MilitiaMan and Crew: 8-17-2023
The Crew: Samson, PompeyPeter, Petra, Daytrader, Sunkissed, GIGI and Militia Man
MM: A Iraq economist is suggesting that Iraq should ONLY deal in dinar…..no dollars at all….and to raise the value of the dinar to do away with the US currency. ….news on the Buna platform and lots more.
Persistent inflationary woes have obligated the majority of the Fed officials to remain hawkish in the July meeting as they hint at higher interest rates soon. This, in turn, is a boon for financial companies such as Radian Group (
RDN - Free Report) , JPMorgan Chase & Co. (JPM - Free Report) and Mercantile Bank (MBWM - Free Report) , which makes them compelling investment choices as of now.
Major bourses ended in the negative territory on Aug 16 and registered back-to-back losses. After all, the broader S&P 500 Index, the tech-laden Nasdaq, and the 30-stock index, better known as the Dow, slipped more than 1% on Aug 15.
The S&P 500, in particular, ended below its 50-day moving average on Aug 15 for the first time since Mar 28, per Dow Jones Market Data. It’s a tell-tale sign that the index could extend its losses further, as it did on Aug 16, and that the summertime stock-market selloff trend hasn’t finished yet.
From an increasing long-dated Treasury yield to a stronger U.S. dollar, all are hurting the stock market rally. But recently, the Fed’s minutes from the meeting held in July showed that most of the officials believe that “upside inflation risks” persist, which could lead to further interest rate increases.
The possibility of more rate hikes rattled investors and dragged the stock-market indexes lower. This is because interest rate hikes impact borrowing costs, curtail consumer spending, and hamper economic growth.
Most Fed officials said, “further tightening of monetary policy” is needed to ease inflationary pressure. Lately, both retail and producer prices may have moderated from last year, but inflation remains above the Fed’s desired target of 2%. And with consumer outlays showing no signs of ebbing, prices of indispensable commodities are well-poised to rise (read more: 5 Stocks to Make the Most of Booming Retail Sales).
Most Fed officials also believe that moderation in real GDP growth and softening of labor market conditions are required to bring down inflationary pressure. However, at present, the economy continues to chug along, and the labor market exhibits strength.
Currently, the CME FedWatch Tool shows that most market participants anticipate the Fed to keep interest rates unchanged in the September meeting. But the likelihood of a 25-basis-point rate increase in the November meeting has gone up modestly following the release of the Fed minutes.
The broader stock market may have fallen on fears of an increasing interest rate environment. But such a situation bodes well for insurance companies. They invest the premiums they get from policyholders in corporate and government bonds. When the interest rate increases, bond yields rise, helping insurance companies to invest the premiums at a higher yield, and earn more.
When interest rate increases, banks also stand to gain. The spread between what a bank earns from loans with short-term liabilities like deposits increases amid higher interest rates, thereby increasing their profit margins.
With insurance players and banks poised to win big, we have selected three solid stocks from these areas that boast a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Radian Group is known for providing its clients with an array of private mortgage insurance products and services. The decline in primary delinquent loans coupled with an improving risk-based capital ratio, all augur well for Radian’s long-term growth.
Radian Group’s estimated earnings growth rate for the next five-year period is 5%. Its shares have already gained 19% over the past five years. The Zacks Consensus Estimate for its current-year earnings has moved up 5.8% over the past 60 days. RDN, presently, has a Zacks Rank #2.
JPMorgan Chase is one of the biggest global banks. Its strong liquidity position and diversification initiatives will surely boost its long-term growth prospects.
JPMorgan’s estimated earnings growth rate for the next five-year period is 5%. Its shares have already gained 10.4% over the past five years. The Zacks Consensus Estimate for its current-year earnings has moved up 10.3% over the past 60 days. JPM, currently, has a Zacks Rank #1.
Mercantile Bank aids consumers across Grand Rapids and Kent County with a variety of mortgage, lending, deposit, and checking products and services.
Mercantile Bank’s estimated earnings growth rate for the current year is 26.5%. Its shares have already gained 12.5% over the past five years. The Zacks Consensus Estimate for its current-year earnings has moved up 11.4% over the past 60 days. MBWM has a Zacks Rank #2 at present.
