How this week's avalanche of news from Washington to Wall Street kept investors guessing
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4 minutes ago
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Trump's attacks on Fed, data integrity weigh on US dollar forecasts: Reuters poll
By Sarupya Ganguly BENGALURU (Reuters) -The U.S. dollar will weaken steadily over the coming months on mounting concerns over the Federal Reserve's independence, the credibility of official statistics, ballooning fiscal debt and rising bets on interest rate cuts, a Reuters survey of foreign exchange analysts showed on Tuesday. Underscoring those concerns, President Donald Trump's dismissal of the Bureau of Labor Statistics commissioner last week over unproven claims of data rigging - following record downward revisions to job numbers - prompted a swift reversal of recent dollar gains from Trump's tariff deal with the EU. While there was a modest pullback from a crowded short-dollar trade, the greenback is still down nearly 9% this year against a basket of major currencies. Trump's erratic tariff moves, repeated attacks on the U.S. central bank and Fed Chair Jerome Powell and rising debt levels have made investors rethink holding U.S. assets and raised the term premium - compensation demanded for holding long-term debt. Reflecting that sentiment, foreign exchange strategists, who have maintained a bearish dollar outlook since at least April, forecast in an August 1-5 Reuters poll that the euro would gain around 2% to $1.17 by the end of October and continue to rise to $1.18 in six months. The euro would then rise to $1.20 in a year - the highest survey median since October 2021. "We've been trading in this environment of U.S. exceptionalism and the U.S. being far and away the strongest economy in the world. That just isn't the case anymore in my view," said Erik Nelson, head of G10 FX strategy at Wells Fargo. "There are underlying structural concerns - Fed independence, data quality, you name it. When it comes to the economic backdrop, all that is heading in the wrong direction. The temptation for the foreseeable future will be to sell the dollar on rallies." An overwhelming majority, 89 of 100 top policy experts in a separate Reuters survey, raised concerns over the accuracy of U.S. government statistics days before Trump fired BLS Commissioner Erika McEntarfer. FED INDEPENDENCE Investor nerves have been further frayed by Trump's repeated attacks on Powell, who has so far resisted the president's demands for steep rate cuts - and Fed Governor Adriana Kugler's early resignation, potentially shaking up an already-fractious succession process for the Fed's leadership. Powell's term as Fed chief expires next May. "For Trump to place one of his nominees as governor, who could then be elected Chair next year - I believe markets would take it quite poorly. Naturally, there will be a lot of scrutiny on how many members switch to the dovish side or whether they remain more cautious and fail to align with a new dovish Chair," said Francesco Pesole, FX strategist at ING. "Should markets interpret Fed independence as having been materially compromised, that would be quite a compelling argument for a weaker dollar." Interest rate futures are currently betting on roughly three Fed rate cuts by the end of this year, with the first move happening in September - a sharp increase from just the one or two reductions in borrowing costs anticipated weeks earlier. The European Central Bank is priced for just one cut or no cuts. While a still-resilient U.S. economy and the risk of tariff-driven inflation have pared some of the dollar's gains - net-short dollar positions had reached a two-year high in late June - the greenback's slide may only slow but not reverse. Over 60% of strategists, 26 of 42, expected dollar net-shorts in Commodity Futures Trading Commission positioning to either rise or hold steady by the end of October, the survey showed. But a growing minority, over a third of respondents versus 17% in July, now predict a decrease in net-short bets. "Short-dollar has been one of the most consensus trades this year, and most investors still expect long-term depreciation to continue. But near-term views have become less bearish, and therefore positioning is more likely to move towards fewer net shorts over the next few months," said Jason Draho, head of asset allocation in the Americas at UBS Global Wealth Management. (Other stories from the August foreign exchange poll)
Yahoo
4 minutes ago
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Are These 3 Essential Large-Cap Stocks from the Top 100 Still Worth Investing In?
