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Economics

Lead Outlook 2022: Demand to Recover, Prices Likely to Remain High

Click here to read the previous lead outlook article. Following the rebound from the lows hit in 2020, lead prices continued their upward trend in 2021.Although volatility was high, prices reached their highest level in more than three years. As the new..

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Click here to read the previous lead outlook article.

Following the rebound from the lows hit in 2020, lead prices continued their upward trend in 2021.

Although volatility was high, prices reached their highest level in more than three years.

As the new year begins, the Investing News Network (INN) is looking back at the main trends in the lead space in 2021 and what’s ahead for prices, supply and demand in the new year. Read on to learn what analysts and market participants had to say.


Lead trends 2021: Price performance review


Lead prices kicked off 2021 on a bright note after recovering from the uncertainty brought by COVID-19 in 2020, but volatility reigned in the lead space for most of the year.

Speaking with INN about how lead performed in 2021, CPM Group’s Carlos Sanchez said lead was the weakest performer of all base metals.

“One would have expected, given the performance of all other base metals, and really most commodities, for lead to have performed better,” he said.

Lead prices started 2021 hovering around the US$2,000 per tonne mark and traded higher for most of the first quarter. Prices started to fall by the end of February, hitting their lowest point of the year by the end of March.


“Lead prices dropped, likely weighed on by higher US yields and still-downbeat demand for automotives,” FocusEconomics analysts said back in Q1.

After plummeting by the end of the first quarter, prices took a turn to the upside, as demand from top consumer China was firm.

“Moreover, healthier automotive production data in key manufacturing countries in March, particularly in China, Germany and the US, pointed to stronger demand for lead-acid batteries, thereby pushing lead prices further up,” FocusEconomics analysts said. “However, lower lead scrap prices in the US market amid ample supply seemingly capped the increase somewhat.”

The third quarter saw prices pull back again, although they continued to trade above the US$2,000 level.

“Ongoing energy shortages in China, which have resulted in production curbs, weighed on lead-acid battery output, with plants markedly reducing output from 23 September,” FocusEconomics analysts said. “On top of this, downbeat car manufacturing amid semiconductor shortages, as well as surging prices for silicon — essential for alloying purposes — likely exerted additional downward pressure on prices.”

The fourth quarter saw some recovery for the lead price, which saw a Q4 high of US$2,469 on October 25 before ending the year sitting around the US$2,300 level.

Lead outlook 2022: What’s ahead for supply, demand and prices


As the new year begins, investors interested in the lead market should keep an eye on supply and demand dynamics as well as catalysts that could impact the sector and, of course, prices.

In terms of demand, the pandemic hit demand for lead, as its main use is in batteries, and the auto sector has experienced many hurdles in the past year, including a chip shortage.

In 2022, CPM is expecting the market to recover, assuming the world can get past COVID-19.

“Expect a recovery in lead to happen more in the second half of 2022,” Sanchez said.

Looking at how supply has performed, global lead mine production rose by 4.6 percent over the first 10 months of 2021 compared to the same period in 2020, according to the International Lead and Zinc Study Group. This was mainly due to increases in Bolivia, China, India, Mexico and Peru that more than balanced a significant reduction in Poland.

Additionally, world refined lead metal supply exceeded demand by 15,000 tonnes during the first 10 months of 2021, with total reported stock levels increasing by 31,000 tonnes.

Following the sharp contraction seen as a result of the global COVID-19 pandemic in 2020, global lead mine production is expected to rebound strongly during the 2021 to 2023 period, according to Fitch Solutions.

“Output will be boosted by increased investment into copper, zinc and silver mines that produce lead as a by-product,” the firm says. “Lead mine production will grow most rapidly in Peru and Australia, while output growth will slow in dominant producer China due to tightening safety and environmental regulations in the country.”

But even with output increasing, CPM is expecting the lead market to be tight in 2022, although a surplus is still expected.

“But that surplus is expected to be reduced in 2022 and likely be reduced further beyond this year,” Sanchez said.

Looking over to prices, CPM is expecting lead prices to pick up in 2022, in particular in the first few months of the year — a seasonally strong period for demand.

“Prices do retreat a little bit in the summer months because there's reduced demand for lead batteries,” Sanchez said. “But then, if we can get past this COVID virus and the shortage in chips for autos no longer becomes an issue, I think you're gonna see lead prices move sharply higher.”

CPM Group forecast lead prices will average US$2,600 for the year. Meanwhile, panelists recently polled by FocusEconomics see prices averaging US$2,057 in Q4 2022 and US$2,025 in Q4 2023.

“Although prices for lead are seen falling further ahead, positive fundamentals amid a gradually normalizing automotive sector should limit the decline next year and in 2023,” FocusEconomics analysts said. “The gradual phasing-out of lead-acid batteries, amid the global legislative push for green technologies, poses a key downside risk, while pandemic-related uncertainty casts a shadow over the outlook.”

