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Top Penny Stocks To Watch If You’re Playing The Esports Trend In 2021

Esports penny stocks to watch in October.
The post Top Penny Stocks To Watch If You’re Playing The Esports Trend In 2021 appeared first on Penny Stocks to Buy, Picks, News and Information | PennyStocks.com.

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A new industry has emerged from the ashes of the 2020 pandemic. Both penny stocks and blue chips have started to reap the reward. The exciting part is that, unlike other “reopening stocks,” this new trend has only just begun to dig its cleats in. In this article, we’re looking at the emerging trend in esports. We’ll also discuss what’s happening in the industry. Plus, I’ll go over a few penny stocks to watch as M&A activity has grown prominence.

Esports & A New Trend That Can’t Go Unoticed

Believe it or not, professional esports has been around for a while. Thanks to the global shutdown last year, its growth was amplified, however. For example, Newzoo, an industry analytics firm, explained that in 2015 just over 800,000 people had even heard of esports. Fast-forward a few years, and Newzoo finds that nearly 2 billion people are well aware of the industry. More than 600 million encompass the “active live streaming” audience.

Read more: 5 Top Penny Stocks To Watch In The Stock Market Today

You also can’t ignore that Newzoo expects the industry to reach $1.8 billion by next year. Thanks to these stats, it’s no wonder that top celebrities and professional athletes are grabbing a stake in this niche. Everyone from Michael Jordan and David Beckham to Will Smith and Drake is throwing their hats into the ring right now.

Esports Penny Stocks To Watch

Alpha Esports Tech Inc. (CSE:ALPA) (OTC:APETF)

alpha esports tech investor info deck image

One of the newer companies on this list of penny stocks is Alpha Esports. It made its public debut earlier in the year and since then has put a more significant focus on building partnerships and strong working relationships. Alpha’s model leverages its GamerzArena platform to build upon a userbase of both novice and professional games, taking full advantage of the popularity of Esports. According to the company, GamerzArena boasts over 100,000 active users and a rapidly evolving ecosystem.

New partnerships have become a driving force for Alpha aside from members’ eligibility to become GamerzArena+ members (at $12.99/ month per member). The company has explained that its relationship includes names like The New Jersey Devils, Barstool Sports, ESPN Radio, Notre Dame, Syracuse University, & Penn State, among others.

What To Watch With Alpha Esports

Most recently, Alpha became the Official Online Gaming Portal of Nets Gaming Crew, the NBA 2K League affiliate of the Brooklyn Nets. NetsGC and Alpha will team up to host two esports tournaments on the GamerzArena platform – one for high schoolers and one for college students, just for starters.

This became the latest on a long list of deals that Alpha has been part of since going public. Each deal has further expanded its reach and access to new users. This week, Alpha inked an agreement with Esports Entertainment Group (NASDAQ:GMBL) subsidiary, EEG Labs, to develop a new computer vision tech system. The tech will simplify match scoring and allow GamerzArena to detect fraud, including falsified game outcomes. Magnus Leppaniemi, President of EEG Games, explained, “In working together, we will pave the way for ground-breaking and efficient scoring of esports match results, allowing gamers everywhere to compete safely and reliably.”

With countless deals in the books and progress being made via its GamerzArena platform, Alpha could be one of the Esports penny stocks to watch as the industry grows.

FansUnite Entertainment Inc. (CSE: FANS)(OTC: FUNFF)

best esports penny stocks to watch FansUnite FUNFF stock

Another one of the esports penny stocks gaining momentum later in the year is FansUnite. The company offers technology that is specific to gaming and entertainment. Unlike Alpha, FansUnite has put a more significant focus on the iGaming (sports betting) side of the token in Esports.

In particular, its VamosGG is an esports-first sportsbook and casino site. It was created on the company’s Chameleon platform to explicitly service the esports betting market in Brazil. This is also one of the fastest-growing regions for esports betting globally.

What To Watch With FansUnite

When you think about emerging industries like this, you can’t ignore the entire ecosystem. Similar to Alpha, FansUnite goes beyond an event-only business model. Where Alpha focuses on building an active user base, Fans develops platforms for viewers to wager on this emerging sport.

Read more: What Are Penny Stocks? 3 to Watch if You’re New to Investing

Last month the company was granted UK gambling licenses for B2C and B2B businesses. Fans also inked a new deal with multiple data providers for its Chameleon B2B platform. This includes agreements with Pariplay, Sports IQ, Pythia Sports, and Algosport. In particular, Algosport became one of the first providers to offer Bet Builder products for games like FIFA 2021. Coincidentally, Electronic Arts (NASDAQ:EA) recently expanded its EA Sports FIFA 22 Esports program last month. Focusing on events like this, will FansUnite hit watch lists for esports stock traders in October?

Super League Gaming (NASDAQ: SLGG)

best esports penny stocks to watch Super League SLGG stock

Shares of Super League recently caught a spark thanks to new M&A headlines. The company specializes in video game and esports experiences, with the last few weeks being some of the most active Super League. In particular, the company has struck several partnerships (including its latest acquisition), which have raised eyebrows during the quarter.