When it comes to emerging markets investing, China looms large. It’s the world’s second-largest economy and that heft is reflected in supposedly diverse indexes and exchange traded funds. For example, the widely observed MSCI Emerging Markets Index allocates almost 30% of its weight to Chinese stocks, or more than its combined weight to Brazilian and Indian equities.
Speaking of India, it too is an enormous economy – currently Asia’s third-largest and, by some estimates, eventually the biggest in the world. More important than those data points, and they are important, is performance. India has delivered the goods for investors. Over the past three years – a period including myriad stumbles for broader emerging markets strategies – the MSCI India Index is higher by 40.3% while the MSCI China Index and the MSCI Emerging Markets Index are deeply in the red. Plus, Indian stocks were significantly less volatile than the China and emerging markets gauges over that period.
With those points and the specter of a China’s economy slumping in mind, investors might want to consider giving India ETFs a closer look.
WisdomTree India Earnings Fund (EPI)
EPI is one of the oldest India ETFs and it’s getting better with age as it has absolutely obliterated the MSCI India Index and other India ETFs over the past three years. An important point in EPI’s favor and one that likely explains some of its long-term out-performance is an index methodology that emphasizes profitability.
That reduces the number of speculative companies that appear in the ETF while serving to enhance the fund’s quality profile. Regarding quality, it’s a distinct factor from low volatility, but the former often begets the latter. Interestingly, EPI has been less volatile on an annualized basis over the past three years. Importantly, EPI is well-positioned to capitalize on India’s attractive demographic trends.
“India has a young and growing population with a median age of just under 29 years, a large and growing middle class, and a rapidly expanding skilled workforce,” according to WisdomTree research. “It also has the largest English-speaking population after the U.S., making it the preferred destination for outsourced manufacturing and services. In addition to this, the nation’s progress in enhancing literacy levels and education standards has positioned India as an emerging powerhouse of the world.”
VanEck Digital India ETF (DGIN)
Speaking of India’s alluring demographic trends, DGIN is a prime example of an ETF levered to those themes. It’s widely known that the behemoth economy is among the most technologically advanced in the world, but some of the old guard ETFs in this category aren’t adequately attuned to that theme.
Additionally, while it’s not yet on par with the U.S. or China, India’s e-commerce market is one of the fastest-growing in the world. That status is fortified by at least two pivotal points. First, India lacks the big-box retail infrastructure found in the U.S. Second, perhaps as a result of the first point, Indian consumers are comfortable shopping online, including via mobile devices.
“We’re making a bold call for India’s smartphone market. We believe it will triple in size over the next decade to $90 billion and account for 15% of global smartphone shipments by 2032, up from just 6% today. That implies that India alone will drive 100% of global smartphone shipment growth over the next decade,” observed Erik Woodring, Morgan Stanley’s U.S. hardware analyst.
Invesco India ETF (PIN)
PIN follows the FTSE India Quality And Yield Select Index, making it a dividend-based play on Indian equities. That index excludes the 10% of the lowest yielders among Indian stocks and another 10% that score poorly based on quality metrics.
That strategy seems to have long-term durability as PIN, though oft-overlooked in this category, has been around for more than 15 years. Importantly, PIN could be better positioned to capture long-term upside relative to a comparable China ETF.
“Moreover, India's ability to leverage multi-polar world dynamics is a significant advantage. Simply put, India's future looks to a significant extent like China's past, and in this context, it's particularly relevant to note long run trends in exchange rates now show the Indian rupee more stable and actually appreciating whilst the renminbi is depreciating,” according to Morgan Stanley.
https://www.nasdaq.com/articles/the-big-emerging-market-to-consider-if-china-stumbles
ERBIL, Aug 12 (Reuters) - Iraq's telecoms ministry said it will lift a ban on the Telegram messaging app on Sunday, which was imposed earlier this week, citing security concerns and data leaks of official state institutions and citizens.
The app is widely used in Iraq for messaging but also as a source of news and for sharing content.
Some channels contain large amounts of personal data including the names, addresses and family ties of Iraqis.
