
+0.07%
was flat at $4.333 a pound. January platinum 
PLF22,
+0.15%
rose 0.1% to $938.70 an ounce and March palladium 
PAH22,
-2.27%
 fell 2.3% to $1,771.50 an ounce.

Futures Movers: Oil futures rebound Friday, head for best weekly gain in over 3 months

financialnews1 on December 10, 2021

Oil futures traded higher Friday, attempting to claw back some of Thursday’s loss, as commodity investors aimed to cap an otherwise strong recovery this week from fears of demand shocks due to the omicron variant of COVID.

West Texas Intermediate crude for January delivery
CLF22,
+1.17%

CL.1,
+1.17%
 traded 71 cents, or 1% higher, to reach $71.64 a barrel on the New York Mercantile Exchange, after shedding 2% a day ago.

February Brent crude
BRNG22,
+1.09%

BRN00,
+1.09%
was trading 63 cents, or 0.8%, higher at $75.07 a barrel on ICE Futures Europe, following a 1.9% decline on Thursday.

For the week, WTI, the U.S. benchmark, is up more than 8%, representing the sharpest weekly gain since a 10% rise in the period ended Aug. 27, if gains hold. Brent, the international contract, meanwhile, has climbed 7.4%, based on the most-active contract values from last Friday, also on track for its steepest weekly advance since late August.

Oil prices have been buffeted by concerns about demand due to the spread of the new omicron variant of COVID since the end of November, with restrictions imposed again on consumer activity in parts of the world including the U.K. this week.

Concerns about China’s property market, with highly leveraged developer Evergrande being downgraded by Fitch Ratings, also had contributed to some headwinds for markets.

But analysts say that the worst-case scenario for the pathogen may already have been factored into energy supply and demand.

Crude oil prices appear to be close to recovering nearly half of what was lost during the height of selling on Nov. 26.

Bond Report: Treasury yields climb as investors watch for hottest inflation reading in nearly 40 years

financialnews1 on December 10, 2021

Yields on U.S. government debt were rising again Friday morning, adding to the weakness in Treasuries this week, as fixed-income investors positioned ahead of the November consumer price index data due during the session which may reveal the highest annual inflation rate in 40 years.

A hot inflation report could solidify the view that the Federal Reserve will act more quickly to tighten monetary conditions when it meets next week and raise interest rates next year to cool surging pricing pressures.

What are yields doing?
  • The 10-year Treasury note yields
    TMUBMUSD10Y,
    1.506%
    1.514%, up compared with 1.486% on Thursday at 3 p.m. Eastern Time.

  • The 30-year Treasury bond rate
    TMUBMUSD30Y,
    1.876%
    was at 1.884%, up from versus 1.865% a day ago.

  • The 2-year note yield
    TMUBMUSD02Y,
    0.716%
    was at 0.717%, adding to its highest rate since March of 2020, compared with 0.684% on Thursday afternoon.

  • For the week, the 10-year Treasury has risen 17.2 basis points, the 30-year added 20.9 basis points, and the 2-year Treasury note picked up 12.8 basis points, based on 3 p.m. levels on Dec. 3.

What’s driving the market?

All eyes are on the U.S. consumer inflation data due Friday morning, with prices expected to have risen by 6.7% year-on-year in November, according to economists surveyed by the Wall Street Journal, when the data is published by the Labor Department at 8:30 a.m. ET.

The inflation rate is expected to top 5% for the sixth straight month to the highest pace since 1982.

Some analysts are wagering that the reading might come in a little cooler because of a sharp drop in oil prices
CL.1,
+1.01%
last month, but core inflation, which excludes volatile food and energy prices is estimated to see a rise of 0.5% for the month, compared with a 0.6% reading for October.

Read: Traders see next U.S. CPI reading close to 7% as volatile markets try to shake off omicron and Federal Reserve’s hawkish pivot

Fed Chairman Jerome Powell signaled last week that the central bank is likely to move more quickly on reducing its monthly bond purchases, amid fears that the omicron variant of the coronavirus that causes COVID-19 could intensify supply-chain bottlenecks that have contributed to higher prices. Markets expect the tapering of Treasurys and mortgage-backed securities purchases could be completed by March, with multiple interest rate hikes expected in 2022.

A punchy inflation report also could hamper President Joe Biden’s goal of passing a multitrillion-dollar social-spending package through Congress before the end of the year, as some U.S. senators fear fiscal stimulus is already overdone, Barron’s, MarketWatch’s sister publication, writes.  

What strategists are saying

“With the fed funds futures market already pricing in almost 3 rate hikes in 2022 (the now more hawkish Jim Bullard who votes next year said he wants two) and everyone expecting a doubling of the pace of taper, I’m not sure even an upside surprise to today’s CPI is going to move the Treasury market much as I can’t imagine the Fed going faster than what the Treasury market now anticipates,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group, in a Friday note. “I doubt they’ll even get to what is currently priced in. “

What’s going on with Lucid stock?

financialnews1 on December 10, 2021

Lucid (NASDAQ: LCID) stock has tanked in the past few days. Shares in the company are off 25% since the beginning of the week. Since mid-November, the stock is down by a third. Still, over the past year, the stock is up 270%.

It looks to me as if there are two key reasons why investors have been selling shares in the electric vehicle (EV) company this week. 

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Lucid stock headwinds 

The first development is the company’s recent decision to issue $1.75bn of convertible senior notes, debt in other words. The debt carries an interest rate of 1.25% and can be converted into its shares at a predetermined rate. 

Not only will this debt issue incur additional costs for the company in terms of the interest paid, but it could also dilute existing shareholders if converted. With each new share that is issued, existing shareholders’ claim on the business declines. Investors could be selling the stock to reduce their exposure to this dilution. 

This debt issue is important to consider, but I do not think it is the primary reason why investors have been selling Lucid stock over the past week. 

The most pressing reason is the fact that the US Securities and Exchange Commission (SEC) has subpoenaed the company seeking documents related to an investigation.

Although the exact target of the investigation has not yet been revealed, Lucid is telling investors that “the investigation appears to concern the business combination between the Company (f/k/a Churchill Capital Corp. IV) and Atieva, Inc.” 

Atieva was Lucid’s former name before the corporation’s merger with the special purpose acquisition company (SPAC) Churchill Capital Corp. IV. 

The SEC has launched a range of investigations recently regarding SPAC mergers. This seems to be the latest attack on these entities. 

Many of the investigations revolve around whether or not these companies misled investors by providing overly optimistic financial statements. I should clarify that no statements related to Lucid accuse the business of this. The company says it is fully cooperating with the SEC.

Uncertainty prevails 

As of yet, it is unclear what will happen with the investigation. It is also unclear if it will have any impact on Lucid at all. Unfortunately, it does bring an element of uncertainty into the equation. The market hates uncertainty more than anything else. 

This seems to be why Lucid stock has crashed. The uncertain outlook is spooking investors. 

Still, there are some reasons to be positive. The company’s first EV started rolling off the production line earlier this year. The first deliveries went out to customers in November. As production scales up, the group’s revenues should begin to grow, and the market may reflect that in its assessment of the business. 

Despite this positive outlook, I am not a buyer of the stock today. I think Lucid’s outlook is just too uncertain, and the company has a lot of work to do to catch up to market leaders in the EV space. 


Rupert Hargreaves 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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