What To Watch With Super League

Toward the end of September, the company struck what it called a first-of-its-kind esports events production partnership. Super League and Production Resource Group, an event production solution company, formed a partnership. This new partnership provides event support to the esports community.

“Together, Super League and PRG can leverage our diverse strengths and networks to push past current boundaries of the esports event fan experience…With PRG’s global network of locations and resources, Super League can now activate anywhere at scale,” explained Matt Edelman, Chief Commercial Officer, Super League.

Read more: Penny Stocks To Watch Under $1 With Bitcoin Prices Up 20%+ In October

Following this, Super League filed an 8-K this week, showing that it quired ad platform Bloxbiz. Why could this be important for Super League? According to the company, Bloxbiz’s platform reaches more than 25 million monthly active Roblox users across more than 75 games. This deal allows Super League to execute plans to extend its reach into the metaverse and appeal to a broader audience, according to Ann Hand, Chairman, and CEO of Super League.

Esports Stocks To Watch This Month

Where attention could be on broader markets, there’s something to be said about particular niches rapidly emerging. Thanks to the expected growth in esports, there are plenty of people watching. This pool of onlookers includes many more than just retail investors. With the potential growth expected from firms like Newzoo, this could be an exciting area of the stock market to watch as things continue materializing.

best esports penny stocks to watch right now

End Notes:

Pursuant to an agreement between Midam Ventures LLC and Alpha Tech INC Midam has been paid $300,000 for a period from February 12, 2021, to April 2, 2021. We may buy or sell additional shares of Alpha Tech INC in the open market at any time, including before, during, or after the Website and Information, to provide public dissemination of favorable Information about Alpha Tech INC. Now extended from 6/30/2021 to October 29, 2021 & no additional compensation of any kind has been received by MIDAM Click here for full disclaimer

The post Top Penny Stocks To Watch If You’re Playing The Esports Trend In 2021 appeared first on Penny Stocks to Buy, Picks, News and Information | PennyStocks.com.

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Government

Bond Market Crash Will Surprise Only The Uninformed

Bond Market Crash Will Surprise Only The Uninformed

By Bloomberg macro commentator and analyst Tommi Utoslahti

A global bond market meltdown is only a matter of time. One fine morning, traders will wake up to find all benchmark yields sharpl

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Bond Market Crash Will Surprise Only The Uninformed

By Bloomberg macro commentator and analyst Tommi Utoslahti

A global bond market meltdown is only a matter of time. One fine morning, traders will wake up to find all benchmark yields sharply higher, 10 to 20 basis points or more, and no buyers around.

Bond price indicators are flashing deep red right now, from decade-high inflation expectations to waning auction demand and whispers of depressed liquidity. Last week, the U.S. 5-year breakeven rate briefly topped 3% for the first time since the maturity was restarted in 2004
Bloomberg’s U.S. Treasury index is on track for its worst annual loss since 2009, and that’s only the beginning. Expect the Treasury 10-year yield to top 2%, Bunds to end their two-year trek in the sub-zero wilderness and Gilts to continue pushing higher toward levels last seen in 2018.

It’s not a taper tantrum. The time for that passed months ago, and the Fed’s well-telegraphed intention to start slowing its $120 billion monthly bond purchases at next week’s meeting is all baked in.

Bonds will collapse on investors’ delayed realization that inflation is here to stay, and won’t be tamed without serious policy tightening.

Equally serious concern stems from the fact that a big part of the recent inflation spike is supply-shock driven. Conventional policy tightening would do little to resolve supply-chain problems, leaving policy makers unable to directly influence rising prices.

If all that sounds unrealistic, or just a mere tail risk scenario, consider this: wagers for Bank of England rate hikes over the next year have been ramped up to more than 100 basis points in only a few weeks. A Hundred basis points! Saying that aloud would have been seen as a joke as recently as early September.

Perma-bulls often point out that yields fell following the 2013 taper tantrum. That is correct, but it only happened after the Treasury 10-year yield had surged about 140 basis points in four months and took well over a year to return to where it was before the selloff. A similar move now from August lows would take Treasuries above 2.5%.

The biggest difference is in the macro backdrop. In 2013, the headline U.S. inflation rate was well below 2% -- it’s been over 5% for five months now. The ISM index of prices paid for inputs is hitting levels not seen for a decade and the inflation expectations of the University of Michigan consumer survey are the highest since 2008.

Everyday consumer items are only about to get more expensive amid stubborn supply-chain disruptions. There’s an energy crunch brewing in many of the developed economies and crude oil appears more likely to hit $100 than fall back toward $50.

Fed Chair Powell on Friday said that “risks are clearly now to longer and more persistent bottlenecks”. Other Fed officials have earlier acknowledged that “transitory” has become a dirty word. And the global financial commentariat is now more often talking about “policy error.”

Treasury yields are now almost exactly where they were just before the 2013 taper tantrum or the 2016 reflation trade following Trump’s election victory. In both cases, yields eventually topped 3%.