Don’t forget to follow us @INN_Resource for real-time news updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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Economics

5 Top Consumer Stocks To Watch Right Now

Are these consumer stocks a buy amid the earnings season?
The post 5 Top Consumer Stocks To Watch Right Now appeared first on Stock Market News, Quotes,…

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5 Trending Consumer Stocks To Watch In The Stock Market Now         

As we tread through the earnings season, consumer stocks could be worth watching in the stock market this week. This would be the case since a number of big consumer names such as Costco (NASDAQ: COST) and Macy’s (NYSE: M) will be posting their financials for the quarter. As such, investors will be keeping an eye on these reports for clues on the strength of consumer spending amid this period of high inflation.

However, despite the soaring prices across the economy, it seems that consumers are surprisingly showing resilience. According to the Commerce Department, retail sales in April outpaced inflation for a fourth straight month. This could suggest that consumers as a whole were not only sustaining their spending, but spending more even after adjusting for inflation. Ultimately, it could be a reassuring sign that consumers are still supporting the economy and helping to diminish the narrative of an incoming recession. With that being said, here are five consumer stocks to check out in the stock market today.

Consumer Stocks To Buy [Or Sell] Right Now

Nordstrom

retail stocks (JWN stock)

Starting off our list of consumer stocks today is Nordstrom. For the most part, it is a fashion retailer of full-line luxury apparel, footwear, accessories, and cosmetics among others. The company operates through multiple retail channels, boutiques, and online as well. As it stands, Nordstrom operates around 100 stores in 32 states in the U.S. and three Canadian provinces.

Yesterday, the company reported its financials for the first quarter of 2022. Starting with revenue, Nordstrom pulled in net sales worth $3.47 million for the quarter. This marks an increase of 18.7% from the same quarter last year. Its Nordstrom banner saw net sales rise by 23.5% year-over-year, exceeding pre-pandemic levels. Next to that, its Nordstrom Rack banner saw a 10.3% increase in net sales from last year. Besides, net earnings were $20 million, with earnings per share of $0.13 for the quarter. Considering Nordstrom’s solid quarter, should you invest in JWN stock?

[Read More] Best Stocks To Invest In Right Now? 5 Value Stocks To Watch This Week

The Wendy’s Company

best consumer stocks (WEN stock)

Next up, we have The Wendy’s Company. For the most part, it is the holding company for the major fast-food chain, Wendy’s. Being one of the world’s largest hamburger fast-food chains, the company boasts over 6,500 restaurants in the U.S. and 29 other countries. The chain is known for its square hamburgers, sea salt fries, and the Frosty, a form of soft-serve ice cream mixed with starches. WEN stock is rising by over 8% on today’s opening bell.

According to an SEC filing, Wendy’s largest shareholder, Trian Partners, is looking into making a potential deal with the company. Trian said that it is considering a deal to “enhance shareholder value.” Also, the firm adds that this could lead to an acquisition or business combination. In response, Wendy’s stated that it is constantly reviewing strategic priorities and opportunities. It added that the company’s board will carefully review any proposal from Trian. Given this piece of news, will you be watching WEN stock?

[Read More] 4 Semiconductor Stocks To Watch In The Stock Market Today

Foot Locker

FL stock

Another stock investors could be watching is the shoes and apparel company, Foot Locker. In brief, the company uses its omnichannel capabilities to bridge the digital world and physical stores. As such, it provides buy online and pickup-in-store services, order-in-store, as well as the growing trend of e-commerce. Some of its most notable brands include Eastbay, Footaction, Foot Locker, Champs Sports, and Sidestep. Last week, the company reported its results for the first quarter of the year.

For starters, total sales came in at $2.175 billion, a slight uptick compared to sales of $2.153 billion in the year prior. Next to that, Foot Locker reported a net income of $133 million. Accordingly, adjusted earnings per share came in at $1.60, beating Wall Street’s expectations of $1.54. CEO Richard Johnson added, “Our progress in broadening and enriching our assortment continues to meet our customers’ demand for choice. These efforts helped drive our strong results in the first quarter, which will allow us to more fully participate in the robust growth of our category going forward.”  As such, is FL stock one to add to your watchlist? 

Tyson Foods 

TSN stock

Tyson Foods is a company that built its name on providing families with wholesome and great-tasting protein products. Its segments include Beef, Pork, Chicken, and Prepared Foods. With some of the fastest-growing portfolio of protein-centric brands, it should not be surprising that TSN stock often comes to mind when investors are looking for the best consumer stocks to buy. 

