Finance

Check out the companies making headlines before the bell:
CarMax (KMX) – The auto retailer’s stock jumped 5.1% in premarket trading after CarMax beat estimates on the top and bottom lines for its latest quarter, as well as posting comparable dealer sales that were above analyst forecasts.

Tesla (TSLA) – Tesla shares rose 3.4% in the premarket after CEO Elon Musk said he has now sold enough stock to reach his goal of selling 10% of his shares. Over that time, however, Musk has actually increased his holdings in Tesla due to the exercising of options.
BlackBerry (BB) – BlackBerry reported a breakeven quarter, on an adjusted basis, compared with analyst forecasts of a 7 cents per share loss. The communications software maker also saw revenue beat estimates, helped by strong demand for cybersecurity products, but current quarter forecasts for those products is shy of some analyst estimates.
Caterpillar (CAT) – Caterpillar rose 1.6% in the premarket after Bernstein upgraded the heavy equipment maker’s stock to “outperform” from “market perform.” Bernstein said concerns about a machinery upgrade cycle ending in 2022 are overdone.
CalAmp (CAMP) – CalAmp lost an adjusted 8 cents per share for its latest quarter, surprising analysts who had expected a profit of 8 cents per share. The maker of wireless data communications products and software also saw revenue fall short of forecasts, with component shortages a key factor impacting its results. CalAmp plunged 15.7% in premarket action.
Alibaba (BABA) – Alibaba shares fell 4% in the premarket after Atlantic Equities downgraded the Chinese e-commerce company’s stock to “neutral” from “overweight.” The firm cites concerns that Alibaba shopping platforms Tmall and Taobao won’t see improvement in their performances in the near term.

Darden Restaurants (DRI) – Darden Restaurants was upgraded to “buy” from “hold” at Stifel Financial, which pointed to the Olive Garden parent’s upbeat quarterly results last week. The stock had fallen after that report, but Stifel believes that was driven by the announcement that CEO Gene Lee will retire in May. Darden added 1.1% in premarket trading.
Williams-Sonoma (WSM) – Williams-Sonoma was upgraded to “buy” from “hold” at Loop Capital, which thinks the household products retailer has a “premier” brand and that the tailwinds provided by the pandemic will continue well into 2022.
Coinbase Global (COIN) – The cryptocurrency infrastructure company was named a “top pick” for 2022 at Oppenheimer, which pointed to an accelerating move into the mainstream for digital assets.

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Bitcoin has risen nearly 70% since the start of 2021, driving the entire crypto market to a combined $2 trillion in value.
But heightened regulatory scrutiny and intense price fluctuations have dampened bitcoin’s prospects lately.
Some experts believe bitcoin is due for a sharp decline in the coming months.

Vertigo3d | iStock | Getty Images

Crypto crash

Some experts believe bitcoin is due for a sharp decline in the coming months.
Bitcoin surged to a record high of almost $69,000 in November. It’s now sitting below $50,000, down almost 30% from its peak. Wall Street wisdom defines bear markets as a decline of 20% or more from recent highs, but it’s worth noting bitcoin is notorious for its volatility.
Carol Alexander, professor of finance at Sussex University, said she expects bitcoin to tank as low as $10,000 in 2022, virtually wiping out all of its gains in the past year and a half.

“If I were an investor now I would think about coming out of bitcoin soon because its price will probably crash next year,” Alexander said. Her bearish call hinges on the notion that bitcoin “has no fundamental value” and serves as more of a “toy” than an investment.

