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January 22, 2022

Top hedge fund manager warns that market ‘superbubble’ will burst

Jeremy Grantham, co-founder and main financial commitment strategist of Grantham, Mayo, & van Otterloo (GMO) mentioned in a report called “Let the Wild Rumpus Start off” that stocks are now in the midst of a “superbubble,” that it will never stop well.

Grantham, who has been running the firm’s investments given that it was commenced in 1977, was likewise bearish at market place tops in 2000, and throughout the Wonderful Fiscal Crisis of 2008.

“Very good luck! We will all want it,” reported Grantham, whose organization manages about $65 billion in assets.

He noted that US stocks have knowledgeable two these types of “superbubbles” in advance of: 1929, a marketplace tumble that led to the Terrific Melancholy, and yet again in 2000, when the dot-com bubble burst. He also explained the US housing marketplace was a “superbubble” in 2006 and that the 1989 Japanese stock and housing marketplaces were being the two “superbubbles.”

2022 hasn't been good for stocks. But the Biden market is still up 18{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}

“All five of these superbubbles corrected all the way back to development with significantly higher and more time ache than average,” Grantham wrote.

Quite a few investors never want to believe that that the stock market place is overdue for a broader pullback, Grantham argues, especially given that the current market fell into bear territory — albeit briefly — in March 2020 at the pandemic’s start.

“In a bubble, no one would like to listen to the bear circumstance. It is the worst kind of party-pooping,” Grantham wrote. “For bubbles, especially superbubbles wherever we are now, are generally the most exhilarating monetary ordeals of a life time.”

Grantham believes that the Federal Reserve’s moves to minimize rates to zero — and then preserve them there for nearly two many years — is a major bring about for the market’s current frothiness. The Fed is widely envisioned to get started elevating premiums at its March conference.

“One of the major reasons I deplore superbubbles — and resent the Fed and other financial authorities for making it possible for and facilitating them — is the under-recognized damage that bubbles cause as they deflate and mark down our wealth,” he wrote.

Jeremy Grantham, co-founder of hedge fund GMO, is warning that stocks could fall a lot further.

Grantham additional that “as bubbles type, they give us a ludicrously overstated perspective of our serious prosperity, which encourages us to shell out appropriately. Then, as bubbles split, they crush most of those people goals and speed up the destructive economic forces on the way down.”

“To allow for bubbles, permit by yourself aid them together, is just negative financial coverage,” Grantham wrote, introducing that he’s anxious about “the terrible enhance in inequality that goes with larger rates of assets, which a lot of only do not possess.”

This just isn’t the very first time Grantham has issued these types of a doom and gloom connect with on the markets. He designed a comparable proclamation about the end of the bull market in January 2021, contacting stocks an “epic bubble.” The sector wrapped up 2021 in the vicinity of document highs and with its third straight calendar year of gains.

Charge hikes will deflate a large amount of the market’s scorching air

Other investing authorities share some, but not all, of Grantham’s worries. Jordan Kahn, president and main investment decision officer of ACM Resources, which has a portfolio that each purchases shares and shorter sells ones that it thinks are overvalued, stated there are certainly extra opportunities on the small facet of the marketplace ideal now.

Kahn informed CNN Enterprise that his lengthy-small fund is only invested about 30{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} in bullish positions that it expects to go up. He is also anxious about what will occur to shares as fees go up.

Bitcoin tumbles as cryptocurrencies continue their downward slide

“When prices are at zero for a extensive time, it really is effortless to justify almost any valuation, and coming out of 2020 we observed ridiculous selling prices for stocks,” he claimed, a little something he hadn’t seen because 1999. “But as soon as inflation commenced individuals question valuations.”

Nonetheless, Kahn isn’t as bearish as Grantham. Fairly than an epic crash, he foresees a collection of what he calls “bubble-ettes,” mini manias in corners of the market these kinds of as crytpocurrencies and speculative, unprofitable tech shares.

“There has been a large amount of blind faith,” Kahn explained. “There are areas in which there has been a ton of speculation and there will be soreness there.”

January 13, 2022

Top Stock Market News For Today January 13, 2022

Stock Market Futures Steady After Another Green Day For Stocks

Stock market futures are edging up today following a session where stocks climbed marginally higher. For some, this slight movement in markets could be a welcomed sign. Before the release of December’s Consumer Price Index (CPI) figures yesterday, there were some bouts of volatility in the stock market. Following the results, things appear to be relatively calm. Given that the CPI reading is within economists’ estimates, this is understandable. Nevertheless, investors still have interest rate hikes to consider this year as inflation remains at highs last seen decades ago.