The S&P 500 is up 7.6% year-to-date and 22.1% over the past 12 months. These are both attractive returns. However, over the same two periods, I've got three essential large-cap stocks that have run laps around the index. Last November, I wrote a Barchart piece 3 Essential Stocks from the Top 100 That Are Truly Worth Investing In. The three names are Comfort Systems USA (FIX), Spotify Technology (SPOT), and Royal Caribbean Cruise Lines (RCL). More News from Barchart Dear Nvidia Stock Fans, Mark Your Calendars for August 27 Options Traders Expected Palantir Stock's Tamest Earnings Reaction in a Year. Did They Get It Right? Tesla Gains on Elon Musk's New Pay Package. Is TSLA Stock a Buy? Stop Missing Market Moves: Get the FREE Barchart Brief – your midday dose of stock movers, trending sectors, and actionable trade ideas, delivered right to your inbox. Sign Up Now! Stock YTD Return 12-Month Return Comfort Systems USA 64.9% 132.4% Royal Caribbean Cruise Lines 36.9% 125.9% Spotify Technology 47.2% 103.3% S&P 500 7.6% 22.1% As you can see by the table above, these three essential large-cap stocks have handily outperformed the index. None of these stocks is a Mag 7, yet they've managed to deliver for their shareholders. Will they continue to do so in the future is the million-dollar question. While I believe in all three businesses and their respective business models, they've all come a long way in a relatively short period. The last thing investors want to do is base their buying decision on FOMO (the fear of missing out). None of the three stocks is currently on Barchart's Top 100 Stocks to Buy, with RCL and SPOT down over the past month, compared to a 1.6% gain for the index. Meanwhile, FIX was one of the best-performing U.S. stocks over the past month, up 29.1%. It's on a significant roll. Can one or more of these stocks double over the next 12 months? That's unlikely. However, that doesn't mean you've missed the boat on good returns in the future. Here's why. Comfort Systems USA (FIX) The national provider of heating, ventilation, and air conditioning installation, maintenance, repair, and replacement services, according to Morningstar, was the top-performing stock in July, up 31.2%. That would be good as a one-year return. When I recommended FIX last November, I wrote that there were three reasons for liking its stock: 1) According to S&P Global Market Intelligence, just four analysts cover FIX. As more analysts jump on the bandwagon and provide coverage, retail and institutional investors will pile in, acting as a catalyst for its share price. 2) It has net cash of $112 million and is growing, and 3) Although it operates in 137 cities in the U.S., it has very little coverage west of the Mississippi, providing it with plenty of future expansion. Let's consider how each of these points has changed over the past nine months. S&P Global Market Intelligence says five analysts have price targets for the stock. The analysts have an Outperform rating for FIX with a median target of $775, 11% higher than its current share price. The number of analysts needs to double for the real money to get behind its stock. At the end of 2025's second quarter, Comfort Systems' net cash position was $27.7 million, a considerable improvement from net debt of $126.9 million in Q2 2024. Over the trailing 12 months ended June 30, its net cash was $286.9 million, up from $132.3 million. That's a nice doubling of its net cash. Lastly, it had 178 locations in 27 states as of Dec. 31. It has plenty of expansion ahead of it, which explains the analyst EPS growth estimate of 35% over the next 3-5 years. In 2024, its normalized earnings per share were $14.60. In the next three years, it's expected to grow to $27.06 in 2027. It trades at 25.9 times the 2027 estimate. With all the growth potential, that's a reasonable multiple. Of the three stocks, this one has the best shot of doubling over the next year or two. Spotify Technology (SPOT) Of the three stocks, SPOT has the worst performance over the past month, down nearly 11%. That takes a bit of the shine off the music streaming services' performance over the past year. Spotify went public through a direct listing rather than a conventional IPO. Its shares opened trading on April 3, 2018, at $165.90. Based on this price, SPOT stock has gained nearly 21% annually in the seven years since. As I said last November, it had a trailing 12-month free cash flow at the end of Q3 2024 of 1.8 billion euros ($1.91 billion). As of June 30, it was 2.8 billion euros ($3.23 billion), 69% growth over six months. Equally important, its MAUs (monthly active users) increased by 11% year-over-year to 696 million, with premium paid subscribers up 12% to 276 million. In the first half of 2025, its net addition to its number of subscribers increased by 30% compared to the first half of 2024. This is helping boost its profitability. What's impressive is its growth in Latin America. In Q2 2021, Latin America accounted for 20% of Spotify's premium subscribers. In Q2 2025, it was 23%, a 300-basis-point increase. At the same time, its Rest of the World segment saw premium subscribers grow to 14%, a 300-basis-point increase. Ultimately, its business model will comprise four regions, each contributing between 20% and 30% of the company's premium subscribers. That will result in a significant increase in free cash flow. Spotify's $ enterprise value is 7.66 times its trailing 12-month revenue. That's the highest multiple as a public company. However, its EBITDA (earnings before interest, taxes, depreciation and amortization) margin is 11.6%, the highest in its history. According to Barchart data, 22 of 32 analysts rate SPOT a Buy (4.28 out of 5), with a target price of $738.12, 12% higher than its current share price. I don't know if it can double over the next 12 months, but I definitely could see a double over 24 months as profits continue to grow. Royal Caribbean Cruise Lines (RCL) The cruise operators' stock is down 4% over the past month. Investors sold the stock after it delivered mixed earnings on July 28. Selling on the news is typical for hard-charging stocks like RCL. On the top line, Royal Caribbean's sales in Q2 2025 were $4.54 