The USD/CHF exchange rate tilted upwards on Friday after Switzerland published weak Consumer Price Index (CPI) data, and as traders waited for the upcoming nonfarm payrolls (NFP) data. It was trading at 0.8675, a few points below last month’s high of 0.8700, and 3.65% higher than this month’s low of 0.8375.

Switzerland inflation falls

The USD to CHF pair continued rising after the latest economic data from Switzerland. Data by the statistics agency showed that the headline Consumer Price Index dropped for the third consecutive month.

The CPI dropped by 0.1% in October after falling by 0.3% in the previous month. It was a weaker number than the median estimate of 0.0%.

This decline translated to a YoY drop from 0.8% in September to 0.6% in October, missing the analysts’ estimate of 0.8%. 

These numbers mean that the Swiss National Bank (SNB) has achieved its goal of bringing inflation to the 2% target. 

However, there is a risk that the country is moving towards a deflation, where prices are moving downwards. While high inflation is not ideal, deflation is also a dangerous thing for the economy since it lets customers delay some of their purchases as they wait for prices to fall further.

Additional data that Swiss retail sales dropped by 2.2% in October after rising by 2.7% in the previous month. These numbers were worse than the median estimate of 2.5%. 

Other data showed that the Swiss purchasing managers index remained unchanged at 49.9, and is moving near the expansion zone of 50. This report was also higher than the expected 49.5.

Therefore, the Swiss National Bank will likely continue cutting interest rates in the next meeting as it works to stimulate the economy. It also hopes that these hikes will lead to a weaker Swiss franc, which has strengthened substantially in the past few months. 

The Swiss franc has risen by almost 6% from its lowest level in May. It has also risen by 5% against the euro in this period.

The SNB prefers a weaker franc because of the importance of exports to the Swiss economy. Data by the OECD shows that Switzerland exports goods worth over $402 billion a year and imports goods worth $364 billion. As such, its exporters are usually impacted by a strong local currency.

US nonfarm payroll data

The next important USD/CHF data will come out on Friday when the US publishes the latest nonfarm payroll (NFP) data. 

These are crucial numbers because they will have a big impact on the Federal Reserve when it meets next week.

A report released by ADP on Wednesday showed that the labor market strengthened substantially in October. It estimated that the number of jobs increased from 233k, the biggest gain in 14 months.

Analysts expect the data to show that the unemployment rate remained unchanged at 4.1% in October. They also expect the numbers to reveal that the nonfarm payrolls slipped from 254k in September to 106k in October. Wage growth is expected to come in at 4.0% YoY and 0.3% MoM.

These are important numbers because the Federal Reserve is now more concerned about the labor market instead of inflation. That’s because there are rising chances that inflation is moving towards the Fed’s 2.0% target. 

The other key data to watch will be the ISM and S&P manufacturing PMI numbers, which will provide more information on the economy. Economists expect the ISM data to show that the PMI rose from 48.3 to 49.8, while the S&P figure remained at 47.8.

Analysts expect the Federal Reserve to either cut interest rates by 0.25% in its meeting next week or leave them unchanged if the jobs numbers come out weaker than expected.

The USD/CHF pair will also react to next week’s US election, which has become difficult to predict. The predictions market predicts that Donald Trump will win, while polls show that the race is virtually tied.

A Trump win will be positive for the US dollar because it will lead to more demand for safe havens as he starts his trade wars.

USD/CHF technical analysis

USD/CHF chart by TradingView

The daily chart shows that the USD/CHF pair dropped and bottomed at 0.8377 in September, and has been in a bullish trend since then.

It has formed a small bullish flag pattern, one of the most popular positive signs in the market. Also, the pair is consolidating at the 100-day Exponential Moving Average (EMA).

Meanwhile, the USD to CHF pair has formed an inverse head and shoulders pattern, which often leads to more downward moves. 

Therefore, the pair is sending mixed signals. While more gains are possible, it may also have a bearish breakout.

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Abercrombie & Fitch (ANF) stock suffered a harsh reversal this year, erasing some of the gains made last year, when it was one of the best-performing companies in Wall Street. It has retreated to $130, its lowest point since Oct. 3, and 33% below its highest level this year.

Growth concerns remain

Abercrombie & Fitch, the parent company of it eponymous brand, Hollister, and Gilly Hicks, has gone through a difficult year as it failed to replicate its success in 2023.

It is not alone as other apparel companies have struggled. Lululemon, the biggest athleisure brand, has dropped by over 37% from its highest level this year.

Similarly, Gap stock remains in a deep correction after falling by 30% from the year-to-date high. Other firms like American Eagle, American Outfitters, and Boot Barn have all pulled back, a sign that the weak consumer spending is to blame.