Among the economists commenting on this is Christian Scherrmann from the DWS Group U.S. He posits, “Persistent high inflation rates together with the recent strong labor market data reinforce the hawkish narrative provided by the Fed.” Furthermore, Scherrmann adds, “Looking ahead, Omicron looks set to dictate the fate of the economy in January and maybe in February, but current indications on how the new variant plays out suggest that the Fed will remain on track to reduce its accommodative monetary policy, most likely as early as in March this year, by hiking rates for the first time since December 2018.”

As of 7:36 a.m. ET, the Dow, S&P 500, and Nasdaq futures are trading higher by 0.12{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}, 0.07{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}, and 0.10{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} respectively.

TSM Reports Solid Fourth Quarter Earnings Figures

The Taiwan Semiconductor Manufacturing Company (NYSE: TSM) or TSM for short, is among the notable names reporting earnings today. Earlier today, the firm announced its fourth-quarter results. In detail, TSM raked in an earnings per share (EPS) of about $1.15 for the quarter. This marks a respectable 16.4{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} increase year-over-year. Additionally, the company also reported a net income of about $6.01 billion on revenue of $15.84 billion. Year-over-year, this translates to gains of 16.4{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} and 21.2{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} respectively.

On top of that, the company also provided a breakdown of its revenue streams as well. Throughout the fourth quarter, TSM’s 5-nanometer chips, and 7-nanometer chips accounted for 23{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} and 27{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} of total wafer revenue respectively. Also, “advanced technologies” defined as 7-nanometer and more advanced tech, made up the remaining 50{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}. Overall, the company seems to be going from strength to strength as it sees steady demand for semiconductor chips. Considering the ongoing supply shortages and TSM’s leading position in the industry, this could persist. As a result of all this, investors may want to keep an eye on TSM stock in the stock market today.

Tesla Co-Founder JB Straubel Sees EV Sales Taking Off Through 2025

Speaking of semiconductors, a booming market that relies on these chips now would be the electric vehicle (EV) industry. In fact, providing his outlook on EV sales is Tesla (NASDAQ: TSLA) co-founder JB Straudel. Namely, Straudel says that consumer demand for EVs has and continues to pick up. So much so that he is questioning industry estimates of EVs accounting for only 12.7{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} of all U.S. auto sales by 2025. Straubel argues, “If you look at how fast adoption is growing in parts of Europe and other parts of the world, I think it points to a path of potentially even higher percentages than that by mid-decade.” With all this momentum, the top EV stocks in the market could be more appealing to investors now.

At the same time, it is also important to note that Straubel is currently the CEO of a battery-recycling firm, Redwood Materials. This is relevant to the current update from him as well. Notably, Redwood Materials is allocating $1 billion towards building a new EV battery recycling plant in Nevada. The company cites this very demand as a key reason behind the current facility. Subsequently, Redwood will employ the factory to produce necessary materials used at the Tesla Gigafactory in Nevada.

In other news, Bank of America (NYSE: BAC), or BofA for short, now offers a forecasting tool for both its corporate and commercial clients. The tool in question is an artificial intelligence (AI)-powered forecasting solution. Ideally, the tool serves to help BofA customers better manage their cash flows. To highlight, the current news comes from talks between executives and Bloomberg. More importantly, BofA clients will need to be using the bank’s CashPro app to benefit from this new service. In turn, the app gathers data and predicts future cash positions. This will apply to a client’s bank accounts across the board through AI.

For one thing, such a tool would be relevant given the Fed’s plans to raise interest rates this year. CashPro Global Product Head Tom Durkin also weighs in on this. He says, “We’re going into a raising-rate environment, so you need an effective tool that sets your cash position.” Not to mention, the company is also planning to reduce overdraft fees and eliminate non-sufficient fund fees. BofA plans to implement these changes to its core services in May 2022. All in all, the bank seems to be aggressively optimizing its operations amidst rising competition and challenging times. The question now is whether or not all this is enough to make BAC stock stand out among its peers.

Lithium Mining Stocks Gain Amidst Supply Shortages And Increasing Government And Analyst Support

Elsewhere, companies in the lithium mining space are gaining in the stock market now. For the most part, this could be thanks to rising lithium prices amidst dwindling supplies. To explain, the current scarcity is likely from the rising use of lithium as a core component in EV batteries. In a time where the shift towards clean energy resources is coming hard and fast, this is understandable. Evidently, the global price for lithium almost quadrupled throughout 2021.

This year, the price for this increasingly precious commodity continues to rise. As of yesterday, the price per ton of lithium carbonate in China is now at a record high of $49,600. Because of all this, lithium stocks such as Sociedad Quimica (NYSE: SQM) and Lithium Americas (NYSE: LAC) are in the green this week. Moreover, there is no shortage of exciting news from these two firms as well.