The ministry said in a statement the decision to lift the ban came after "the company that owns the platform responded to the requirements of the security authorities that called on the company to disclose the entities that leaked citizens' data."
The company also "expressed its full readiness to communicate with the relevant authorities...," the statement added.
In response to Reuters request for comment a member of Telegram's press team said that "posting private data without consent is forbidden by Telegram's terms of service and such content is routinely removed by our moderators."
"We can confirm that our moderators took down several channels sharing personal data. However, we can also confirm that no private user data was requested from Telegram and that none has been shared."
Last week the ministry said that the company did not respond to its request to close down platforms that leak data of the official state institutions and the personal data of citizens.
Reporting by Amina Ismail ; editing by David Evans
Iraq set in 'battle' against dollar smugglers, c.bank governor says
BAGHDAD, Aug 16 (Reuters) - Iraq has made strides implementing U.S. dollar supply restrictions targeting Iran but faces an uphill battle with a banking system unaccustomed to strict oversight and persistent currency smugglers, central bank governor Ali al-Allaq said.
"It is really a battle, because the people benefiting from this situation and those harmed (by the new measures) will try in various ways to continue their illegal activities," Allaq said in an interview with Reuters.
Allaq did not mention Iran by name and said he did not have data on how much of Iraq's dollars been smuggled to Iran or other neighbouring countries, including Turkey and Syria, before the United States tightened regulations in November.
The U.S. measures that aim to enforce sanctions on Iran are a sensitive matter in a country that has often been a front line in the rivalry between Washington and Tehran.
Iraq's government is reliant on Washington's continued goodwill to ensure oil revenues and finances do not face U.S. censure, but it came to power with the support of powerful, Tehran-backed groups and so cannot afford to alienate Iran.
The latter groups have accused the U.S. of meddling in Iraq's internal affairs and creating a currency crisis, as businesses either struggling or unwilling to abide by the new measures sourced dollars from exchange shops, driving down the value of the Iraqi dinar.
Iraq has more than $100 billion dollars in reserves, Allaq said, but could not freely intervene in the market to bring the rate down due to the restrictions.
Last month, the U.S. Treasury Department and the Fed barred 14 Iraqi banks from conducting dollar transactions as part of a wider crackdown on dollar smuggling to Iran via the Iraqi banking system, U.S. officials said.
Allaq said that action related to transfers from 2022, before a new platform that aimed to improve transparency went live. He said the central bank was undertaking a review of the banking sector and introducing new regulations that he said would likely see some banks close.
"It would be very normal in the coming period to see a reduction in the (number of private banks)," he said.
"There are always side-effects, but at the same time we have a responsibility to protect the country's interests by trying to find the necessary means for monitoring and oversight so as not to expose the country to any issues on this front," he said.
The U.S. measures have targeted Iraq's so-called dollar auction, where the central bank requests dollars from the U.S. Federal Reserve before selling them to commercial banks, which in turn sell the funds to businesses in the highly import-dependent economy.
U.S. and Iraqi officials have said the auction allowed large sums of money to be illegitimately acquired by groups who would provide fake invoices and then either transfer or physically smuggle the funds to neighbouring countries, chiefly Iran.
A feature of a highly informal economy, the system was also used by thousands of small businesses that are not registered with the state, Allaq said, a widespread phenomenon in Iraq that allows them to dodge taxes and customs fees.
Since January the central bank has asked banks to provide detailed information on senders and recipients of transfers via an online platform.
When companies began trying to use the platform in January, less than 20% of requests were approved by U.S authorities, Allaq said. That number had now risen to around 85 percent, signalling growing ease with the new regulations, he said.
Allaq said that tighter regulations along with government plans to promote digital payment were forcing a wider shift in the Iraq economy in a country where cash remains king and the majority of adults do not have bank accounts.
"It is not just an electronic platform, it will lead to a total reorganisation of trade and the movement of money, and control on a lot of avenues for suspicious activity."
Reporting by Timour Azhari; Editing by Angus MacSwan
REINALDO JC Dinar Rumors of WWIII & When things seems to be at their worst…Than BOOM!!! Hold as we are in the final stretch… You w...
