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First-quarter profits are expected to rise 8.3 percent year-on-year, according to UBS strategist Jonathan Golub. Investors are not particularly encouraged by the first quarter reports and are focusing on other factors such as interest rates. UBS GWM strategists are bullish on US stocks and recommend investors invest in technology stocks, industrials, healthcare and small caps.
Strong first-quarter earnings reports barely kept U.S. stocks afloat – but a top figure at UBS Global Wealth Management is confident markets will soon continue their run higher. First-quarter profits are expected to rise 8.3 percent year-on-year, according to UBS strategist Jonathan Golub.
The main reason for this is the biggest earnings surprise since 2021. Almost a month ago, analysts were still expecting subdued earnings growth of just three percent. Rather than bringing forward future growth, UBS noted that second-quarter estimates are also above trend. This represents a deviation from the typical rhythm of companies that exceed a low bar.
David Lefkowitz of UBS Global Wealth Management isn’t worried about interest rate hikes. UBS
Despite this positive news, investors are not particularly encouraged by the first quarter reports. They currently have a different focus in mind – which is understandable given the current economic situation. “In the long term, earnings are very important,” David Lefkowitz, head of U.S. equities at UBS GWM, said in an interview. “In the short term, other factors such as sentiment, positioning and the development of interest rates can also play an important role.”
UBS
Before the 4.2 percent setback in April, US stocks were in a situation rarely seen historically. According to a Bank of America report from early May, the S&P 500 rose around 26 percent from late October to late March. This corresponds to a value of 98 percent within just five months. Lefkowitz cited a similar statistic.
As a result, this rally led to excessive optimism among investors. Given the positioning of the portfolios, many became downright greedy. High hopes for stock returns and earnings underpinned last month’s disappointment, Lefkowitz said.
Why interest rates are not yet a reason to panic
Alarmingly high inflation data prompted investors to drop their calls for interest rate cuts. Ten-year Treasury yields skyrocketed, with Lefkowitz noting they soon rose 1.5 standard deviations. These sudden, large swings in interest rate expectations and yields are often accompanied by a sell-off, he said.
There are two key components for valuing stocks, explains Lefkowitz: the earnings and the price that investors are willing to pay for them (the so-called discount rate). Higher interest rates weigh on the price-to-earnings ratio (P/E) because they reduce the present value of future earnings. However, Lefkowitz noted that the price-to-earnings ratio is a poor predictor of short-term stock returns.
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Although higher interest rates can cause difficulties, Lefkowitz believes that the most important thing is earnings growth. If the economy is weak, the Federal Reserve could be forced to cut interest rates. The fact that the Federal Reserve is keeping interest rates high for longer is a sign of its confidence in the economy. That could be an encouraging sign for earnings.
“The reason they don’t have to make cuts is that nominal growth still remains fairly solid,” Lefkowitz said. “So when you think about companies and corporate profits, their revenues are nominal in nature. So if inflation is a little higher, that should increase revenues, and companies that have pricing power are in a better position to increase their profit margins in that situation.”
Instead of worrying about when interest rates will fall, Lefkowitz says investors should consider the reasons behind the Federal Reserve’s decisions. Markets are likely to react differently if interest rates are cut due to a sudden downturn in the economy than if progress is made on inflation. “If interest rates rise and that leads to more confidence in earnings growth prospects, then that should not be a headwind for markets,” Lefkowitz said.
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Healthy earnings growth and a robust economy make UBS GWM strategists optimistic about US stocks. In their base case, the S&P 500 will end the year slightly higher at 5,200, although their upside scenario sees the index rising another 8.7 percent to 5,500 as inflation declines.
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Banco Azteca bribed a Democratic congressman to receive political favors in the United States
Azteca Bank remains under the scrutiny of the authorities of USAnow due to a new accusation for a case of bribery still democratic party congressman.
This was revealed by the Department of Justice of USAwhich reported on Friday, May 3, about an accusation against the democratic congressman for the state of Texas, Henry Cuellar.