On one hand, SQM recently won a lithium development contract with the Chilean government. On the other hand, Lithium Americas received rosy analyst updates from Cowen (NASDAQ: COWN), Deutsche Bank (NYSE: DB), and Piper Sandler (NYSE: PIPR) this week. In particular, Piper Sandler notes that the company “holds the keys to a multitude of game-changing catalysts”. As such, it would not surprise me to see investors turning their radars to lithium mining stocks now.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

January 12, 2022

Top Stock Market News For Today January 12, 2022

Stock Market Futures Edging Up Ahead Of December’s Consumer Price Index Readings

Stock market futures are marginally higher in early morning trading today. This comes after a recovery rally on Tuesday following a whipsaw-like start to the trading week. All in all, this volatility in stocks is not all that surprising. Especially after comments from Federal Reserve Chairman Jerome Powell ensuring that the central bank is working on reeling in inflation. He said, “If we see inflation persisting at high levels, longer than expected, if we have to raise interest rates more over time, then we will.”

If that wasn’t enough, there is also more inflation-related data on tap today. At 8:30 a.m. ET, the Bureau of Labor Statistics is going to release the Consumer Price Index (CPI) figures for December. As it stands, economists are projecting a 7{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} year-over-year CPI increase, its highest since 1982. For reference, this is versus a year-over-year jump of 6.8{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} in November.

Providing some insight into all this is Brian Belski, BMO Capital Markets chief investment strategist. Belski notes, “I think the biggest comment on most investors’ minds that we talk to around the world would be a ‘policy mistake’ that the Fed might be too aggressive.” He continues, “Mr. Powell basically came out today and said this is going to be a process … with respect to how long this is going to take, and I think that’s what’s calming investors.”

As of 7:13 a.m. ET, the Dow, S&P 500, and Nasdaq futures are trading higher by 0.06{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}, 0.03{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}, and 0.05{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} respectively.

ExxonMobil Selling Ohio Shale Gas Properties Valued At About $200 Million; Invests In Biofuels Firm Biojet

Oil giant ExxonMobil (NYSE: XOM) is making several notable plays this week. As of yesterday, the company is currently trying to sell its shale gas properties in Ohio’s Appalachian Basin. The likes of which could be worth about $200 Million, given the current natural gas prices and production. In detail, the news came from Reuters who cited a marketing document alongside company confirmation. Now, Exxon’s current shale gas properties in the region span a whopping 27,000 acres. To highlight, 61 oil wells make up this asset. All of which produced around 81 million cubic feet per day equivalent of natural gas. Moreover, 274 wells being operated by other companies are also included in the current sale.

Also, while the company is divesting in this conventional energy asset, it is making investments in clean energy. On the same day, Exxon announced that it bought a 49.9{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} stake in Biojet, a Norwegian biofuels company. Through the current deal, Exxon can purchase up to 3 million barrels of Biojet’s biofuel a year. Ideally, this would serve to help the company grow its investments in low-carbon businesses. Additionally, Biojet is currently planning to develop five facilities to produce biofuels from forestry and wood-based construction waste.

In the larger scheme of things, this would be crucial in Exxon’s efforts to achieve net-zero greenhouse gas emissions. It aims to do so for its working assets in the U.S. Permian basin by 2030. As a result of all this, XOM stock is currently up by over 12{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} year-to-date. It seems that Exxon is looking to adapt to the times and investors are eager to tag along for now.

Source: TD Ameritrade TOS

Oil Prices Soar As Fed Sees Omicron Having Short-Lived Impact On Economy

At the same time, oil prices are on the rise following the latest comments from Federal Reserve Chair Jerome Powell yesterday. The price per barrel of Brent crude gained by a solid 3.52{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}, settling at $83.72. Furthermore, U.S. West Texas Intermediate (WTI) rose by 3.82{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}, ending the day with a price of $81.22 per barrel. Notably, both are at their highest levels since November. Overall, this is likely due to a positive outlook regarding energy demands. Yesterday, Powell argued that the economic impacts from the Omicron Covid variant will be “short-lived”.

On top of that, Powell also added that the upcoming quarters could be good for the recovering economy as Omicron subsides. Weighing in on the current price movement of oil in general is Phil Flynn, senior analyst at Price Futures Group. Flynn says, “Combination of facts – that demand is going to be stronger than anticipated and that OPEC’s supply may not grow as fast as the demand – is why prices are climbing.” All this alongside oil companies making notable plays continues to put the industry on investors’ radars this week.

Nio Pops On News Of Supply Agreement And HSBC Price Target Bump

In other news, Chinese electric vehicle (EV) maker Nio (NYSE: NIO) appears to be making a rebound. For the most part, this comes as Nio continues to power through on the operational front. To begin with, the company is now working with Chinese steel producer Baoshan Iron & Steel. This deal will see the duo collaborate via a product and supply chain partnership. According to Nio CEO William Li, “Nio needs a global partner like Baosteel to work hand-in-hand on products, supply chain, technology innovation, new material applications, and zero-carbon pathways.”

