Wall Street closed lower on Tuesday due to uncertainty on second round of coronavirus-aid package. Do you want to upgrade to the new iPhone 12? Are you planning to trade in your existing phone to help fund your new phone purchase? If so, we hope you The former vice president and key Democrats in Congress want to use trade agreements to fight global warming, but reversing four years of Trump’s “energy dominance” is no easy task. 3 Stocks Trading Below the Earnings Power Value, Stocks: RF,FITB,MET, release date:Oct 14, 2020
Wall Street closed lower on Tuesday due to uncertainty on second round of coronavirus-aid package. Moreover, negative developments on COVID-19 treatment fronts also dented market participant’s confidence. All the three major stock indexes ended in red.
The Dow Jones Industrial Average (DJI) fell 0.6% or 157.71 points to close at 28,679.81, reversing a 4-day winning streak. Notably, 23 components of the 30-stock index ended in the red while 7 finished in green.
Moreover, the tech-laden Nasdaq Composite finished at 11,863.90, dropping 0.1% due to the weak performance by large-cap technology stocks. The tech-heavy index has declined after four successive days.
Meanwhile, the S&P 500 dipped 0.6% to end at 3,511.93, ending the 4-day winning run. The Financials Select Sector SPDR (XLF), the Real Estate Select Sector SPDR (XLRE) and the Energy Select Sector SPDR (XLE) tumbled 1.9%, 1.7% and 1.6%, respectively. Notably, ten out of eleven sectors of the benchmark index closed in negative zone and one in the green.
The fear-gauge CBOE Volatility Index (VIX) was up 4% to 26.07. A total of 8.5 billion shares were traded on Tuesday, lower than the last 20-session average of 9.72 billion. Decliners outnumbered advancers on the NYSE by a 2-to-1 ratio. On Nasdaq, a 1.50-to-1 ratio favored declining issues.
U.S. Congress is yet to reach an amicable solution regarding the size and scope of a second round of coronavirus-aid package. The Democrats have settled for $2.2 trillion stimulus while the White House approved only $1.8 trillion.
It is not clear whether a deal will arrive before the U.S. presidential election scheduled on Nov 3, though House speaker Nancy Pelosi said she is still hopeful for a deal. Meanwhile, the Republic-controlled Senate leader Mitch McConnell said he will release a separate stimulus proposal worth just $500 billion. President Donald Trump has already rejected this proposal.
The year 2020 is likely to remain coronavirus-stricken as the availability of a vaccine by this year-end looks unlikely. On Oct 13, the U.S. FDA has paused the late-stage clinical trials of Eli Lilly and Co.’s (LLY – Free Report) leading monoclonal antibody treatment for the coronavirus over potential safety concerns.
On Oct 12, Johnson & Johnson (JNJ – Free Report) announced that the company has halted clinical trials of its late-stage vaccine for the treatment of COVID-19 after a participant reported an “adverse event” a day before. The company’s data and safety monitoring board will investigate the unexplained illness in details.
Last month, AstraZeneca plc (AZN – Free Report) halted late-stage clinical trials of its coronavirus vaccine on safety concerns. The company was conducting clinical trials in association with Oxford University. However, the clinical trial has restarted in the U.K.
Each of these three stocks carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Department of Labor reported that consumer price index (CPI) rose 0.2% in September, in line with the consensus estimate. CPI rose 0.4% in August. September’s data is the lowest in four months. Year over year, CPI grew 1.4% compared with 1.3% in August.
The core CPI (excluding volatile food and energy items) rose 0.2% in September, in line with the consensus estimate. The core CPI rose 0.4% in August. September’s data is the lowest in four months. Year over year, the core CPI grew 1.7%, remained flat sequentially.
he upcoming election could be a massive buying opportunity for savvy investors. Trillions of dollars will shift into new market sectors after the election. The question is, which sectors will soar for each candidate? Zacks has put together a new special report to help readers like you target big profits.