Alexander warns bitcoin could nosedive, as it has done in the past, after a big run-up in the price. In 2018, bitcoin tumbled close to $3,000 after climbing to a high of nearly $20,000 a few months earlier. The cryptocurrency’s backers often say that things are different this time, as more institutional investors are jumping into the market.
“Without question, Bitcoin’s price chart appears to track many historical asset bubbles and busts and is carrying a ‘this time it’s different’ narrative just like other bubbles,” said Todd Lowenstein, chief equity strategist of Union Bank’s private banking arm.
A common investment case for bitcoin is that it serves as a hedge against rising inflation caused by government stimulus. Lowenstein said there’s a risk that a more hawkish Federal Reserve may take the wind out of bitcoin’s sails.
“Goldilocks conditions are ending and the liquidity tide is receding which will disproportionately harm overvalued asset classes and speculative areas of the market including cryptocurrencies,” he said.
Still, not everyone is convinced the crypto party will end in 2022. “The biggest risk factor, namely [quantitative tapering] by the Fed, has been decided and likely priced in already,” said Yuya Hasegawa, crypto market analyst at Japanese exchange Bitbank.

First spot bitcoin ETF

A big development crypto investors are on the lookout for in 2022 is approval of the first spot bitcoin exchange-traded fund in the United States.
Although the Securities and Exchange Commission greenlit the launch of ProShares’ Bitcoin Strategy ETF this year, the product tracks bitcoin futures contracts rather than giving investors direct exposure to the cryptocurrency itself.

Futures are financial derivatives that oblige an investor to buy or sell an asset at a later date and for an agreed-upon price. By tracking futures prices instead of bitcoin itself, experts say, ProShares’ ETF could be too risky for novice traders, many of whom are invested in crypto.
“The Bitcoin Futures ETF that launched this year has been widely regarded as not very retail-friendly given the high costs involved of rolling over contracts which amounts to around 5-10%,” said Vijay Ayyar, vice president of corporate development and global expansion at crypto exchange Luno.
“Increasing pressure/evidence… points to a Bitcoin Spot ETF being approved in 2022 mainly because the market is now large and mature enough to support one.”
Grayscale Investments has filed to convert its bitcoin trust, which is the world’s biggest bitcoin fund, into a spot ETF. And there are plenty of other bitcoin ETF applications waiting in the wings.

Rotation into ‘DeFi’

As the crypto industry has evolved, bitcoin’s share of the market has waned, with other digital currencies like ethereum playing a much larger role. This is something analysts expect to continue into next year, as investors increasingly look to smaller pockets of crypto in the hope of big gains. 
Sussex University’s Alexander flagged ethereum, solana, polkadot and cardano as coins to watch in 2022.
“As retail investors begin to realize the dangers of trading bitcoin, especially on unregulated venues, they will switch to…other coins belonging to blockchains which actually serve an essential and fundamental role in decentralized finance,” she said.
“This time next year I predict that bitcoin’s market cap will be half the combined cap of smart contract coins” like ethereum and solana, Alexander added, “or even less.”

Emerging crypto developments such as decentralized finance and decentralized autonomous organizations are “likely to be the highest growth areas of crypto,” said Bryan Gross, network steward at crypto platform ICHI. DeFi aims to recreate traditional financial products without middlemen, while DAOs can be thought of as a new type of internet community.
Total money deposited into DeFi services surpassed $200 billion for the first time this year, and experts expect demand to grow further in 2022.
Web3, a movement calling for a new, decentralized iteration of the internet, is also expected to gain more traction next year. Web3 encompasses DeFi and other blockchain technologies such as non-fungible tokens. It has already found skeptics in the likes of Elon Musk and Jack Dorsey.

‘A big year on the regulatory front’

Regulators flexed their muscles on cryptocurrencies this year, with China completely banning all crypto-related activities and U.S. authorities cracking down on certain aspects of the market. Analysts widely expect regulation to be a key issue for the sector in 2022.
“2022 will be a big year on the regulatory front, no doubt,” Luno’s Ayyar said. “The interest from various governments, and especially the U.S., to bring regulation into the crypto space has not been higher.”
Ayyar said he expects to see some clarification on the legal “gray zone” of cryptocurrencies other than bitcoin and ethereum, which the SEC has said are not securities.
Blockchain company Ripple is locking horns with the U.S. watchdog over XRP, a cryptocurrency it is closely associated with. The SEC alleges XRP is an unregistered security and that $1.3 billion worth of the tokens were illegally sold by Ripple and two of its executives. For its part, Ripple says XRP should not be considered a security.