On top of that, analysts over at HSBC (NYSE: HSBC) are also bullish on NIO stocks’ growth prospects. Just this week, analyst Yuqian Ding reiterated a Buy rating on it with a price target of $54 per share. This would suggest a possible upside of 79.8{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} from its closing price of $30.02 at yesterday’s closing bell. Generally, the firm cites Nio introducing more models this year and strong demand for its ET5 EVs as driving factors. The real question now is whether investors should be buying into NIO stock’s current weakness or not.

Source: TD Ameritrade TOS

Walgreens Conducting “Strategic Review” Of U.K-Based Operations

Walgreens (NASDAQ: WBA) is currently conducting a “strategic review” of its Boots pharmacy chain in the U.K. This announcement comes from CEO Roz Brewer at the virtual JPMorgan (NYSE: JPM) Healthcare Conference this week. She said, “While the process is at an exploratory stage, we do expect to move quickly.” As it stands, the company is not giving a definite answer as to whether it would be selling its U.K.-based drugstore chain. If anything, a potential sale of the business would help fund the company’s ongoing push to bolster its health care offerings in the U.S.

To put things into perspective, Boots currently operates a network of 2,200 stores in the U.K. They provide for U.K. consumers’ day-to-day health, optical, and hearing needs. Moreover, Boots also sells a wide array of beauty products alongside its drugstore essentials. Not to mention, there is also the ongoing surge in Omicron cases in the U.S. to consider. Analysts from Mizuho believe that demand for Covid vaccines and test kits could continue to bolster sales for the quarter. Given all this exciting news about Walgreens, I could see investors eyeing WBA stock in the stock market today.

Source: TD Ameritrade TOS

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

December 17, 2021

Top Stock Market News For Today December 17

Stock Market Futures Extend Losses As Central Bank Tightens Monetary Policies

Stock market futures appear to be dipping further after yesterday’s sell-off of growth names. The current activity is likely a continuation of investors’ reaction to the Fed’s policy announcement this week. In brief, the Federal Reserve is pulling back on its pandemic-era easy-money policies. This involves tapering its bond purchasing program and a possible interest rate hike down the line. As a result, investors appear to be rotating out of high-growth names. Among the main sectors affected by this would be tech stocks. This is evident as the tech-heavy Nasdaq was down by as much as 2.5{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} during intraday trading yesterday.

Weighing in on all of this is FS Investments chief market strategist Troy Gayeski. He said, “The thing investors have to understand is, we’re going through a major transition in monetary policy”. Gayeski went on to elaborate, “The Fed has been running emergency policies arguably far longer than they should have been, and as that money supply growth slows down as they ease off the balance sheet expansion and ultimately hike next year, one would at least expect more volatility in markets. And that’s really what we’ve been seeing the last month.”

If all that wasn’t enough, investors have no shortage of exciting stock market news to consider today as well. As of 7:38 a.m. ET, the Dow, S&P 500, and Nasdaq futures are trading lower by 0.25{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}, 0.47{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}, and 0.94{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} respectively.

Rivian Shares Fall On Wide Earnings Miss

Among the companies turning heads at the tail-end of this earnings season is electric vehicle (EV) industry newcomer Rivian (NASDAQ: RIVN). This would be the case given the company’s explosive initial public offering (IPO) back in early November. However, the company’s first quarterly earnings since going public fell short on several fronts.

Namely, Rivian posted a loss per share of $12.21 on revenue of about $1 million from its first customer deliveries of 11 R1T EVs. On one hand, the company missed consensus earnings estimates by $5.53 and revenue projections by $0.03 million. As a result, the company’s shares are sliding by over 9{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} in pre-market trading, placing RIVN stock below the $100 mark.

By and large, the numbers may not seem all that inviting at face value. However, a loss is expected given the company’s current focus on expanding its operations. After all, it is looking to compete with major names in the industry that already have substantial head-starts. In fact, Rivian also revealed plans to build its second U.S. production plant. The company is looking to begin construction by the summer of 2022. By Rivian’s estimates, it will have an annual production capacity of about 400,000 units. On top of that, the company also notes that it currently has over 71 thousand pre-orders for its EVs. Regardless of where you stand on Rivian’s prospects, RIVN stock will likely be in focus in the stock market today.

FedEx Back On Track To Deliver On Original Fiscal Year 2022 Profit Goals

In other earnings-related news, FedEx (NYSE: FDX) posted solid figures in its latest quarterly earnings release after yesterday’s closing bell. In detail, the company reported an earnings per share of $4.83 on revenue of $23.5 billion for the quarter. For comparison, this is versus estimates of $4.28 and $22.4 billion respectively.