billion, $10 million lower than Wall Street's expectations. However, its earnings per share were $4.38, 34 cents better than the consensus and 36% higher than a year ago. What really worried investors was the company's guidance for the rest of the year. Royal Caribbean expects Q3 2025 EPS of $5.60 at the midpoint of its guidance, 24 cents shy of Wall Street, $15.48 for 2025, two cents higher than the analyst estimate. What's clear about its current situation is that profitability hasn't been this high at any time in the past 25 years -- its trailing 12-month gross margin as of June 30 was 50.0% while its EBITDA margin was 36% -- suggesting that its business is firing on all cylinders. As long as a major recession doesn't arrive courtesy of the global tariff uncertainty, consumers will continue to take lots of cruises. Trading at less than 21 times its 2025 EPS estimate, and its business is possibly in the best financial shape it's been in since going public in 1993, I don't think that's a ridiculously high multiple. It could soon retest its all-time high of $355.91 that it hit on July 25. As I said last November, RCL stock is an excellent long-term buy. 'With revenues expected to grow from $13.9 billion in 2023 to $22.67 billion in 2028, a compound annual growth rate of 10.3%, its EBITDA should nearly double over the same period,' I wrote. 'Barring another Covid-like issue, it should be smooth sailing for investors over the long term.' I see very few reasons why it can't continue to outperform the S&P 500. Buy for the long haul, adding to your position every time it falls into double digits below $100. In 10 or 20 years, you'll be happy you did. On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
4 minutes ago
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Trump rules out Bessent as next Fed chair, says may name Powell replacement soon
President Trump said Tuesday morning that the pool of potential nominees to succeed Federal Reserve Chair Jerome Powell is down to four people, and that Treasury Secretary Scott Bessent will not be nominated for the role. "The two Kevins are doing well, and I have two other people that are doing well," Trump said in an interview with CNBC on Tuesday. The "two Kevins" are in reference to former Fed governor Kevin Warsh and Kevin Hassett, director of the National Economic Council. Asked about Fed Governor Chris Waller and Secretary Bessent, Trump didn't deny that Waller was among the four possible replacements for Powell, but did say that Bessent does not want the job. "I love Scott, but he wants to stay where he is," Trump said. Trump said he may make the decision to announce Powell's replacement "soon," also noting that Fed governor Adriana Kugler is set to leave her post at the end of week and that a nominee for that opening could be announced in the coming days. Asked whether a Kugler replacement could eventually be nominated to replace Powell as Fed chair, Trump said, "that's a possibility, too." Kugler's term as a governor was set to expire on Jan. 31, but she announced last week she will resign on Aug. 8, opening a spot on the Federal Reserve Board for the president to fill. Kugler, who has served as a Fed governor since Sept. 13, 2023, will return to Georgetown University as a professor this fall. Warsh has experience navigating the central bank, serving as Fed governor from 2006 until 2011; Warsh was former Fed Chair Ben Bernanke's liaison to Wall Street during the chaos of the 2008 financial crisis. He is also a known figure to Trump, who interviewed him for the Fed chair post eight years ago before deciding to nominate Powell. Trump nominated Powell to serve as Fed chair in 2017 at the direction of then-Treasury Secretary Steven Mnuchin. Powell's first term as Fed chair began in Feb. 2018. Former President Biden reappointed Powell to another four year term which started in 2022. Powell's current term as Fed chair is set to expire next May. The White House also hopes that Powell will decide to leave the Fed Board of Governors when his chairmanship is up next year, which would open up a second seat Trump can fill. Powell has not yet said whether he intends to do that; his term as a Fed governor is not up until 2028. Warsh has been critical of the Fed of late, suggesting that the Fed could look through inflation related to tariffs because they'd be a one-time increase. He's also argued that the costs involved in renovating the Fed's headquarters represent one of several examples of how the Fed "has lost its way" and that the American people "need a reformer to fix" the institution and rebuild its credibility. "Frankly, it's about breaking some heads," he said on Fox Business last month, calling for "regime change" at the central bank. Hassett, meanwhile, already has a close relationship with Trump, given that he advises the president on economic policy and also served in the first Trump administration. Earlier in the year, Hassett said he was more focused on the 10-year Treasury yield than on any quick monetary policy changes at the Federal Reserve. While the Fed has greater influence on short-term Treasury yields, longer-term yields are influenced by a range of factors outside the Fed and the 10-year holds sway over mortgage rates that more directly weigh on household finances. Recently, Hassett has been more blunt, saying there's no reason why the Fed shouldn't be cutting rates now, something the president has repeatedly hammered the central bank to do. Hassett signaled in an interview Sunday on NBC's Meet the Press that he's open to succeeding Fed Chair Powell if the president chooses him. 'I've been working with the president for about eight years, and, you know, as one of his closest economic advisers, of course, we've talked about the Federal Reserve,' Hassett told NBC. When pressed whether he'd say yes if chosen to be the next Fed Chair, Hassett said, 'we'll have to see if he chooses me.' Meanwhile, Fed Governor Waller — whom the president acknowledged is in the running for chair — dissented at last week's central bank policy meeting along with Fed Governor Michelle Bowman, with both preferring the Fed cut rates by 25 basis rather than keeping interest rates unchanged.
