Strong Buy for The Carmakers Across the Globe

Apple still stay below the up trendline, which is not really encouraging to any purchases.

British American Tobacco tests the lower line of the symmetric triangle pattern.

Royal Dutch Shell rises, thanks to the higher oil prices.

Rolls-Royce calmly rests on an important, horizontal support.

BMW aims higher with a very strong buy signal.

Porsche, on the other hand, is waiting for a proper signal. Breakout of the dynamic resistance will give us a buy signal and a break out of the horizontal support will give us a signal to sell.

Ferrari is above the horizontal support and upper line of the wedge, which is really optimistic.

Bayer tests the neckline of the iH&S formation but from the top!

Siemens continues the drop after the false bullish breakout and the breakout of the major up trendline.

Allianz stays above major supports with a very promising buy signal.

For a look at all of today’s economic events, check out our economic calendar.

Marketmind: Final Quarter Blues

A look at the day ahead from Saikat Chatterjee.

Consider these two opposing pieces of data in the last 24 hours: A frantic summer of merger activity produced deals worth $1.52 trillion in the September quarter, more than any other quarter on record, according to Refinitiv data while fresh evidence of China’s waning economic momentum was again evident with the official PMI data showing factory activity unexpectedly shrinking in September. and

Even as investors struggle to grasp the implications of record corporate profit growth and slowing economies, major central banks remain optimistic about the global economy’s prospects.

As Robert Almeida at MFS Investment Management says the biggest uncertainty facing markets is not the widely expected decline of corporate profitability but the magnitude of the deceleration. Add to that the swirling concerns about the U.S. debt ceiling, the passage of President Joe Biden’s trillion dollar spending packages and the ongoing energy crisis in China and Europe – and the path to the end of the year is strewn with hurdles.

So European stock futures are poised to suffer sharp falls on the first day of the last quarter, with U.S. futures not far behind. U.S. stocks are nursing losses after posting their biggest monthly drop since the pandemic-fuelled selloff in March 2020 and the greenback is set for its biggest weekly rise in more than three months.

With inflation adjusted interest rates in the developed world pushing deeper into negative territory, the dollar’s rise is particularly concerning for emerging markets. Slowing Chinese growth reverberated across the region with factory activity in September shrinking in Malaysia and Vietnam and growing at its slowest rate in seven months in Japan.

Key developments that should provide more direction to markets on Friday:

A U.S. judge said Germany’s Allianz must face investor claims it wrongly “abandoned” the investment strategies it promised to use on hedge funds that suffered massive losses.

British beverage company Diageo said it will invest $500 million to increase its tequila production capacity in Mexico.

Manufacturing PMI: Spain, Germany, France, Eurozone

Debt auctions: UK 1-month to 6-month bill sales

ECB’s Schnabel speaks at New York Fed event

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Saikat Chatterjee; editing by Karin Strohecker)

 

European Shares Hover Below Record High, Telecom Stocks Jump

The pan-European STOXX 600 index slipped 0.1% by 07:19 GMT, after coming just a point below its record high in the previous session.

Media and utilities fell the most among sectors, while telecoms gained 0.8%.

Deutsche Telekom rose 2.5% after it struck a share-swap deal with Softbank Group to increase its stake in U.S. unit T-Mobile and sold its Dutch unit.

Shares in Sweden’s Tele2 rose 1%, while KPN gained almost 4%.

Germany’s Allianz slipped 0.5% after Reuters reported that regulators have launched an investigation into the company after the demise of some of its U.S. investment funds last year.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta)

 

Low Rates to Persist, Drive Quest for Yield – Allianz Life CEO

By Alwyn Scott

A gradual rate rise and slow withdrawal of excess liquidity would put emphasis on alternative assets, which are a growing part of Allianz‘s investment portfolio, said Walter White, chief executive officer of Allianz Life, speaking in an interview that aired on Tuesday for the Reuters Future of Insurance U.S.A. conference.

Private equity firms are using such investments to boost returns on the nearly $380 billion of insurance assets they own. [L2N2NJ1DG]

“We have to be prepared to deal with what is still an historically low-rate environment,” said White, who will step down as CEO September 1. While he expects rates to rise, “I don’t see rates radically changing” from current yields around 1.50% to 1.60% on 10-year Treasuries.

Insurance stocks have lagged as investors fret that insurers cannot operate well in a low-rate environment, White said. In contrast, private equity firms have taken a bullish long-term view on demand for annuities by the aging U.S. populous. That’s an optimism White shares: “These products are critical, and the market is inexorably growing because of demographics.”