According to the information issued by the organization, the legislator would have received a millionaire bribery by a senior official Azteca Bankin exchange of political favors.
The United States launches a new accusation of bribery against Banco Azteca that involves a Democratic congressman
A new case against Azteca Bank opened in USAbecause the Department of Justice announced that an investigation is being carried out into an alleged case of bribery.
The report states that in 2015, a senior official of the banking institution owned by Ricardo Salinas Pliego, agreed with a democratic congressman the delivery of money in exchange for political favors.
In particular, the Department of Justice indicated that he was the former vice president of Banco Azteca, Luis Niño de Riverawho agreed on bribes with the Democratic legislator Henry Cuellar.
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The information revealed establishes that the former director of Banco Azteca agreed to hand over the Democratic congressman, 236 thousand dollarsthat is, more than 3 million 700 thousand pesos at the exchange rate of that year.
By filing the complaint in the federal court of the Southern District of Texas, the Department of Justice accused Henry Cuellar of a series of charges such as conspiracy, bribery and money laundering.
This is how Banco Azteca negotiated bribes with the Democratic congressman in the United States
The complaint against democratic congressman Henry Cuellar to agree bribes from Banco Aztecaestablishes that the contact to agree on the illegal acts occurred during 2014.
In that year, Henry Cuellar and his wife, Imelda Cuéllar, They traveled to Mexico to hold a meeting with Luis Niño de Riverawhose name is not mentioned but details about his identity are mentioned.
It is even stated that Luis Niño de Rivera proposed to the Democratic congressman giving more moneyif in the medium term Banco Azteca benefited from political favors.
Regarding the favors in exchange for 236 thousand dollars, it is noted that the Democratic congressman would have collaborated with Banco Azteca to reduce the impact of the Bank Secrecy Law of 2012.
This is due to the fact that said legislation caused various banking institutions of the United States, would lose the possibility of serving as correspondent banks from foreign banks.
Regarding this, the Department of Justice stated that the law generated concern for Banco Azteca, because blocked the possibility to enter the United States financial system.
Especially because Banco Azteca required American banks to help it repatriate large reserves of physical money in United States currency, which remained in Mexico.
To achieve the above, the accusation states that Henry Cuéllar He pressured a senior official in 2016 in charge of banking regulation, during the Barak Obama administration.
Banco Azteca has not commented on accusations of bribery against a Democratic congressman in the United States
When the new case against Azteca Bank by bribes to the Democratic congressmanHenry Cuellar, the legislator himself denied the accusations made by the Department of Justice.
On May 3, Henry Cuellar pleaded not guilty of the different charges brought against him for the alleged irregular agreements with the Mexican banking institution.
However, until now neither Banco Azteca nor Luis Niño de Riverahave spoken out regarding accusations of bribing legislators in exchange for political favors.
It should be noted that by presenting the case before the Federal Court of the Southern District of Texas, the United States Department of Justice offered various evidence such as emails between Luis Niño de Rivera and Henry Cuellar.
Banco Azteca bribed a Democratic congressman to receive political favors in the United States
Snowfall in APEC
Joe Biden and Xi Jinping. Tension between the United States and China, both members of APEC, marks the field.
This is one of the major APEC events prior to the leaders’ summit in November. As part of the formal start of activities under the Peruvian presidency of APEC PERU 2024, the Meeting of APEC Finance and Central Bank Delegates (FCBDM) will take place on February 23 and 24 in the city of Arequipa.
Last December, Peru managed to get the 21 member economies of the Forum to approve the proposal for thematic priorities presented by the country, so that they will be the subject of the forum’s thematic agenda for this year, based on which it is expected to adopt a significant number of “frameworks or work plans” (deliverables, in APEC jargon) by November, for when Lima receives the leaders of the 21 economies for the third time in the history of the forum.
It will highlight the transversal treatment of the issue of economic informality and how governments could, with the collaboration of the private sector, apply policies or initiatives that promote the transition to formality of informal economic actors, particularly the most vulnerable sectors.