Providing an overview of the quarter is executive VP and CFO Michael Lenz. Lenz said, “FedEx operating income grew in our second quarter, driven by strong revenue growth and effective management of our cost and expected labor availability challenges.” While the company’s earnings per share were unchanged year-over-year, he also notes that FedEx paid “significantly higher” taxes this year.

Notably, a key highlight of the company’s earnings call would be the update to its fiscal 2022 profit outlook. Thanks to the current momentum in its business, FedEx is reinstating its initial estimates after lowering them in September. For the fiscal year, the company is now expecting an annual earnings per share between $20.50 to $21.50. At the same time, FedEx also announced a $5 billion share repurchase program as well. With FedEx seemingly kicking into high gear across the board, I could see investors watching FDX stock now.

Goldman Sachs Sees ‘Solid Demand’ For Apple’s iPhones In China

Elsewhere, Apple (NASDAQ: AAPL) received a positive update from analysts over at Goldman Sachs (NYSE: GS). In essence, the firm recently highlighted Apple’s improving iPhone supply in general. According to analyst Rod Hall, this is evident from better lead times for iPhones across “all major geographies”. He added that 13 weeks since launching, lead times for the iPhone 13 Pro models are down by 6 to 7 days in the U.K. In China, lead times also improved by 8 days. Not to mention, Hall also highlights that there is “solid demand” in China while Europe is seeing “slightly weaker” demand.

That’s not all, the analyst also pointed out that there is a notable increase in Macbook orders in China, the U.S., and part of Europe. Hall argued that this could be “suggesting supply is not keeping up with the demand”.

Across the board, it seems that Apple’s vast array of cutting-edge tech remains in demand this holiday season. With consumers looking to spend their saved-up discretionary funds, this comes as no surprise. As such, AAPL stock could be a top stock to watch for some investors now, even as it trades around record levels.

Churchill SPAC Looking To Bring India’s Byju Via $48 Billion Deal

Churchill Capital VII (NYSE: CVII), a special purpose acquisition company (SPAC), is making waves in the stock market as well. Accordingly, this would be thanks to news about its plans to take Indian online education company Byju public. According to Bloomberg, should things go as planned, the company would have a valuation of about $48 billion. Given the sheer scale of the deal, it is no wonder that some consider Byju among India’s most valuable startups.

Overall, the report suggests that among all the SPAC partners Byju has talked to, Churchill Capital has “made the most progress” yet. In terms of the timeline, a deal could potentially be set as soon as next month. For the uninitiated, Churchill Capital brought EV firm Lucid Group (NASDAQ: LCID) public earlier this year. Given the generally positive reception to LCID stock, investors could be keeping CVII stock in view now.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

December 9, 2021

Opinion: This surprising investing strategy crushes the stock market without examining a single financial metric

I am not a professional stock picker, but over the past decade my portfolio has beaten the stock market by a factor of three to one.

Unlike Peter Lynch, who advocated investing in the makers of products you love and who, in my estimation, stands out as one of the greatest of all stock pickers, I did not examine a single financial metric to build my portfolio. Instead, I simply ranked competitors in each industry based on customer love and then bet on the winner.

My portfolio has performed so well because the market undervalues the economic power of customer love. When customers feel loved, they come back for more and refer their friends. This is the economic flywheel that drives sustainable prosperity, and companies built on it generate surprising levels of profitable growth.

To measure customer love, I used the Net Promoter Score (NPS) that I created 20 years ago. It captures how likely a customer is to recommend a product or service to a friend or colleague. I relied on the market to incorporate all financial insights into the current stock price.

My buy-and-hold investing portfolio started with the 11 public NPS leaders profiled in my 2010 book, “The Ultimate Question 2.0“: Amazon
AMZN,
Meta Platforms (formerly Facebook)
FB,
Apple
AAPL,
Costco Wholesale
COST,
Google parent Alphabet
GOOG

GOOGL,
Southwest Airlines
LUV,
American Express
AXP,
JetBlue Airways
JBLU,
Verizon Communications
VZ,
T-Mobile US
TMUS,
NortonLifeLock
NLOK
and Metro PCS Communications (which merged with T-Mobile in 2013).

In hindsight some of those stocks look like no-brainers, but back when the book was written they were anything but. Amazon had a market cap below eBay’s. T-Mobile was considered by many to be the weakest player in mobile telephony.

In the years since, however, this group’s extraordinary customer focus has paid off. From Jan. 1, 2011 to Dec. 31, 2020 these stocks outperformed Vanguard’s Total Stock Market Index exchange-traded fund
VTI
by a factor of 2.8 to 1. (This performance is market-cap weighted and rebalanced quarterly akin to VTI’s rebalancing).