Portfolio holders suddenly find themselves bracing for potentially massive losses. Duration hedging will only work to drive bond prices lower. The dollar should benefit from the dual tailwind of higher U.S. yields and haven demand.

Risk assets won’t be able to ignore severe bond market carnage. Earlier this year, when 10-year Treasuries were testing 1.70%, the S&P 500 index retreated about 5% before resuming its rally. Investors shouldn’t count on such a benign reaction this time. Wall Street near records and the VIX at its lowest since the pandemic started show that stocks are hopelessly unprepared for tighter funding conditions.

It’s not all gloom. Previous cycles have shown that the world economy can handle higher borrowing costs. Equities may even see firmer yields as a sign of a strong economy. But there’s no denying recalibration to higher yields after years of ultra-low rates will be a painful exercise for those not ready for it.

Tyler Durden Tue, 10/26/2021 - 09:50

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Government

Tesla And Hertz – Whatever Next…

Tesla And Hertz – Whatever Next…

Authored by Bill Blain via MorningPorridge.com,

“Democracy is absolutely the worst form of government, except for anything else…”

Tesla’s rise into the $1 trillion club is extraordinary – proving…

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Tesla And Hertz – Whatever Next...

Authored by Bill Blain via MorningPorridge.com,

“Democracy is absolutely the worst form of government, except for anything else…”

Tesla’s rise into the $1 trillion club is extraordinary – proving that listening to what the momentum crowd is buying, while suspending disbelief and fundamental analysis is one road to success. Hertz is a lesson in seizing the moment – its stock gains and free publicity from its new EV fleet will likely exceed the cost of the cars!

As I write this morning’s Porridge I am going to try and not sound like a bitter and twisted old man….

I suppose today’s lesson today might be: “Don’t over think it.” Every morning I wake up and try to make sense of the market noise to discern the big forces acting on markets, the underlying rationales, what the numbers really mean, the potential arbitrages, and the direction of trade flow. But I wonder if I’m doing it wrong.

It’s not what I think that matters. The only thing that’s important is what the market thinks.

The market is simply a voting machine where suffrage is simply the price of a stock. If the market believes Donald Trump’s sight-unseen social media empire is worth billions, so be it. If the market believes Meme Stocks are worth trillions, so be it. Whatever the market believes.. so be it.

As so many clever economists and traders have spotted before me.. it’s the madness of crowds that matters. Over the last few years understanding Behaviours has proved far more useful than forensic accounting skills when it comes to stock picking.

I make the mistake of calling out the inconsistencies of the “drivers” like Adam Neumann, Cathie Wood, Elon Musk and the Eminence Noirs driving SPACs and funds – rather than understanding what makes them look so attractive, clever, clearsighted and intuitive to so many market participants. Promise most people you are going to make them unfeasibly rich – and they will listen.

I make the schoolboy error of asking.. how?

Life is full of regrets. If we let them define us – we truly would be miserable.

Do I regret dumping Tesla in the wake of the cave-diving comments scandal? I reckoned it was massively overpriced around $70. Ever since I have pontificated why it’s not worth a fraction of even that valuation. I don’t regret selling, but I acknowledge I’ve been wrong about the price. But not because I got the fundamentals wrong – I misread the crowd. Failing to understand the momentum was my failure. I am less wealthy than I could have been.

Tesla is worth a Trillion dollars plus. Elon Musk is the richest guy on the planet. These are facts.

Tesla, remarkably, has become a great auto-company. It makes good cars. It understands the logistics of super-charging networks. It has front-run the switch from ICE to EVs, making them mainstream, leading a massive industrial shift, and forced the rest of the sector to play catch up. It changed the perception of EVs from milk-carts to desirable luxury status symbols. It will successfully open new plants and sell more cars. It’s the number one selling car in Europe this quarter – possibly because no one else can get hold of chips!

Perversely, Tesla’s success demonstrates momentum can take a company to fundamental strength. For much of Tesla’s life, sceptics like myself predicted it would stumble and fall, brought down most-likely by apparently insurmountable production problems, its debt load, or regulation. It didn’t happen. Instead it survived, thrived and has been able to reap the momentum and build a strong balance sheet on the back of its extraordinary stock price gains. It could potentially acquire whole swathes of its rivals and supply chain.

It’s been an extraordinary climb from likely disaster to undeniable success – and the one constant has been the support of dedicated Tesla fans. Frankly, it flabbergasts me just how Elon got away with it… but he did.

At this point you are expecting a But…

But…. What would be the point?

In the mind of the crowd facts like how 10-year old Telsa only just started making profits on selling cars don’t matter. Its consistently made profits for the last 2.25 years – largely from selling regulatory credits. Prior to that… Tesla racked up losses. It has consistently failed to deliver so many promises on deliveries, automation and new models. None of these facts matter.

It’s what the market believes that matters.

So, there is no point looking at Tesla this morning and trying to explain how it’s worth a trillion – a multiple of the much larger and more profitable Toyota. Let’s not wonder  why many analysts reckon its going higher. There is no point trying to fathom why a $4.2bn order from newly out-of-bankruptcy Hertz caused the stock price to ratchet up $110 bln yesterday.