Abercrombie & Fitch’s business has done well in the past few years as its revenue growth has recovered modestly. This happened as the management accelerated its product launches while attracting many of the young shoppers. 

ANF’s annual revenue has rebounded from $3.2 billion in 2020 to $4.2 billion las year, a trend that has continued this year. 

The most recent results showed that its second-quarter revenue rose by 21% to $1.1 billion, while its comparable sales growth rose to 18%. This revenue growth happened across all its regions and brands.

Abercrombie also boosted its margins by 590 basis points to 15.5%, pushing its operating income to $176 million. 

The management expects that its annual revenue growth will be between 12% and 13% and its operating margin will be between 14% and 15%. 

Read more: Abercrombie & Fitch stock: the moment of clarity nears

ANF earnings ahead

The next important catalyst for the Abercrombie & Fitch stock will be its third-quarter earnings that will come out on Nov. 29.

These results will provide more color on its performance, and whether the business is still firing on all cylinders. 

Analysts are optimistic that its business trajectory was in the right direction in the last quarter, with the average revenue estimate being $1.18 billion. The firm will likely report stronger numbers since it has beaten the consensus in the past few consecutive quarters. As such, I suspect that the revenue will be about $1.19 billion.

External data shows that its e-commerce platforms continued to see modest traffic, which may translate into sales. In September, its main website had 17 million visitors, while Hollister had 14 million.

The revenue guidance for the fourth quarter will be $1.51 billion. That will bring the annual revenue to $4.85 billion, a 13.3% increase from last year. Its 2025 revenue is expected to slow to 5.2% to $5.1 billion. 

Abercrombie & Fitch has also been a highly profitable company, with the expected earnings per share expected to be $2.37, higher than the $1.83 it made in the same quarter last year. 

The annual EPS is expected to jump sharply from $6.28 in 2023 to $10.36 this year. This is a strong performance for a company that struggled to attain profitability a few years ago.

ANF also has a strong balance sheet. It ended last quarter with over $738 million in cash and short-term investment and no debt. Its biggest part of its liabilities is its capital leases, which stood at $688 million. It ended the last quarter with total liquidity of $1.2 billion.

Abercrombie is still a fairly undervalued company since it has a forward price-to-earnings ratio of 12.8, much lower than the S&P 500 average of 21. It is also cheaper than some other apparel companies like Boot and Aritzia. 

Read more: Abercrombie & Fitch (ANF): insiders are selling the stock

Abercrombie & Fitch stock analysis

ANF chart by TradingView

The daily chart shows that the ANF share price peaked at $143.42 earlier this year and then moved into a deep correction as it fell to $127. It has found a strong support at this level since it has failed to move below it several times since August 2nd.

Abercrombie & Fitch has moved below the 50-day and 100-day Exponential Moving Averages (EMA). It is also approaching the 38.2% Fibonacci Retracement point.

Also, the MACD and the Relative Strength Index (RSI) have all pointed downwards. It has also formed a descending triangle pattern, a popular bearish sign.

Therefore, while the ANF stock is cheap, there is a likelihood that it will have a bearish breakout, with the next point to watch being at the 50% retracement point at $105, which is about 20% below the current level. This view will be confirmed if the price moves below the lower side of the triangle at $127. 

On the flip side, a rebound above the 50-day moving average at $143 will point to more gains, potentially to $167, its highest level on Oct. 17.

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Texas Instruments (TXN) stock price has risen by almost 20% this year and is hovering near its highest point on record. It was trading at $203.15 on Friday, a few points below the year-to-date high of $215. 

Texas Instruments’ growth has stalled

Texas Instruments is one of the biggest companies in the technology industry with a market cap of over $188 billion.

It is a top manufacturer of semiconductors that are mostly used in the industrial sector. As a result, most of its customers are firms in industries like factories, grid infrastructure, medical, and lighting.

34% of its customers are in the automotive sector, followed by personal electronics, communication, and enterprise systems.

Texas Instruments generates most of its money in the analog industry, where it manufactures chips that convert real-world signals like sound and temperature into streams of digital data that can be processed by other semiconductors.

Texas Instruments business has slowed mostly because of the weak performance of the manufacturing sector. Recent PMI numbers by companies like S&P Global and the Institute of Supply Management (ISM) showed that the manufacturing sector in the US has remained below the expansion zone of 50.

Its annual revenue peaked at over $20 billion in 2022 to $17.5 billion in the last financial year. Its profit moved from $8.7 billion to $6.5 billion. 

The most recent results showed that its revenue dropped slightly in the last quarter. Its revenue dropped by 4% to $4.1 billion, while its operating profit moved downwards by 18% to $1.5 billion. Also, the net income fell by 20% to $1.3 billion.

Analysts expect that its revenue will drop by 5.10% in the fourth quarter to $3.87 billion. Its quarterly earnings per share metric is also expected to drop from $1.2 to $1.2. 