Since then, Bain & Co., where I have worked since 1977, has applied NPS to a long list of industries, and created NPS Prism, a data benchmarking service that ranks competitor NPS on an apples-to-apples basis. As we X-ray more industries, we continue to uncover new NPS leaders, among them Texas Roadhouse
TXRH,
Discover Financial
DFS,
Tesla
TSLA,
Chewy
CHWY
and FirstService
FSV.

I serve on the board of directors at FirstService, a real-estate services company whose social media handle #FirstServeOthers provides a hint about its corporate philosophy. Over the 25 years since the IPO, its annual total shareholder return has been just under 22{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}, a better record than all but seven of the 2,800 firms with revenues of at least $100 million at the time of their NASDAQ listing.

For a long time, like many great customer-focused organizations, it remained below investors’ radar screens. One reason: GAAP accounting is woefully lacking at measuring customer centricity. It doesn’t even require organizations to report the number of customers they serve, let alone how many are returning, increasing purchases, or referring friends and family.

This makes it hard to find comparable data. I first discovered online pet supply retailer Chewy when its self-reported NPS appeared in its IPO documents. Chewy does a tremendous job tapping into the special emotional tie between owner and pet, with things like the hand-painted pet portraits the company mails as surprise thank-yous to customers, who, delighted, then post them, along with glowing testimonials, across social media.

By our calculations Chewy’s NPS beats Amazon’s by 24 points in its category — an extraordinary performance. Chewy’s own numbers are slightly different from ours, however, and the inconsistency of self-reported numbers is one reason we developed a new metric called earned growth rate. It measures the revenue growth generated by returning customers and their referrals by combining net revenue retention (NRR), the back-for-more battle-tested statistic used in the software-as-a-service (SaaS) industry among others, with earned new customers (ENC), measuring how much new customer spending is earned through referrals rather than bought through promotional channels.

NPS exemplar First Republic Bank
FRC
has in the past earned 82{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} of its deposit growth, with 50{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} coming from existing customers and another 32{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} from referrals. Warby Parker
WRBY,
the direct-to-consumer pioneer in prescription eyeglasses, earns almost 90{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} of its new customers through referrals.

You can use this calculator to estimate your company’s earned growth rate.

In addition to these metrics, it’s also possible to spot NPS leaders by their common features.

They apply the Golden Rule – love thy neighbor as thyself. This often means eschewing bad profits. Discover Card, for example, never sells receivables to collection agencies.
They empower their front-line employees to serve customers in creative ways. Companies like Chewy that give employees the freedom to serve customers with empathy and creativity engender trust in and loyalty to their companies.
They integrate in-store and online customer feedback. Technology-rich companies like Warby Parker augment direct feedback with digital signals from customers and front-line employees to guide decision-making—crucial in helping companies respond to holiday shopping trends this season.
They make customers their primary purpose. By going the extra mile to provide a customer with an experience that’s not just good, but remarkable, companies can play a part in enriching their lives beyond the product they offer.

I have spent most of my 44-year career focused on understanding the role that loyalty plays in building great organizations and helping leaders inspire their teams to embrace a mission of purposeful service enriching the lives of customers and colleagues. That is the right way—and the best way—to win in business and the stock market.

Fred Reichheld is the creator of the Net Promoter system of management and the author of “Winning on Purpose: The Unbeatable Strategy of Loving Customers” (together with Darci Darnell and Maureen Burns), among other books.

Posted on November 28, 2021
Dow Jones Futures Loom As Market Rally Awaits Omicron Covid Variant News; What To Do Now

Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures, with all eyes on the newly discovered omicron Covid variant following Friday’s sell-off.

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The stock market rally was hit from all directions last week, with the major indexes tumbling below key levels Friday on the new omicron Covid variant, with crude oil prices and Treasury yields plunging. Coronavirus vaccine makers such as Moderna (MRNA), BioNTech (BNTX) and Pfizer (PFE) were big winners.

Is this the start of a significant market slide, the continuation of recent whipsaw action or will stocks quickly rebound? The current uncertainty makes it difficult to navigate the stock market rally. Investors should be playing more defense than offense until conditions clearly improve. More clarity on the new omicron variant is needed.

Li Auto earnings are due before Monday’s open. Later this coming week, Li Auto (LI) and Chinese EV startups Nio (NIO) and Xpeng (XPEV) are likely to release November delivery figures. China EV giant BYD Co. (BYDDF) may come slightly later, with Tesla (TSLA) China sales figures eventually following.

Tesla stock is on IBD Leaderboard and the IBD 50. Pfizer stock was Friday’s IBD Stock Of The Day.