This morning analysts are predicting Tesla stock will go higher, building from the “breakthrough psychological level of $900, right through the key $1200 milestone level, and then the next level is $1500.” There was nary a mention of its PE, fundamentals, margins or such irrelevancies… just that its going higher.

Meanwhile…

The Hertz trade is fascinating – Hertz has generated tremendous publicity for its re-launch, and enough stock upside to pay for the cars! It steals a march on any other hire firm wanting to build a fleet of EVs. Hertz went bust early in the pandemic and sold its whole fleet. But, as signs of economic recovery first appeared it became the perfect recovery play. After a bidding war, it was bought out from bankruptcy and restarted with a clean sheet. It now has its very own army of meme stock proponents. Its stock price has more than doubled to $12 on the OTC market.

The fact car hire firms are vulnerable businesses in a highly competitive market, or there are now literally hundreds of new EV makers, in addition to the incumbent ICE auto-manufacturers – all now competing in the EV space for Tesla’s lunch – doesn’t matter.

For now.

Always bear in mind Blain’s Market Mantra no 1: The Market has but one objective: to inflict the maximum amount of pain on the maximum number of participants.

Tyler Durden Tue, 10/26/2021 - 08:00

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Bonds

Futures Surge To All Time High As Earnings Supercharge Market Meltup

Futures Surge To All Time High As Earnings Supercharge Market Meltup

The wall of worry that preoccupied traders just weeks ago has melted away, and has been replaced with a global market melt up (just as Goldman predicted again this weekend),

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Futures Surge To All Time High As Earnings Supercharge Market Meltup

The wall of worry that preoccupied traders just weeks ago has melted away, and has been replaced with a global market melt up (just as Goldman predicted again this weekend), which pushed US index futures to a new all time high this morning when spoos hit 4,580.75, while propelling European and Asian stocks higher as corporate earnings helped boost sentiment amid lingering concerns about inflation and growth. As of 715am ET, US equity futures were up 0.42% or 19.25 points, Dow Jones futures were up 126 points or 0.35% and Nasdaq futures jumped 0.61%, extending cash market gains boosted by Tesla’s rally to a $1 trillion market value on a big order and Facebook’s results announcement revealing strong user growth and a $50 billion stock buyback. 10-year Treasury yields dropped by 1 basis point while the dollar slid to session lows. Bitcoin traded around $63,000.

The barrage of earnings reports continued on Tuesday morning, with United Parcel Service, General Electric and 3M all gaining in pre-market trading after strong results. Eli Lilly advanced after raising full-year forecasts. Bakkt shares jumped 36% in the U.S. premarket session after more than tripling Monday when Mastercard said it has inked a deal with the firm to help banks offer cryptocurrency rewards on their debit and credit cards.  Facebook also rose after pledging to buy back as much as $50 billion more in stock, with tech heavyweights Twitter, Alphabet and Microsoft reporting after the market close on Tuesday. Here are all the notable premarket movers:

  • Facebook (FB US) rises as much as 2.5% in premarket as analysts stay bullish despite a third-quarter revenue miss and an outlook that was below consensus. Advertising growth is seen improving in 2022.
  • Tesla (TSLA US) gains 1% after stock closed at a record high, boosted by several factors on Monday including a large car order from rental firm Hertz and Morgan Stanley lifting its price target.
  • Creatd (CRTD US) was up 27% adding to a 50% gain over the past two trading sessions amid a rally in a growing number of retail-trader favorite stocks linked to former U.S. President Donald Trump.
  • Redbox (RDBX US) rises as much as 130% after the firm completed a business combination with Seaport Global Acquisition, a special purpose acquisition company.
  • Cryptocurrency-exposed stocks rise, with Eqonex (EQOS US), previously known as Diginex, more than doubling in value after listing Polkadot on its platform and Bakkt (BKKT US) extending Monday’s gains.

Earnings season is helping to counter concerns that elevated inflation and tightening monetary policy will slow the recovery from the pandemic. Some 81% of S&P 500 members have reported better-than-expected results so far, though CitiGroup Inc. warned that profit growth may be close to peaking.

Equity markets are “continuing their recovery and we expect this process to continue past big-tech earnings” and this week’s European Central Bank meeting, where policy makers may flag the end to their pandemic bond-buying program, Sebastien Galy, senior macro strategist at Nordea Investment Funds, wrote in a note.

Still, some analysts voiced caution over the impact of the COVID-19 pandemic on supply chains: “Even though this has been a good earnings season in aggregate we are starting to see more companies with supply backlogs, hiring difficulties, and rising input prices that are eating into profits,” Deutsche Bank analysts wrote.

The debate over price pressures continued when former Treasury Secretary Lawrence Summers said officials are unlikely to deal with “inflation reality” successfully until it’s fully recognized.