PE firms have purchased annuity companies and redeployed the assets into areas insurers have typically not used, creating pressure for independent insurers to follow. “We have to keep pace with that,” White said. “They’re finding arbitrage opportunities … we also have to be savvy about those choices and respond.”

But insurers need to balance the risks. “We’re here to deliver a commitment to our customers 30, 40 years out. So a few basis points of investment yield can’t be attained at the expense of not being able to meet that commitment,” he said. “In fairness to customers, we have to be extremely conservative in our investment strategy.”

Allianz has moved more of its portfolio into alternative investments. It is “still not a huge percentage of the total portfolio, but it’s a growing percentage,” he said.

White also said older customers want technology, not just younger ones. “There’s just a huge expectation across all generations that you’ve got digital capability,” he said. Even senior centers are “completely outfitted with technology to do things virtually.”

For more on the Reuters Future of Insurance U.S.A. 2021 conference please click here [https://reutersevents.com/events/connectedusa/].

(Reporting by Alwyn Scott; Editing by Lauren Tara LaCapra and Nick Zieminski)

Virtus Investment Partners’ 2021 EBITDA Estimate Increased to $253 Million; Target Price $159: Morgan Stanley

Virtus Investment Partners Inc’s 2021 earnings before interest, taxes, depreciation and amortization (EBITDA) forecast was increased by 40% to $253 million on the back of strong second-quarter earnings and recently announced a partnership with Allianz Global Investors, said Morgan Stanley analysts, who also upgraded their price target to $159 from $133.

Early this month, Virtus, a financial advisory and consulting firm, which offers mutual, closed-end funds, managed accounts and related services, announced a strategic partnership with Allianz Global Investors (AGI) that will add $24 billion of assets, which is expected to close by year-end.

“Acquisitions in recent years (SGA and Ridgeworth) bolster scale but lack of consistent M&A execution and inconsistent organic growth likely weigh on the valuation multiple Recent partnership with AGI highly accretive and no upfront cash payment minimizes downside risks, but outflows likely worsen the Pro-forma flow trajectory,” Michael J. Cyprys, equity analyst at Morgan Stanley said.

“Top 5 strategies represent 50% of mutual fund AUM. Relatively smaller AUM size at $109 billion (as of June 30, 2020) relative to other multi-affiliate managers. Combined this leaves Virtus prone to concentration risk and outsized exposure to idiosyncratic events. High retail skew (currently 63% of AUM) could mute improving flows given growth challenges in the channel,” Cyprys added.

Five analysts forecast the average price in 12 months at $149.40 with a high forecast of $185.00 and a low forecast of $105.00. The average price target represents a 7.77% increase from the last price of $138.63. From those five, three analysts rated ‘Buy’, two rated ‘Hold’ and none rated ‘Sell’, according to Tipranks.

On Monday, Virtus Investment Partners shares closed nearly 4% higher at $138.63, up about 14% so far this year.

Morgan Stanley target price is $219 under a bull scenario and $54 under the worst-case scenario. Several other equity researches have also recently upgraded their stock outlook.

The financial advisory and consulting firm, Virtus Investment Partners, had its price objective upped by analysts at Barclays to $170 from $150. Barclays ‘s target price would indicate a potential upside of 27.08% from the stock’s previous close. Bank of America raised its price target to $154.00 from $140.00 and gave the company a “buy” rating.

“Balanced risk/reward profile (+58% bull/-61% bear) keeps us Equal-weight with $159 price target for +15% upside. PT increase of +20% can be attributed to 40% uplift to EBITDA, partially offset by higher leverage as VRTS is assuming $250 million of contingent liability (based on our assumptions of a purchase multiple 2.75x revenues). Our price target is based on a target multiple of 5.8x EV/2021e EBITDA, which is a slight -3% degradation from 6.0x previously,” Morgan Stanley’s Cyprys added.

“While we view the AGI partnership as meaningfully earnings accretive, we note that outflows from AGI funds (-9% annualized outflow year-to-date and -6% in 2019) are likely to weigh on VRTS’s organic growth trajectory (VRTS inflected strongly to +11% org growth in 2Q20). Further, the acquisition could also accelerate fee rate degradation over time, as AGI funds add to the existing mix. We look for stabilizing/improving outflows as AGI leverages VRTS’s strong U.S. retail distribution to get more positive.”