The video embedded in this article analyzed a pivotal market week and discussed PFE stock, Ovintiv (OVV) and Li Auto.

Dow Jones Futures Today

Dow Jones futures will open at 6 p.m. ET, along with S&P 500 futures and Nasdaq 100 futures.

Dow futures could be volatile Sunday night, with investors making best on the market rally’s direction without a clear picture of just how serious, or not, the omicron variant is.

Bitcoin rose modestly, trading above $56,500 and at weekend highs, suggesting a vague “risk on” sentiment after Friday’s sharp sell-off in cryptocurrencies.

After U.S. crude oil prices plunged 13{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} on Friday, OPEC+ is delaying some technical meetings set for Monday-Tuesday to Wednesday-Thursday so the market can digest the impact of the new Covid variant.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live

Omicron Coronavirus: Covid Variant Of Concern

A new coronavirus variant with a large number of mutations, first detected in South Africa, is raising concerns. It’s unclear if the B.1.1529 Covid variant, dubbed the omicron variant on Friday, is more deadly or infectious than prior strains, or whether vaccinations or prior Covid infection provide substantial protection.

The World Health Organization noted that the omicron variant appears to have a higher risk of reinfection for people who have already had Covid-19. The WHO declared it a “variant of concern,” the first such designation since the delta variant a year ago.

However, a coronavirus adviser to the South Africa government as well as the Pretoria doctor who sounded the alarm about the Omicron variant said that cases generally seem to be “mild.”

There are reasons to believe that anti-viral pills, such as those made by Pfizer and Merck (MRK), would retain effectiveness vs. the latest Covid strain.

The U.S., U.K., European Union, Australia, Israel and Singapore have suspended flights or entry from southern Africa.

Dutch officials on Sunday reported 13 omicron Covid cases among travelers from South Africa to the Netherlands.

The U.K., Belgium, Australia, Italy, Hong Kong and Israel are among countries that have identified a handful of omicron Covid cases.

Coronavirus Vaccine Stocks

Pfizer partner BioNTech said it will take two weeks to see how effective its vaccine is vs. the omicron Covid variant. Moderna said it could have a Covid vaccine designed for the omicron variant by early 2022. MRNA technology speeds up vaccine development, though FDA approval could take several months.

On Nov. 19, the FDA approved Moderna or Pfizer booster shots for all adults. That came soon after the FDA approved the Pfizer/BioNTech vaccine for children aged 5-11, after already approving the Covid vaccine for adolescents aged 12-15.

Pfizer and partner BioNTech, along with rival mRNA coronavirus vaccine maker Moderna, jumped Friday on the omicron Covid variant, also called Nu Covid. Pfizer also is benefitting from Merck reporting even-lower efficacy from its antiviral Covid pill. A Pfizer Covid oral drug is much more effective.

PFE stock jumped 6.1{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} on Friday to 54, gapping above a 51.96 buy point, according to MarketSmith analysis. However, Pfizer stock has surged for six straight weeks off the bottom of its cup base. A pullback wouldn’t be a surprise.

MRNA stock gapped above its 50-day line, breaking a trend line with a 21{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} gain. BNTX stock, which cleared its 50-day line earlier in the week, soared 14{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}. Both Moderna stock and BioNTech could be deemed early entries. But investors might want to see more strength from Moderna and a post-gap up consolidation from BNTX stock.

Meanwhile, other coronavirus medical plays such as Quest Diagnostics (DGX) and PerkinElmer (PKI) showed positive action as well.

Covid Cases Rising

Coronavirus cases had already been ramping up worldwide for the past several weeks, notably in Europe. Austria began a lockdown in the past week.

Coronavirus cases worldwide reached 261.72 million. Covid-19 deaths topped 5.21 million.

Coronavirus cases in the U.S. have hit 49.09 million, with deaths above 799,000. U.S. cases, after picking up for a couple of weeks, appeared to be leveling off shortly before Thanksgiving. Will the holiday travel spur another upsurge in cases next week? Coronavirus deaths in the U.S. have continued to fall.

These Sectors Lead Sell-Off As New Covid Variant Emerges

Stock Market Rally

The stock market rally had a rough holiday-shortened week, with broad-based losses.

The Dow Jones Industrial Average gave up 2{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} in last week’s stock market trading, all driven by Friday’s 2.5{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} decline. The S&P 500 index shed 2.2{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}. The Nasdaq composite skidded 3.5{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}. The small-cap Russell 2000 tumbled 4.6{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}.