The 2020 Election Stock Report reveals specific stocks you’ll want to own immediately after the results are announced – 6 if Trump wins, 6 if Biden wins. Past election reports have led investors to gains of +71%, +83%, even +185% in the following months. This year’s picks could be even more lucrative.
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Apple iPhone Trade-in Values Plunge
Do you want to upgrade to the new iPhone 12? Are you planning to trade in your existing phone to help fund your new phone purchase? If so, we hope you locked in a trade-in price a few weeks ago.
Not surprisingly, the trade-in prices for older iPhone models have plummeted almost immediately after the iPhone 12 was announced.
According to online trade-in trackers, older iPhone values have dropped precipitously following the iPhone 12 announcement.
- This year, an iPhone 11 Pro Max will net you a maximum of $500 using Apple’s trade-in program.
- Last year, an iPhone XS Max trade-in could net you a whopping $600, in comparison.
The most significant drop was seen among the good and poor condition phones. A good condition 256GB iPhone X would previously fetch $330 while a poor condition phone would net you just $120.
Fast forward to today, and those iPhones are valued at $207 and $69, respectively. That’s about a 35 percent loss for a good condition phone and nearly a 45 percent drop for one in poor condition.
If you want to get the maximum amount for your older iPhone, you should stay away from trade-in programs. They are convenient, but you won’t get top dollar. These offers tend to be low because the company buying your older iPhone will turn around and sell it. To make money off the resale, they can only pay you a fraction of what the phone is worth.
The best way to get as much money as possible is to sell the iPhone in a private sale. Use a local service like Craigslist or a local Facebook group to sell your old phone to a person who needs a new phone.
You also can use eBay, which broadens your customer base but also requires you to pay fees. You may be able to sell your phone for more money on eBay, but the fees will quickly eat up that extra profit.
If you prefer the trade-in route because of its convenience, you should plan in advance. Many resellers like Gazelle will let you lock in a price before an Apple event. Commit to a trade-in early, and you can secure a higher price for your phone. You’ll also enjoy the convenience of merely sending your phone to a reseller and getting cash back right away.
How Biden would use trade agreements to fight global warming
“The U.S. is in a globally unique position,” said Todd Tucker, a trade and climate researcher at the Roosevelt Institute, a progressive think tank. “It’s got the largest consumer market in the world and with that comes a lot of leverage over foreign governments.”
Biden’s trade agenda calls for a global ban on fossil-fuel subsidies, tariffs on imports that produce a lot of carbon, and trade deals that include commitments to reduce emissions. Key Democratic trade leaders in Congress say they are on board.
“I’m confident that we’ll be able to work with a Biden administration to, in a cooperative way, make sure that we are taking into account carbon emissions,” said Rep. Earl Blumenauer (D-Ore.), head of the House Ways and Means subcommittee on trade. “We can look at things like having a carbon border adjustment tariff, so that we don’t have countries importing or exporting carbon pollution.”
Republicans warn that Biden risks alienating the Rust Belt voters who will have sent him to the White House if he becomes president and his policies reduce exports of heavy manufactured goods or fossil fuels like oil and natural gas, even if that’s accompanied by a drop in imports from other countries.
“Biden is going to have a big problem if he really goes in this direction in a vigorous way,” said Clete Willems, a former career staffer at the U.S. Trade Representative’s office who later advised President Donald Trump on the National Economic Council. “If you start adopting policies that shut down exports you’re going to have a lot of unhappy people in politically important states.”
But even some Democrats from Midwestern states, where the party has lost working-class voters to the GOP, say they are ready to add climate concerns to their trade agenda. They are gearing up for a battle next year when Congress will need to reauthorize Trade Promotion Authority, which lays out rules for the executive branch to negotiate new trade deals.
“I think all of us recognize we need to use every opportunity we have, especially when it comes to TPA or renegotiating any other trade agreements, that this has got to be front and center,” said Rep. Tim Ryan, (D-Ohio), who ran for president last year on a platform of rebuilding Democratic support in the Rust Belt.