The MSCI world equity index, which tracks shares in 50 countries, added 0.1%

European shares hit the highest level in seven weeks: the Stoxx Europe 600 index rose more than 0.5% led by gains in travel stocks and insurers, and edging close to a the record high reached in September while German stocks gained 0.9%. Reckitt Benckiser gained more than 5% after the maker of Strepsils throat lozenges raised its sales forecast. Swiss lender UBS Group AG climbed after posting a surprise jump in profit, while Novartis AG advanced on news it may spin off its generic-drug unit. After a stellar quarter for U.S. and British banks, Switzerland’s UBS rose over 2% on its highest quarterly profit since 2015, helping the financial services sector climb about 1%.

Earlier in the session, the MSCI Asia Pacific Index traded 0.3% higher in afternoon trading, paring an earlier gain of as much as 0.7% which pushed it to its highest level in six weeks.  Asian stocks rose as investors focused on encouraging earnings reports from some of the world’s biggest technology companies. The advance was driven by a subgauge of IT names including South Korean memory chipmaker SK Hynix, which climbed after reporting record sales and forecasting further demand growth. Japanese electronics giants Nidec Corp. and Canon Inc. reported results after Tuesday’s close. “The earnings season so far continues to meet investor expectations and assuage inflationary concerns,” said Justin Tang, head of Asianresearch at United First Partners. Tesla’s order from Hertz, good prospects for the $550 billion U.S. infrastructure bill and the latest talks between U.S. and China officials also helped “inject some risk appetite,” Tang said. Japan led gains among national benchmarks, with the Topix rising more than 1%. The market was helped by a local media report that the ruling Liberal Democratic Party may be able to win a majority of seats on its own in the general elections scheduled for next week. Key gauges in tech-heavy South Korea and Taiwan also jumped more than 0.5%, while benchmarks fell in Hong Kong and China.

In China, Modern Land China Co. became the latest builder to miss a payment on a dollar bond, in a further sign of stress in the nation’s real estate sector. Defaults from Chinese borrowers on offshore bonds have jumped to a record.

Japanese stocks advanced as investors looked toward earnings reports from major companies and political stability after the upcoming election. Electronics makers and telecommunications providers were the biggest boosts to the Topix, which gained 1.2%. Fast Retailing and Tokyo Electron were the largest contributors to a 1.8% rise in the Nikkei 225. Asian stocks and U.S. futures also rose, following the S&P 500’s climb to a record high, amid positive news from Tesla and Facebook. Japanese companies reporting results today include Canon, Nidec and Hitachi Construction Machinery.  Meanwhile, the ruling Liberal Democratic Party may be able to exceed a majority of 233 seats on its own in the general elections scheduled for Oct. 31, a poll conducted by Asahi showed. “There’s a lot of noise out there but for stocks, it’s about fundamentals, which are corporate earnings,” said Hiroshi Matsumoto, head of Japan investment at Pictet Asset Management. “We’re starting to see some pretty good earnings figures, so I’m thinking we’ll see the Nikkei 225 consolidate around the 29,000 level this week.”

In rates, Treasuries were cheaper across front-end of the curve, fading a portion of Monday’s gains even as corporate earnings propel stock futures to new highs. The 10-year TSY yield is lower by less than 1bp at 1.622%; 2-year yields are cheaper by ~1bp on the day while long-end of the curve is richer by ~1.5bp, flattening 2s10s, 5s30s spreads by ~2bp. The TSY curve is flatter with long-end yields richer on the day, unwinding Monday’s steepening move. Treasury auction cycle begins with sale of 2-year notes, followed by 5- and 7-year offerings over next two days. 

In FX, the Bloomberg Dollar Spot Index was mixed but slumped to session lows as US traders walked in. The pound led gains followed by other risk-sensitive currencies such as the Australian and New Zealand dollars. Sterling gained even as overnight index swaps show traders trimmed back bets for BOE tightening, pricing in 14 basis points of hikes in November, down from 15 points previously. The yen was the worst performer as demand for haven assets receded following talks between U.S. and Chinese officials on the economy and cooperation in which some incremental progress was made. The euro inched up after gyrating toward the $1.16 handle; the euro’s volatility skew flattened in the past two weeks, suggesting a rebound in the spot market. Given the latter has stalled at a key resistance area, risk reversals could show downside risks once again. The Turkish lira rallied the most in more than four months after President Recep Tayyip Erdogan dropped his demand for 10 Western ambassadors to be expelled from the country.

China’s offshore yuan gained for a fourth straight day, lifted by a phone call between the U.S. and China on trade and economic issues. Overnight borrowing costs sunk to one-month lows after the central bank boosted cash injections into the financial system. 

In commodities, WTI crude oil was steady around $84 a barrel and Brent traded above $86 as investors weighed the outlook for U.S. stockpiles and prospects for talks that may eventually help to revive an Iranian nuclear accord, allowing a pickup in crude exports.
Gold held above $1,800 an ounce and Bitcoin hovered around $62,500.