Read more: Texas Instruments is one of the most undervalued companies.

Valuation concerns

The other big concern for Texas Instrument is that its stock has become highly overvalued. For one, the average estimate for the stock is $206, a few points higher than the current $203, meaning that the stock is priced to perfection.

What is worrying is that Texas Instruments has a forward price-to-earnings ratio of 40, higher than the sector median of 29. It is also higher than its five-year average of 25.

The non-GAAP forward P/E of 39.4 is also much higher than the sector median of 23. It is also higher than the forward S&P 500 index average of 21. Also, Texas Instruments has a forward price-to-book ratio of 10.

These valuation figures are significantly higher than other companies that are doing much well. For example, NVIDIA, a company that is having triple-digit revenue growth has a forward P/E ratio of 48. 

Meta Platforms, which is growing by almost 20%, has a forward P/E multiple of 25, while Microsoft has a figure of 31.

A likely reason for this valuation is that investors anticipate that its revenue growth will bounce back in 2025. The average revenue estimate is that its revenue will bounce back by 11% to $17.12 billion.

Another reason is that Texas Instruments is seen as a future dividend aristocrat since it has hiked its payouts for almost 20 years. 

Read more: Texas Instruments has topped earnings estimates in three of the last four quarters: Will it do it again today?

Texas Instruments stock analysis

TXN chart by TradingView

The daily chart shows that the TXN share price has moved sideways in the past few months. On the positive side, the stock has moved slightly above the 50-day and 25-day Exponential Moving Averages (EMA).

The stock has also formed a rising wedge chart pattern, a popular bearish sign. Therefore, the stock will likely have a bearish sign in the market. If this happens, the next point to watch will be at $180, its lowest point on August 5, down by 12% from the current level.

The post Is there a good reason to buy Texas Instruments stock now? appeared first on Invezz

The Nasdaq Composite index has done well this year, helped by the strong performance of technology companies. It has risen by over 20% this year and is hovering near its highest level on record. It soared by 80% from its lowest level in 2023.

Catalysts for the Nasdaq Composite index

The Nasdaq Composite Index, tracks almost all companies that are listed in the NASDAQ index. 

It has thousands of companies and is market-cap weighted, meaning that its top companies are firms like Apple, NVIDIA, Microsoft, and Amazon. 

51% of the companies are in the technology industry, making it a more concentrated fund. They are followed by firms in the communication, consumer cyclical, health care, financials, and consumer defensive. 

The fund has done well this year because of the hopes that the Federal Reserve will deliver more interest rate cuts. It has already slashed rates by 0.50%, and economists see more cuts in the coming months.

Interest rate cuts will likely lead to more inflows as investors who have allocated cash to money market funds (MMF) rotate to risky assets.

It has also done well because of the ongoing inflows in the artificial intelligence industry, which is seeing strong demand. 

Additionally, technology companies have published strong financial results this year. Meta Platforms said that its revenue rose by 19% in the third quarter to $40.5 billion, while its net income jumped by 35% to $15.6 billion. This happened as the number of users in its ecosystem rose by 5% to 3.29 billion.

Apple, the biggest company in the world, also released modest results, which showed that its revenues rose by 6% to $94.9 billion. This revenue was boosted by its strong iPhone demand, especially in China. 

Intel, the embattled semiconductor company, also published strong financials, sending its stock 12% higher.

The next important catalyst for the Nasdaq Composite index will be the US election, which will determine government policy in the next few years. 

Still, historically, American stocks perform well after the election as investors embrace a new normal.

Top Nasdaq Composite stocks

The best-performing companies in the Nasdaq Composite index are in the biotech industry. They include firms like Genedx Holdings, Longboard Pharmaceuticals, Summit Therapeutics, Ligand Pharma, Janux Pharmaceuticals, and Avidity Biosciences. All these firms have soared by over 365%. 

The other top performer is Clover Health Investments, a former meme stock, whose stock has jumped by 332% this year. Clover, a company in the Medicare Advantage, has done well after receiving several upgrades. It also signed a multi-year agreement with Counterpart Health, a deal that will see it deploy its AI technology to hundreds of providers in the region.

AppLovin is another top-performing company in the Nasdaq Composite index as it jumped by over 300% this year. This performance has been because of its strong earnings. Revenue rose by 44% to $1.08 billion, helped by its software platform, which grew by 75%. Its net income rose by 29% to $310 million.

Companies in the crypto industry have also done well this year as Bitcoin has soared. Some of the most notable ones in the Nasdaq Composite were MicroStrategy, Terawulf, and Core Scientific. Other big gainers were Sprouts Farmers Markets, NVIDIA, Comstock, and Powell Industries.