The carbon pollution from global trade is immense. About a quarter of worldwide carbon emissions comes from producing products that are eventually consumed in another country, reported a 2012 article in the journal Biogeosciences.
The U.S. emits about a sixth of global carbon emissions from within its borders, but its imports also accounted for 400 million tons of carbon in 2017, according to Oxford university researchers, raising overall U.S. emissions by almost 8 percent.
But researchers say the true U.S. contribution is even larger than that because so many of the world’s largest companies are American. One paper from last year estimated that carbon emissions from U.S-based companies’ overseas operations alone would rank as the 12th largest national emitter, more than any European nation.
The U.S. “is home to some of the largest multinationals that are responsible domestically and globally for a lot of carbon emissions,” Tucker said. “In theory, [the federal government] can use its market access as leverage and compel its corporations to follow certain rules of the road.”
That would be a clean break from the Trump administration’s policies. Today, U.S. trade negotiators cannot make deals that require domestic carbon cuts, under a TPA provision Republicans inserted in 2016.
And the Trump White House has spent four years hawking American fossil fuels around the world. That solidified the U.S. position as a leading global exporter of oil and gas.
Trade experts don’t expect Biden to push for an outright ban on those oil and gas exports, which only began during the Obama administration, when the president agreed to lift the decades-old oil export ban in a deal that extended domestic wind and solar subsidies.
Instead, Biden is widely expected to work on multilateral deals to reduce global demand for fossil fuels, rather than attack mining and drilling directly. That strategy would hearken back to the Obama administration’s climate diplomacy, when the former president struck a deal with Beijing in 2014 that committed China to capping its emissions, paving the way for the 190-nation Paris Accord a year later. Trump pulled out of the pact soon after becoming president in 2017, but withdrawal can’t be completed until after the November election.
“We have a very aggressive plan to move on this internationally — not just rejoining Paris, but also working to get our allies, partners and others to raise their ambitions,” Tony Blinken, a Biden campaign adviser who served as deputy secretary of state during the Obama administration, said on a Chamber of Commerce webinar last month. “I’d like to think that’s a place where the U.S. and Europe can lead together.”
The Biden camp has been reluctant to release details about how he would push down emissions, but figures close to the campaign are floating ambitious plans. Jennifer Hillman, a former U.S. trade official, said a Biden White House could embrace a bill sponsored by Blumenauer (H.R. 4926) to impose a carbon tax at home and new climate tariffs at the border.
Under that plan, coal, oil and gas would be taxed as they are mined and drilled, raising the price of the fossil fuels and discouraging consumers from buying them, said Hillman. Imports from countries without a carbon price would get hit with a tariff, while exports would get a rebate from the tax.
The Biden campaign declined to comment on Hillman’s remarks, delivered during a POLITICO virtual event this week. But a spokesperson said she is not an official adviser and noted Biden’s climate plan does not endorse a domestic carbon tax, going no further than to call for “an enforcement mechanism” to cut emissions.
Biden’s “Buy American” economic plan, however, does endorse a “carbon adjustment fee” at the border, and other trade leaders say they are open to the idea.
Sen. Ron Wyden (D-Ore.), who would chair the Finance Committee if the Democrats retake the Senate, will only support a domestic tax on carbon “if it includes a well-designed border adjustment,” a spokesperson said, “to ensure American workers are on a level playing field with overseas competitors.”
Biden’s plans are likely to encounter opposition from the energy industry. The American Petroleum Institute says it has not engaged on trade policy with the Biden camp, but warns it will oppose regulations or taxes that increase the price of U.S. oil and gas exports, which it argues could lead other nations to build dirtier coal plants instead.
“In many markets, for the first time, natural gas prices are genuinely competitive with coal and in our mind that is a profound shift in the global energy landscape,” said Dustin Meyer, director of market development for the API. “Any sort of policymaking in the U.S. that would restrict global access to U.S. natural gas would threaten that.”