Looking at today's calendar, we get the August FHFA house price index, September new home sales, October Conference Board consumer confidence and Richmond Fed manufacturing index. In central banks, ECB’s Villeroy and de Cos will speak. In corporate earnings, we will get results from Microsoft, Alphabet, Visa, Eli Lilly, Novartis, Texas Instruments, UPS, General Electric, UBS and Twitter

Market Snapshot

  • S&P 500 futures up 0.4% to 4,576.25
  • STOXX Europe 600 up 0.6% to 474.91
  • MXAP up 0.4% to 200.93
  • MXAPJ up 0.2% to 662.77
  • Nikkei up 1.8% to 29,106.01
  • Topix up 1.2% to 2,018.40
  • Hang Seng Index down 0.4% to 26,038.27
  • Shanghai Composite down 0.3% to 3,597.64
  • Sensex up 0.4% to 61,232.14
  • Australia S&P/ASX 200 little changed at 7,443.42
  • Kospi up 0.9% to 3,049.08
  • German 10Y yield little changed at -0.12%
  • Euro little changed at $1.1609
  • Brent Futures down 0.3% to $85.76/bbl
  • Gold spot down 0.3% to $1,802.76
  • U.S. Dollar Index little changed at 93.86

Top Overnight News from Bloomberg

  • Traders are wagering on rate hikes of as much as 158 basis points over the next year in countries including the U.K., New Zealand and South Korea amid soaring costs of living and commodity prices. Yet a flattening in yield curves -- historically seen as the market’s assessment of economic health -- indicates rising concern that such a rapid withdrawal of support will hurt the nascent recovery
  • Financial markets have stubbornly ignored recent warnings from ECB policy makers including Chief Economist Philip Lane that they’re wrong to anticipate a rate hike at the end of next year. The task of persuading people otherwise will fall to President Christine Lagarde as she presents the Governing Council’s latest decision on Thursday

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac stocks were lifted by the tailwinds seen stateside, whereby the SPX and DJIA both notched fresh all-time-highs, although the NDX outperformed as Tesla shot past the USD 1000/shr mark and USD 1trl market cap milestone. US equity futures overnight drifted higher with the NQ narrowly outperforming its peers. European equity futures also posted mild gains. Back to APAC, the ASX 200 (+0.1%) was kept afloat by tech names as the sector saw tailwinds from the stateside performance. The Nikkei 225 (+1.8%) outperformed following the prior session’s underperformance, and as the JPY drifted lower during the session. The KOSPI (+0.9%) was also firmer with SK Hynix rising some 3% at the open as chip demand supported earnings. The Hang Seng (-0.4%) and Shanghai Comp (-0.3%) opened flat but the latter was initially underpinned following another chunky CNY 190bln net liquidity injection by the PBoC. The Hang Seng Mainland Properties Index fell almost 5% in early trade, whilst Modern Land noted that it will not be able to meet payments and shares were halted until future notice. Finally, 10yr JGBs were lower amid spillover selling from T-notes and Bund futures.

Top Asian News

  • MediaTek Sees 2021 Revenue Growing by 52%; 3Q Profit Beats
  • UBS Going ‘Full Bull’ on China Despite Outflows, Growth Worry
  • China’s IPO Flops Raise Red Flag Over Shares Pricing: ECM Watch
  • Asian Stocks Rise as Investors Focus on Major Tech Earnings

European equities (Stoxx 600 +0.6%) trade on a firmer footing after extending on the tentative gains seen at the cash open with the Stoxx 600 at its best level in around seven weeks. The APAC session saw some support via the tailwinds seen in the US after the SPX and DJIA both notched fresh all-time highs and the NDX outperformed and Tesla shot past the USD 1000/shr mark and USD 1trl market cap milestone. The Nikkei 225 (+1.7%) led gains in the region alongside a firmer JPY whilst the Shanghai Comp (-0.3%) was unable to benefit from another chunky liquidity injection by the PBoC. Stateside, futures are indicative of a firmer cash open with the NQ (+0.6%) continuing to outpace peers with Facebook +2.4% in pre-market trade post-results which saw the Co. announce a USD 50bln boost to its share buyback authorisation. From a macro perspective, with the Fed in its blackout period and events on Capitol Hill not providing much impetus for price action, the equity landscape will likely be dominated by earnings with the likes of Alphabet, Microsoft, General Electric, 3M, Visa, AMD and Twitter all due to report today. Earnings are also playing a pivotal role in Europe today with Reckitt (+6.4%) top of the FTSE 100 and supporting the Personal and Household Goods sector after Q3 results prompted the Co. to raise its sales outlook. UBS (+0.6%) is off best levels but still firmer on the session after reporting its highest quarterly profits in six years. Countering the upside from UBS in the Banking sector is Nordea (-4.0%) with shares weighed on by Sampo selling 162mlnn shares in the Co. to institutional investors. Novartis (+1.6%) shares are trading broadly inline with the market after opening gains were scaled back post-Q3 earnings which saw the Co. report a 10% increase in operating profits and announce a strategic review of its generic drug unit Sandoz. Telecoms are near the unchanged mark and unable to benefit from the broader gains seen across the region as Orange (-2.7%) acts as a drag on the sector after announcing a decline in Q3 earnings.