Many other companies in the Nasdaq Composite index have also pulled back this year. 23andme, which was founded by Anne Wojcicki has crashed by over 74% this year and is on the verge of collapse.

Hertz shares have plunged by 73%, while Walgreens Boots Alliance, Five9, Intel, Rivian, Plug Power, Vinfast, Avis Budget, and Dollar Tree were some of the worst performers.

Nasdaq Composite index analysis

Nasdaq Composite chart by TradingView

The weekly chart shows that the Nasdaq Composite index formed a double-top pattern at $18,675. In most periods, this is one of the most popular bearish signs in the market.

It has remained above the 50-week and 25-week moving averages. Also, it remains significantly higher than the key support point at $16,230, its highest swing in November 2021.

Therefore, there is a risk that the index will retreat and retest the key support point at $16,230, which is about 10% below the current level.

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Block (SQ) stock price has crawled back after bottoming at $54 in August. It has entered a local bull market, rising by 30% from its lowest point in August, and is hovering near its highest level since May 6.

One of the top fintech brands

Block, formerly known as Square, is one of the top fintech companies in the world with a market cap of over $44 billion. This valuation is still significantly lower than its all-time high of $123 billion.

The company is now working to go back to its former glory, through its several brands like Square, AfterPay, Cash App, TIDAL, and TBD.

The challenge, however, is that each of these businesses is facing substantial competition. Square’s payment solution is competing with the likes of Stripe and PayPal, while TIDAL, a music streaming application, has a tiny market share of 0.11%. TIDAL competes with other juggernauts like Spotify, YouTube Music, and Apple Music.

AfterPay, the Buy Now Pay Later (BNPL) company it acquired for $29 billion in 2021, competes with the likes of Affirm and Klarna. Cash App is also seeing strong competition from companies like Venmo and Zelle. 

Block is doing well despite this rising competition. Its annual revenue has risen from $1.53 billion in 2019 to over $6.2 billion in 2023. Its trailing twelve-month (TTM) revenue stood at a record high of $8.4 billion.

The most recent results showed that its revenue grew from $5.5 billion in the second quarter of 2023 to $6.15 billion. This growth was mostly driven by transactions, which rose to $1.7 billion.

Subscriptions rose to $1.78 billion, while its Bitcoin revenue jumped to $2.6 billion as prices and volume rose. Block is the seventh-biggest holder of Bitcoin in the world, with 8,211 coins worth $573 million in its balance sheet. 

Block has also become a profitable company. Its second-quarter profit rose to $195 million, a big improvement from the $102 million loss it made in the same period last year. It also made a profit of $667 million in the first half of the year.

The results showed that Square’s gross profits rose to $923 million, while Cash App generated $1.29 billion.

Read more: PayPal stock analysis: the train already left the station

Third-quarter earnings ahead

The next important catalyst that will impact Block’s stock will be its third-quarter earnings scheduled for November 7. These results will provide more color on its performance as retail spending remained strong.

The numbers will also provide more hints about its recent partnerships. For example, it recently entered a partnership with SalonCentric, the biggest beauty product business-to-business company in the US. The deal introduced solutions like SalonInteractive, Vish, Submatic, and Pomp into Square’s app marketplace.

The biggest partnership that Block made was with Lyft, the second-biggest ride-hailing company in the US. This deal means that users are now able to pay for their trips using Cash App.

The average revenue estimate for the third quarter was $6.24 billion, a big increase from the $5.2 billion in the same period last year. 

Block is also expected to be a more profitable company, with the earnings per share (EPS) expected to grow from $0.55 to $0.87. 

The company’s forward guidance is expected to show that revenue will move to $6.35 billion. For the year, analysts expect its revenue to come in at $24.7 billion, followed by $27.4 billion in the next financial year. 

Read more: What’s going on with Block’s share price after Q4 profits beat expectations?

Is Block a good buy?

Block is one of the top fintech brands in the financial services industry. It owns some of the best brands, and is also one of the biggest players in the crypto industry. 

Most importantly, the management is now working on how to scale its business profitably. For a long time, it has had weaker margins than other companies like PayPal and Adyen. 

It has a 35% gross margin, while the other two have 45% and 62%. Their net profit margin are 2.90%, 14%, and 45%, respectively.

In my view, one easy way to boost its margins is to sell TIDAL, a company that will struggle to become profitable because of the rising competition.

Block stock price analysis

SQ chart by TradingView

The daily chart shows that the SQ share price has moved sideways in the past few months. It has moved slightly above the 50-day moving average. Most importantly, it has formed an inverse head and shoulders pattern, a popular bullish sign in the market.

Block has also remained slightly below the 23.6% Fibonacci Retracement level. Therefore, the stock will likely have a bullish breakout after publishing its financial results. If this happens, the next point to watch will be at $86.63, its highest level on March 12. This target implies a 20% comeback from the current level.

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