The Zacks Analyst Blog Highlights: Toyota, Daimler and AB Volvo

For Immediate Release

Chicago, IL – February 23, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Toyota Motor (NYSE:TM) Corporation TM, Daimler AG (DE:DAIGn) DDAIF and AB Volvo (publ) VLVLY (OTC:VLVLY).

Here are highlights from Monday’s Analyst Blog:

A 'Pop' in Personal Income: Global Week Ahead

While the bulk of Q4 earnings season has wrapped up, we do have interesting company reports out in the Global Week Ahead.

A number of key reports relate to consumer spending.

On Tuesday, watch for Home Depot (NYSE:HD), Macy's (NYSE:M) and Square.

On Wednesday, watch for Lowe's (NYSE:LOW) and Nvidia (NASDAQ:NVDA).

On Thursday, watch for vaccine maker Moderna (NASDAQ:MRNA).

Personal Spending and Incomes become the Global Macro data "Theme de la Semaine" -- in the five trading days ahead of us too.

In particular, out on Friday, there will surely be a much-talked about +10% pop in U.S. Personal Incomes.

That is NOT a typo. It is clear evidence of U.S. fiscal stimulus flowing to individuals.

Look at the following chart. BCA Research has put together a nice "Go Big or Go Home" macro narrative. They compare (as a percent of GDP) 2008/09 major country fiscal stimulus packages to 2019/20. Then add new stimulus -- on the way for 2021.

When compared to China, the U.S., Canada, Japan, the U.K. and Iikely Italy (under Mario Draghi) will lead the Personal Spending surge.

Next are Reuters' five world market themes, reordered for equity traders—

(1) Will Higher U.S. Treasury Yields Jolt Equities?

Higher U.S. Treasury yields have so far done little more than jolt equity markets off record highs. That will change if "real" yields -- adjusted for inflation -- take off.

It was last year's real yield plunge which sent cash flooding into stocks; while expensive, they looked like a good deal compared with real yields of minus 1%.

But big-time government spending plans and prospects of economic reopening have lifted real 30-year Treasury yields to eight-month highs, just 11 basis points shy of 0%. Ten-year real yields are at five-week peaks.

There's little consensus on when yields will become a problem for equities. But some assets are already seeing an impact -- gold for instance struggles to compete with income-bearing investments when yields rise and is down 6% this year.

(2) The British Pound Has Been Strengthening -- with a Strong Vaccine Effort

The British pound has become an unexpected currency market poster child for the COVID-19 recovery theme.

It has marked a major milestone in hitting $1.40, a near three-year high. But just two months ago it was mired in Brexit risks and the worst economic outcome of any major industrialized country.

Since mid-December, sterling has strengthened by around 5.5% against the dollar and by 6.5% versus the euro as Britain's vaccination program got off to a flying start. Hopes of an earlier end to lockdowns have lifted it 2% against the dollar in February.

Some consider the pound expensive. A Reuters poll predicted the U.S. economy would recover to pre-pandemic levels within a year, but saw Britain taking twice that time.

There's also the question of whether the Bank of England might take interest rates negative. Money markets expect it will, though not before the second half of 2022.

(3) Special Purpose Acquisition Companies (SPAC) Sprout Up in Europe, Too

Journalists are rummaging through their pun drawers for ways to describe the deluge of special purpose acquisition companies (SPACs) that have hit markets over the past year.

SPACs are essentially blank cheque companies which raise money in an initial public offering with the aim of buying a private firm and taking it public.

Already this year, 144 SPACs have raised $45.7 billion, data from SPAC Research shows, often backed by high-profile investors and celebrities.

The trend is not without bad press. Investment banks managing the deals earn fees by finding the SPAC a company to acquire -- within two years. That raises fears of insufficient due-diligence.

While primarily a U.S. phenomenon, SPACs are sprouting in Europe too. Ex-UniCredit CEO Jean-Pierre Mustier, and German tycoons Christian Angermayer and Klaus Hommels have announced SPACs.

SPAC launches are plentiful but how actual acquisitions -- or "deSPACing" -- develop will show whether the trend lasts.

(4) At the G20, Will There Be Debt Relief for Low-Income Countries?

Debt relief for low-income economies will be high on the agenda of G20 finance officials when they meet on Feb. 26-27.

They will debate the idea of extending IMF funding and the initiative allowing the poorest countries a six-month suspension on some debt payments, as well as more comprehensive relief. There are also calls for the G20 to lead a global COVID-19 immunization plan.

It will be the first G20 meeting since Joe Biden took over as U.S. president, so the tone may be very different from the Trump years which saw many global alliances fractured. That could be a positive shift at a time when countries are struggling to ensure economic recovery stays on course.

(5) Will the Central Bank of New Zealand Show Us a Post-COVID Hand?

The Reserve Bank of New Zealand's meeting on Wednesday might tell us if the first country to reduce COVID-19 cases almost completely will also be the first to consider cutting back monetary policy support.

A lot has changed since the RBNZ's November policy statement. The kiwi economy is beating forecasts and markets are no longer pricing in negative rates.

Governor Adrian Orr will revise up forecasts for growth and inflation but he faces a communications challenge: acknowledging improvement without spooking markets.

A rate rise may be years away but the prospect of a stimulus slowdown is on investors' minds -- 10-year sovereign bond yields are up 50 bps this year.

Top Zacks #1 Rank (STRONG BUY) Stocks

I noted three top global automakers on our #1 list this week.

Let's take a look into their stocks.

(1) Toyota: Shares price at $153 each, making for a market cap of $214B. I see a Zacks Value score of A, a Zacks Growth score of D, and a Zacks Momentum score of C. These shares are trading at multi-year highs. Looks fully priced.

(2) Daimler (OTC:DDAIF): This is a $81 stock, with a market cap of $112B. I see a Zacks Value score of A, a Zacks Growth score of A, and a Zacks Momentum score of D. These shares are trading a little below the 2018 highs of $93. That's the current target price too.

(3) AB Volvo: This is a $26 a share stock with a $52B market cap. I see a Zacks Value score of C, a Zacks Growth score of C and a Zacks Momentum score of B. This stock has screamed to a multi-year high, easily surpassing the prior 2018 high at $20.

Why the strong moves up in Autos? Autos provide protection against COVID infection versus close-packed public transport. The Volvo Nordic story particularly (and the others) may be a show of strength on electric car plans.

Two of the three stocks (DDAIF and TM) are still A in terms of Zacks Value scores.

None score well on Zacks Growth (either C or D).

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