Top European News

  • UBS Going ‘Full Bull’ on China Despite Outflows, Growth Worry
  • Adler Sells Real Estate Portfolio Valued at More Than EU1B
  • Europe Gas Extends Gains With Weak Russian Flows, Norway Outages
  • Latest Impact of Europe’s Energy Crisis is a Plunge in Trading

In FX, the 94.000 level remains tantalisingly or agonisingly close, but elusive for the Dollar index, and it could simply be a psychological barrier as a breach would clear the way for a complete comeback from trough to 94.174 peak set last week. However, the Greenback has lost some yield attraction and the broad risk tone is bullish to dampen demand on safe-haven grounds, while chart resistance and option expiries are also preventing the Buck from staging a more pronounced rebound ahead of a busier US agenda including housing data, consumer confidence, several regional Fed surveys and the first slug of issuance in the form of Usd 60 bn 2 year notes. Back to the DXY, 93.965-795 encapsulates trade thus far, and the 21 DMA stands at 93.966 today, just 3 ticks shy of Monday’s high.

  • AUD - In similar vein to its US counterpart, the Aussie is finding 0.7500 a tough round number to crack, convincingly, but Aud/Usd is deriving support from the ongoing recovery in industrial metals awaiting independent impetus via Q3 inflation data tomorrow.
  • JPY/CHF - The Yen and Franc continue to lag their major peers and retreat further vs the Dollar, with the former now struggling to keep sight of the 114.00 handle even though hefty option expiries reside from 113.85 to the big figure (1 bn), and Usd/Jpy faces more at the 114.50 strike (1.1 bn), while the latter is sub-0.9200 and unwinding more gains relative to the Euro as the cross probes 1.0700.
  • GBP/NZD - Conversely, Sterling remains primed for further attempts to extend gains beyond Fib resistance and breach 1.3800, while eyeing 0.8400 against the Euro irrespective of some UK bank research suggesting that BoE Governor Bailey may not back up recent hawkish words with a vote to hike rates at the November MPC. Elsewhere, the Kiwi is still hovering above 0.7150 and defending 1.0500 vs its Antipodean rival with a degree of traction via RBNZ Governor Orr warning that climate change could culminate in a lengthy phase of stronger inflation that needs a policy response.
  • EUR/CAD - Both rather flat, as the Euro continues to pivot 1.1600 and rely on option expiry interest for underlying support (1.5 bn rolling off from the round number to 1.1610 today), but also anchored by the 21 DMA that aligns with the big figure, while the Loonie has lost its crude prop on the eve of the BoC, though should also receive protection from expiries at 1.2400 (1 bn) within a 1.2394-68 range.
  • EM - The Try has reclaimed more lost ground to trade above 9.5000 vs the Usd on a mix of corrective price action and short covering rather than any real relief about Turkey’s latest rift with international partners given another blast from President Erdogan who said statements issued by ambassadors on Kavala target his country’s judiciary and sovereignty, adding that the Turkish judiciary does not take orders from anyone. On the flip-side, the Zar is softer alongside Gold and ongoing issues with SA power supply provided by Eskom.

In commodities, WTI and Brent have been softer throughout the European morning dipping from the initially steady start to the APAC session after yesterday’s pressured; nonetheless, prices haven’t dipped too far from recent peaks. Newsflow for the complex and broadly has been sparse thus far as focus remains very much on earnings and events due later in the week. Specifically for energy, we had commentary from Russian Deputy PM Novak that he wants OPEC+ to stick to the agreement to increase production by 400k BPD at the November gathering, commentary which had little impact on crude at the time. Elsewhere, the weekly Private Inventory report is due later in the session and expectations are for a build of 1.7mln for the headline crude figure; for reference, both distillates and gasoline stocks are expected to post a draw. Moving to metals, spot gold and silver are pressured this morning with initial downside perhaps stemming from a short-lived resurgence in the USD; however, while the metals do have a negative bias, the magnitude of this – particularly in spot gold – is fairly minimal. Separately, base metals are softer with LME copper hindered and still shy of the 10k figure. Again, newsflow this morning has been limited but we did see a production update from Hochschild who confirmed FY21 production guidance of 360-370k gold-equivalent ounces after reporting that Q3 was the strongest period of the year, thus far.

US Event Calendar

  • 9am: Aug. S&P Case Shiller Composite-20 YoY, est. 20.00%, prior 19.95%; 9am: MoM SA, est. 1.50%, prior 1.55%
  • 9am: Aug. FHFA House Price Index MoM, est. 1.5%, prior 1.4%
  • 10am: Oct. Conf. Board Consumer Confidenc, est. 108.2, prior 109.3
    • Present Situation, prior 143.4
    • Expectations, prior 86.6
  • 10am: Oct. Richmond Fed Index, est. 5, prior -3
  • 10am: Sept. New Home Sales, est. 758,000, prior 740,000; MoM, est. 2.5%, prior 1.5%; 

DB's Jim Reid concludes the overnight wrap

If you’ve never seen Lord of the Flies feel free to come round to our house where you’ll get a live performance that gets more authentic the longer this two week half-term holiday we’re in goes on. Yet again working is the safest option. We have the option to “purchase” extra holiday each year but I’m thinking of seeing if I can give some back and take the money instead. They are hard work when put into a room together for any period of time.