Under the priorities “Sustainable + Digital + Resilient = APEC”, we want to promote the exchange of experiences and the development of capacities on sustainable finance, sustainable infrastructure, transition to clean energy, carbon measures, exchange of financial information, digital financial inclusion and financing of hydrometeorological risks. Likewise, it will be the opportunity to discuss and eventually approve a new programmatic framework on these issues in the APEC finance process.
On the other hand, the Characato conclave represents another step in the development of a thematic agenda that has incorporated the sustainability pillar in the APEC forum. Along these lines, one of the thematic priorities adopted by the forum for 2024 is “Sustainable growth for resilient development”, and within it the adoption of the deliverables “APEC guide to develop and implement hydrogen policy frameworks with low carbon emissions in the Asia-Pacific region” and the “APEC Principles to Prevent and Reduce Food Loss and Waste in the Asia-Pacific Region”.
A relevant agenda that will also confront the inevitability of geopolitical reality. Tensions between the United States and China, APEC’s big players, show no signs of abating.
As Ambassador Carlos Vásquez Corrales, president of the 2024 senior officials meetings, explained to CARETAS, consensus is increasingly complex to achieve.
China’s isolation from the West is increasingly pronounced. The Economist reported in recent days that the frequency of flights with the United States has been dramatically reduced and is far from its pre-pandemic levels (from 300 direct flights to just 63). The New York Times, meanwhile, announced that 2023 was the first time in 20 years that Mexico surpassed the Asian dragon as the main source of imports for gringos.
The distance increased with the invasion of Russia – another APEC partner – into Ukraine. Chinese leader Xi Jinping has expressed his support for Russia without delay, while the United States and Europe have firmly aligned themselves with Ukraine, even at the immense cost it has so far meant for the old continent.
Added to all this is the waning economy of China, until recently the world’s great locomotive. To the collapse of its real estate companies and its mammoth level of debt, which by 2022 exceeded 272% of its GDP.
The Financial Times recently concluded that the rise in Chinese debt, rather than the problem, is its symptom. The real problem would be the accumulated, unrecognized losses by the government associated with investment misplacements over the last decade, especially in excess property, infrastructure and, increasingly, manufacturing. May Chancay take us confessed.
On the tense Russian side, meanwhile, Ambassador Igor Romanchenko stated that, while his country will be represented at the forum meetings, he did not confirm whether Vladimir Putin would come (Russia, by the way, holds presidential elections in March and it is not difficult to guess the result). The Russian president was not invited to the San Francisco summit last November. And the victory of Prabowo Subianto in the Indonesian presidential elections, linked to the Suharto dictatorship, adds another line to the nervous APEC tiger. It is the third democracy in the world.
In the midst of such a busy environment, we can at least be sure of the solidity of the ashlar and the forcefulness of the chippings.
Officials from the Regional Government of Arequipa held a meeting with representatives of the Executive to finalize the details of this meeting of vice ministers of Finance and Central Banks.
The meeting was chaired by the regional vice governor Ana María Gutiérrez Valdivia. The Cultural Complex of the Mario Vargas Llosa Regional Library (composed of its libraries and House Museum) has been made available to the organizers, and the presence of local artists and craftsmen in the work sessions was coordinated to give color and personality to the journeys.
The advance visit was led by the president of the APEC Peru 2024 Working Group, Ambassador Carlos Chávez-Taffur, and representatives of the Peruvian ministries of Foreign Affairs, Labor and Employment Promotion, Production, and Foreign Trade also participated. and Tourism, Women and Vulnerable Populations, and the Commission for the Promotion of Peru for Exports and Tourism – PROMPERÚ. Representatives of the National Police, the Navy, the Air Force, the Army and the National Institute of Civil Defense – INDECI also attended.
The meeting will be chaired by the Vice Minister of Economy of Peru, Zósimo Juan Pichihua Serna, who is going through his own instability with the replacement in the MEF of Álex Contreras by José Arista.
#Snowfall #APEC
– 2024-05-06 18:14:49
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