Crude oil futures plunged 13{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} on Friday. The 10-year Treasury yield lost 4 basis points to 1.49{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} for the week. But the benchmark yield dived 15 basis points Friday after nearly hitting a six-month high Wednesday intraday.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) plunged 5.9{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}, while the Innovator IBD Breakout Opportunities ETF (BOUT) gave up 3.5{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}. The iShares Expanded Tech-Software Sector ETF (IGV) slumped 5{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}. The VanEck Vectors Semiconductor ETF (SMH) retreated 4.1{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) dived 5.3{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} and ARK Genomics ETF (ARKG) 5.7{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}. Tesla stock remains the No. 1 holding across ARK Invest’s ETFs.

SPDR S&P Metals & Mining ETF (XME) fell 3.2{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} and Global X U.S. Infrastructure Development ETF (PAVE) declined 2.1{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}. U.S. Global Jets ETF (JETS) tumbled 7{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}. SPDR S&P Homebuilders ETF (XHB) slid 2{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}. The Energy Select SPDR ETF (XLE) rose 1.3{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}, but tumbled 4.3{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} on Friday with many shale plays faring far worse. The Financial Select SPDR ETF (XLF) lost 1{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}, skidding 3.7{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} on Friday.

Five Best Chinese Stocks To Watch Now

Li Auto Stock

Li Auto is expected to narrow its per-share loss with Q3 revenue tripling. Last week Li Auto stock rose 5.9{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} to 32.40. That’s near possible entries, including an official 34.93 handle buy point.

Xpeng stock is holding above a 48.08 buy point and 50.50 alternative entry after surging on earnings in the past week. Tesla and BYD stock could be working on new consolidations, both closing Friday near their 21-day lines. Nio stock has fallen back below its 200-day line.

Tesla CEO Elon Musk, in a “leaked” email to employees, suggested the EV giant may push some Q4 deliveries from the typical end-of-quarter crush into early 2022, in a bid to lower shipping costs. “Leaked” Musk emails often spur analysts to lower quarterly delivery targets. The upcoming Austin and Berlin plants should eventually ease some of the Tesla delivery crush in the U.S., Europe and China.

Tesla Berlin will begin production in December, Automobilwoche reported Sunday. Regulators are expected to give final approval to the plant with days. Production is seen picking up in January, but it at a relatively slow ramp in early 2022.

Market Rally Analysis

In the past week, the stock market rally started a major sell-off in highly valued growth stocks, especially software, while energy stocks and banks rebounded. The new Covid variant sent stocks sharply lower on Friday, especially oil and financials, as crude prices and Treasury yields tumbled. Travel stocks also were hard hit, while retailers extended a recent retreat. Coronavirus plays bounced, while software names held up relatively well.

The Nasdaq composite and S&P 500 gapped below their 21-day lines after both found support at that key level earlier in the week. The Dow Jones, which was up modestly through Wednesday, gapped below its 50-day line on Friday.

The Russell 2000 tumbled below its 50-day and 200-day moving averages. The small-cap index is a decent proxy for market breadth, which has weakened considerably. Losers trounced winners 4-to-1 on the Nasdaq Friday, and by 5-to-1 on the NYSE. The advance/decline lines have deteriorated in the past few weeks.

The CBOE Volatility Index, or VIX, spiked 54{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} to 28.62, hitting a 10-month high. Extreme moves in the so-called market fear gauge could raise the odds of at least a short-term market bottom. But it doesn’t have to happen right away and it doesn’t have to last.

There’s a lot of uncertainty right now regarding the market rally and which sectors will lead and lag. Market action is likely to be headline driven. How dangerous is the omicron Covid variant?. That will inform governments’ decisions on travel bans and restrictions and whether or not people adjust their behavior once again. A major outbreak could trigger new government and business shutdowns, roiling supply chains once again and sending commodity prices on a longer slide.

Perhaps all these fears are overdone. Goldman Sachs, in a Friday night note, said “this mutation is unlikely to be more malicious and that the existing vaccines will most likely continue to be effective in preventing hospitalizations and deaths.” Goldman added, “we do not think that the new variant is sufficient reason to make major portfolio changes.”

Time The Market With IBD’s ETF Market Strategy

What To Do Now

The whipsaw, downside action in the major indexes, various sectors and leading stocks is not conducive to new buys. Sure, if the overall stock market rally or specific sectors rebound, buying now will likely turn out well. But with so much uncertainty regarding the new omicron Covid variant, inflation, supply chains and more, the odds are not especially favorable.

It’s quite possible the oil, bank or travel stocks will try to rebound early next week, much as software stocks did on Wednesday. But that doesn’t mean the bounce will continue.

Investors should review their holdings and ditch losers. If you got caught out in Friday’s gap-down losses and didn’t act, don’t continue to freeze.

Take more of a defensive posture with all of your holdings and portfolio. Don’t necessarily be in a rush to sell everything, unless all your stocks are triggering losses.

When market conditions do shore up, whether it’s next week or next year, you want to be ready financially and mentally to take advantage.

Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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