Mizuho says OPEC+ supply cut confirms ‘naked desire for price buoyancy’
OPEC and its allies’ decision to cut production by 2 million barrels per day confirms the group’s “naked desire for price buoyancy, not just support,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank.
A supply cut of around 1 million barrels per day would have resulted in price gains without a compromise on volumes, but a larger cut shows the alliance’s “disregard for the economic woes of, and geo-political alignment with, global partners,” he wrote.
“What may have been argued as an opportunistic gamble exploiting geo-political supply kinks for self-interest advantage is now in danger of being interpreted as an affront to the U.S. and its allies (in protestation of Russia price cap plans) that aligns with Russia,” he added.
— Abigail Ng
Chinese EV battery maker opens flat in Hong Kong market debut
Electric vehicle battery maker China Aviation Lithium Battery (CALB) traded flat in its debut session after raising 9.86 billion Hong Kong dollars ($1.26 billion) in its initial public offering, according to a filing.
The offer price was 38 Hong Kong dollars ($4.84) per share.
Shares allocated to retail investors in Hong Kong were undersubscribed, with only 21% purchased — representing 1% of the entire offering.
Leapmotor and Onewo, which fell in their trading debuts last week, were also undersubscribed.
— Abigail Ng
CNBC Pro: “There’s lots to buy in China,” says the fund manager and names these two EV stocks
Despite abysmal returns from Chinese stock markets this year, one fund manager thinks there are pockets of value in certain ‘core sectors’ even when financial conditions are tight.
Edmund Harris, head of Asian & Emerging Market investments at Guinness Asset Management, says companies in the electric vehicle sector, factory automation, and sustainable energy field would likely outperform their global peers over the next 5 to 20 years.
He’s cited two stocks that are likely to benefit from this theme.
CNBC Pro subscribers can read more here.
— Ganesh Rao
October could be the start of a bull market rally, Detrick says
Even though stocks pulled back Wednesday, stopping a major two-day win streak, October may still be the start of a new bull market rally according to Ryan Detrick, chief market strategist at Carson Group.
“We think this could be the start of a pretty decent-sized end of year rally,” Detrick said during CNBC’s “Closing Bell: Overtime.”
That’s because, traditionally, stock performance improves in October in midterm election years, said Detrick.
He also noted that even though markets ended the day lower, stocks posted a major rally in the afternoon that regained a lot of lost ground. That’s a positive, according to Detrick.
CNBC Pro: Time to buy the dip? Some stocks are still trading at lows with further big upside
The beginning of this week has brought something of a relief rally to stocks. Still, global as well as Wall Street indexes, are still well in the red year-to-date.
That could present an opportunity for investors looking for quality stocks and future upside in a volatile environment.
CNBC Pro screened for stocks trading within 10% of their 52-week low, but have a buy rating from more than 50% of Wall Street analysts that cover them. The stocks have an average price target upside of 20% or more, and earnings growth expectation for 2022 of at least 10%.
Here are the stocks that turned up. CNBC Pro subscribers can read more here.
— Weizhen Tan
Fed’s Bostic says these are just the ‘early days’ of the inflation fight
Atlanta Federal Reserve President Raphael Bostic talked tough on inflation in a speech Wednesday, saying the central bank still has a lot of work to do before it can declare victory.
“We must remain vigilant because this inflation battle is likely still in early days if the projections of my [Federal Open Market Committee] colleagues are correct,” Bostic said in a speech to Northwestern University’s Institute for Policy Research.
Bostic added that it likely “will take some time” to get inflation back to the Fed’s 2% target as “we are still decidedly in the inflationary woods, not out of them.”
From a rates perspective, Bostic said he envisions the Fed’s benchmark levy rising to a 4%-4.5% before policymakers can take a step back to evaluate progress. The fed funds rate currently sits in a range of 3%-3.25%; projections the FOMC released in September foresee rates rising to 4.6% in 2023, putting Bostic slightly to the dovish side of the committee.
However, he added that he would say to anyone expecting the Fed to cut rates next year, “Not so fast.”
Bostic is not a voting member of the FOMC either this year or next, though he does get to voice his policy stance during meetings.
Trade deficit fell more than expected in August
The U.S. trade deficit fell slightly more than expected in August to its lowest level in more than a year, the Bureau of Economic Analysis reported Wednesday.
The trade shortfall declined to $67.4 billion, a $3.1 billion drop from the previous month that was a bit better than the Dow Jones estimate of $67.7 billion. That marked the lowest level since May 2021. In March 2022, the deficit had hit a record $106.9 billion.
A drop in the goods deficit of $3.4 billion helped account for most of the decline as the economy shifts back to higher demand for services.
CNBC Pro: NYU’s Aswath Damodaran names big tech stocks that are a better bet than ‘traditional safe’ ones
NYU’s Aswath Damodaran loves companies that can “withstand a hurricane, a catastrophe if it does happen.”
The professor of finance at New York University, who is sometimes referred to as the “Dean of Valuation, believes big tech stocks can do just that, and reveals the stocks he owns.
Pro subscribers can read more here.
— Zavier Ong