Earlier this month, Tyson Foods provided its fiscal second-quarter financial update. The company’s total sales for the quarter were $13.1 billion, representing an increase of 15.9% compared to the prior year’s quarter. Meanwhile, its GAAP earnings per share climbed to $2.28, up 75% year-over-year. According to Tyson, these financial figures are a reflection of the increasing consumer demand for its brands and products. To top it off, the company was also able to reduce its total debt by approximately $1 billion. Thus, does TSN stock have a spot on your watchlist?

[Read More] Stock Market Today: Dow Jones, S&P 500 Rise, Wendy’s Stock Gains On Potential Deal

DoorDash

food delivery stocks (DASH Stock)

DoorDash is a consumer company that operates an online food ordering and delivery platform. In fact, it is one of the largest delivery companies in the U.S. and enjoys a huge market share. The company connects hundreds of thousands of merchants to over 25 million consumers in the U.S., Canada, Australia, and Japan through its local logistics platform. Accordingly, its platform allows local businesses to thrive in today’s “convenience economy,” as the company puts it.

On May 5, the company reported its first-quarter financials for 2022. Diving in, it posted a revenue of $1.5 billion, growing by 35% year-over-year. This was driven by total orders that grew by 23% year-over-year to $404 million. Along with that, it reported a GAAP gross profit of $662 million, an increase of 34% year-over-year. The company said that it added more consumers than any quarter since Q1 2021, due in part to the growth of its DashPass members. The growth in Monthly Active Users and average order frequency has helped it gain share in the U.S. Food Delivery category this quarter as well. Given DoorDash’s performance for the quarter, should you watch DASH stock?

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The post 5 Top Consumer Stocks To Watch Right Now appeared first on Stock Market News, Quotes, Charts and Financial Information | StockMarket.com.

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Economics

Philly Fed: State Coincident Indexes Increased in 50 States in April

From the Philly Fed: The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for April 2022. Over the past three months, the indexes increased in all 50 states, for a three-month diffusion index of 100. Additiona…

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From the Philly Fed:
The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for April 2022. Over the past three months, the indexes increased in all 50 states, for a three-month diffusion index of 100. Additionally, in the past month, the indexes increased in all 50 states, for a one-month diffusion index of 100. For comparison purposes, the Philadelphia Fed has also developed a similar coincident index for the entire United States. The Philadelphia Fed’s U.S. index increased 1.1 percent over the past three months and 0.3 percent in April.
emphasis added
Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:
The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.
Click on map for larger image.

Here is a map of the three-month change in the Philly Fed state coincident indicators. This map was all red during the worst of the Pandemic and also at the worst of the Great Recession.

The map is all positive on a three-month basis.

Source: Philly Fed.

Philly Fed Number of States with Increasing ActivityAnd here is a graph is of the number of states with one month increasing activity according to the Philly Fed. 

This graph includes states with minor increases (the Philly Fed lists as unchanged).

In April all 50 states had increasing activity including minor increases.

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Economics

Finding Shelter in an Inverse ETF

As the old saying goes, “What goes up must come down.” Indeed, up until the recent selling wave caused by Russia’s war against Ukraine and the continued…

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As the old saying goes, “What goes up must come down.”

Indeed, up until the recent selling wave caused by Russia’s war against Ukraine and the continued effects of supply chain disruptions amid the COVID-19 pandemic, tech stocks, including semiconductors, were the darlings of the investment world. That is, it seemed as if the sky-high valuations of some tech stocks were sustainable in an atmosphere of seemingly perpetual growth.

That, of course, was not the case, and the too-good-to-be-true valuations were quickly brought down to earth by the forces of inflation and tight monetary policy. As a result, the tech-heavy Nasdaq entered a free-fall that has not yet found a bottom.

At the same time, that does not mean that we should abandon the sector as a lost cause. One such way to play the sector during its downhill slide is the exchange-traded fund (ETF) Direxion Daily Semiconductor Bear 3X Shares (NYSEARCA: SOXS).

As its title suggests, this is an inverse ETF, meaning that it is built to go up in value when its parent index goes down. Specifically, SOXS provides three times leveraged inverse exposure to a modified market-cap-weighted index of semiconductor companies that trade in American markets by using swap agreements, futures contracts and short positions.

While the index’s holdings are weighted by market capitalization, the fund’s managers cap the weights of the top five securities in the portfolio at 8% each. The weight of the remaining securities is capped at 4% each.

As of May 24, SOXS has been up 0.37% over the past month and up 24.73% for the past three months. It is currently up 60.47% year to date.

Chart courtesy of www.stockcharts.com

The fund has amassed $258.15 million in assets under management and has an expense ratio of 1.01%.

In short, while SOXS does provide an investor with a way to invest in an inverse ETF, this kind of ETF may not be appropriate for all portfolios. Thus, interested investors always should conduct their due diligence and decide whether the fund is suitable for their investing goals.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

The post Finding Shelter in an Inverse ETF appeared first on Stock Investor.

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