Earlier efforts in the Obama administration to regulate carbon emissions, like a 2009 cap-and-trade bill from California Democrat Henry Waxman and Senator Ed Markey of Massachusetts, died despite Democratic control of Congress. But Blumenauer said he thinks greater global pressure to cut emissions — like efforts to impose a border carbon tax in Europe — will beat back opposition from fossil-fuel producers.
“You look at what is going on with the oil industry, their position has really diminished dramatically,” he said. “This is a different ballgame going forward. I think the politics will be different with the Democrats in charge of the House, with an administration that will work with us, rather than fighting us, and we have a wide array of trading partners that are deeply concerned about the climate crisis. I think it’s a whole new era.”
3 Stocks Trading Below the Earnings Power Value
When in search of stocks that could be priced reasonably, one tool that investors can use is the Earnings Power Value (EPV) metric.
The creation of the EPV metric has been credited to Bruce Greenwald. He was a former professor at Columbia University and a prominent value investor who was looking for ways to circumvent the series of guesswork choices that must be made when applying the discounted cash flow valuation model. The EPV is calculated as the adjusted earnings divided by the weighted average cost of capital.
The following three stocks thus seem reasonably priced, as their share prices are trading below their respective EPVs.
Regions Financial Corp
The first stock that makes the cut is Regions Financial Corp (NYSE:RF), a U.S. regional bank based in Birmingham, Alabama.
Regions Financial Corp’s EPV is $32.15 per share (as of June 29), which is higher compared to the share price of $12.49 at close on Tuesday for a margin of safety of 61.15%.
After a 20% decrease which occurred in the share price over the past year, the market capitalization is $11.99 billion and the 52-week range is $6.94 to $17.54.
GuruFocus has assigned a score of 3 out of 10 to the company’s financial strength and of 4 out of 10 to its profitability.
Wall Street sell-side analysts issued an overweight recommendation rating with an average target price of $13.52 per share for the stock.
VANGUARD GROUP INC dominates the group of the company’s top fund holders, owning 12.58% of shares outstanding. It is followed by BlackRock Inc. with 8.98% and STATE STREET CORP with 5.55%.
Fifth Third Bancorp
The second stock that makes the cut is Fifth Third Bancorp (NASDAQ:FITB), a Cincinnati, Ohio-based regional bank providing a broad range of financial services to U.S. clients.
Fifth Third Bancorp’s EPV is $71.19 per share (as of June 29), which exceeds Tuesday’s closing share price of $23.12, giving a margin of safety of 67.52%.
Due to a 15.5% share price decline which occurred over the past year, the market capitalization is now $16.47 billion and the 52-week range is $11.10 to $31.64.
GuruFocus has assigned a score of 3 out of 10 to the company’s financial strength rating and of 5 out of 10 to its profitability rating.
Wall Street sell-side analysts issued an overweight recommendation rating for this stock and have established an average target price of $24.94 per share.
The company’s top fund holder is VANGUARD GROUP INC with 10.48% of shares outstanding, followed by PRICE T ROWE ASSOCIATES INC /MD/ with 9.39% and BlackRock Inc. with 8.06%.
The third stock that makes the cut is MetLife Inc (NYSE:MET), a New York-based life insurance company.
MetLife Inc’s EPV is $315.16 per share (as of June 29), which is higher than the share price of $39 at close on Tuesday, yielding a large margin of safety of 87.63%.
As a result of a 15.55% share price fall that took place over the past year, the market capitalization now trades at $35.40 billion and the 52-week range is $22.85 to $53.28.
GuruFocus has assigned a score of 5 out of 10 to the financial strength rating and a score of 6 out of 10 to the profitability of the company.
Wall Street sell-side analysts issued an overweight recommendation rating with an average target price of $45.80 per share for this stock.
With 7.31% of shares outstanding, Dodge & Cox is the largest fund holder, followed by BlackRock Inc. with 7.30% and VANGUARD GROUP INC with 6.48%.
Disclosure: I have no position in any security mentioned.
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Author: Alberto Abaterusso