It was not only the fighting that was the same as last week, markets were pretty similar yesterday too as we saw fresh equity highs alongside renewed multi-year highs in breakevens. There are a few subtle changes in company reporting trends though. Even though this has been a good earnings season in aggregate we are starting to see more companies with supply backlogs, hiring difficulties, and rising input prices that are eating into profits. Indeed yesterday saw a few consumer staples companies lower full year profit outlooks in their earnings releases.

Nevertheless, major equity indices marched higher, with the small cap Russell 2000 (+0.93%) and Nasdaq composite (+0.90%) outperforming the S&P 500 (+0.47%). Consumer discretionary stocks were the clear outperformer, driven by news of Tesla (+12.66%) receiving a 100k car order from Hertz. Tesla’s big day saw it become the first automaker to cross 1 trillion dollar market cap and also drove the outperformance of the FANG index ahead of Facebook’s after hours earnings release.

Speaking of which, Facebook missed revenue estimates but beat on earnings. Shares were slightly higher in after-hours trading, where they are betting big on virtual reality technology.

Overnight in Asia, the Nikkei 225 (+1.75%) and the KOSPI (+0.61%) are outperforming the Hang Seng (-0.42%) and Shanghai Composite (+0.01%). The sentiment in China is being clouded by the news of another developer, Modern Land China Co., missing a payment on a $250 million dollar bond. This news came as Bloomberg reported that Chinese firms set a yearly record on offshore bond defaults. Another development in the region is that Hong Kong has pushed back against yesterday’s calls for an easing in its virus rules which the banks in particular were calling for. In geopolitics, China’s Vice Premier Liu He and U.S. Treasury Secretary Janet Yellen held a call about trade and economic concerns, boosting sentiment in Asian markets, while the S&P 500 mini futures (+0.24%) is trading higher. The yield on 10y Treasury (+0.7bps) is also up. In data releases, South Korean preliminary GDP for Q3 came in at +4.0% versus +4.3% expected, while Japan’s services PPI for September declined to +0.9%, missing estimates of +1.1%.

Back to yesterday and in fixed income, as mentioned at the top inflation breakevens continued their march higher. In the US, 10-year Treasury breakevens (+2.7 bps) closed at 2.67%, just shy of their widest levels since 10-year TIPS began trading in 1997. 10yr nominal yields were -0.2 bps lower as real yields slipped -2.3bps to their lowest levels since mid-September. European breakevens kept pace, with 10-year German breakevens increasing +1.9bps to 1.93% and UK breakevens increasing +1.2 bps to 4.20%. As was the case with the US, real yields fell as nominal 10-year yields decreased across Europe. Bunds (-0.9bps), Gilts (-0.5bps), OATs (-1.1bps) and BTP (-3.4bps) yields all fell.

Crude oil futures put in a mixed performance. Multiple OPEC+ members signaled they won’t increase supply at their upcoming meeting leading to gains in crude, yet the gains were short lived, as headlines noted that Iran and the EU will stage talks to restore the 2015 nuclear deal, paving a way for Iranian oil supply to return to the market. Brent futures finished +0.54% higher while WTI futures were unchanged. Natural gas prices were on a one-way track higher, however. US natural gas prices had their biggest one-day gain in a year, increasing +11.70%, on the back of a colder forecast for the upcoming winter as supply issues still abound. European and UK natural gas prices were only modestly higher by comparison, increasing +1.27% and +1.86%, respectively. European leaders are gathering in Luxembourg today for an emergency meeting on the energy crisis.

European equities were almost unchanged, with the STOXX 600 (+0.07%) finishing with marginal gains with energy (+1.27%) leading. The German DAX (+0.36%) gained with the help of stronger IT (+1.76%) performance despite Ifo expectations (95.4) coming in below consensus (96.6).

In other data releases, the Chicago Fed National Activity Index came at -0.13 versus 0.20 expected. The Dallas Fed Manufacturing Activity Index (14.6), however, surprised on the upside by coming above expectations (6.0). Delivery times remained elevated in the survey, and a special question showed that labour supply issues got slightly worse.

In virus news, Moderna reported that its vaccine showed a strong immune response for children from 6 to under 12 years old. Meanwhile, China announced in its initial guidelines that unvaccinated athletes at the 2022 Winter Olympics in Beijing would have to quarantine for 21 days, while Hong Kong was pressured by banks to relax its zero-COVID policy.

In today’s data releases, August FHFA house price index, September new home sales, October Conference Board consumer confidence and Richmond Fed manufacturing index are due from the US. In central banks, ECB’s Villeroy and de Cos will speak. In corporate earnings, we will get results from Microsoft, Alphabet, Visa, Eli Lilly, Novartis, Texas Instruments, UPS, General Electric, UBS and Twitter

 

Tyler Durden Tue, 10/26/2021 - 07:47

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