Experts say another key area regulators will likely focus on next year is stablecoins. These are tokens whose value is tied to the price of existing assets like the U.S. dollar. Tether, the world’s biggest stablecoin, is particularly controversial as there are concerns about whether it holds enough assets in its reserves to justify its peg to the dollar.
“Undoubtedly more scrutiny is forthcoming around stable coins as regulators look under the hood on the soundness of the underlying collateral and amount of leverage deployed,” said Lowenstein.
“People remember all too well when the collateral behind the housing and mortgage crises became suspect and risk appetites repriced aggressively.”
Meanwhile, regulators have also begun scrutinizing the DeFi space. Earlier this month, central bank umbrella group the Bank for International Settlements called for the regulation of DeFi , saying it’s worried about services marketing themselves as “decentralized” when that may not be the case.

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EVERY YEAR comes with its own unexpected twists for financial markets, but 2021 has been jam-packed with them. Here are some of the developments that took investors, companies and analysts most by surprise this year, and what they mean for 2022. Supply-chain disruptionsPaul Samuelson, a Nobel-prizewinning economist, once joked that the stockmarket had predicted nine of the last five recessions. A similar charge could have been levelled against the analysts who regularly fretted about major supply-chain disruptions—until now. The onset of the pandemic in early 2020 was strikingly free of serious snarls, beyond the fact that personal-protective equipment was in short supply for a time. By contrast, this year has been marked by extensive shortages and surging supply-driven inflation. Drewry, a supply-chain consultancy, constructs a measure of the average cost of shipping a 40-foot container across a range of routes. This reached a peak of $10,377 in late September, quadruple the level a year earlier.Disruptions to factories and ports in China and South-East Asia, driven by governments’ efforts to smother covid-19 outbreaks, did not help matters. But the lion’s share of the tumult can be attributed to explosive demand for physical products: spending on durable goods has risen by 34% in America since the beginning of 2020, compared with an increase of nearer 4% on services. As the pandemic recedes, that gap should narrow. But supply chains may remain squeezed for some time relative to pre-covid norms. Chinese markets upturnedThe established order in Chinese financial markets was upended this year, too. For the best part of a decade, investors clamoured for greater access to Chinese assets, with the country’s booming tech sector regarded as particularly alluring. But a regulatory crackdown in 2021 has left the MSCI China Tech 100 share-price index down by nearly a third since the beginning of the year. The stock price of Alibaba, an e-commerce giant, has fallen by almost 50% over the same period.Evergrande, a huge property developer, had long been the most extreme symbol of China’s heavily leveraged real-estate sector. In 2021 it at last defaulted, in the face of a government effort to throttle borrowing by developers. How the regulatory campaigns proceed depends on China’s opaque politics, which will be dominated by the Communist Party Congress towards the end of 2022. But the shakedown of both the tech and property sectors has made clear that investment performance in China can still turn on a dime if the government’s mood shifts. The earnings bonanzaAnalysts and investors expected a revival in earnings in 2021—after all, things could hardly have been worse than last year. But the scale of the recovery has beaten almost all projections. In late December 2020 the consensus expectation was for a 22% increase in earnings per share on the S&P 500, America’s benchmark stock index, in 2021. Fourth-quarter earnings are still to be announced, but the estimate for growth in the year as a whole is now 45%, stronger even than the 40% rise in 2010, after the global financial crisis. This is partly down to a faster economic recovery than expected, with companies’ earnings surpassing not just their 2020 levels but their 2019 levels, too.That puts stockmarkets in a more difficult spot as 2022 begins: some of the economic recovery that had previously been expected to take place next year may already have happened. Analysts expect a much more muted rise in the earnings of S&P 500 companies, of 9%. Beating forecasts by a large margin again next year will be a tall order. And with the index still priced at more than 20 times expected earnings, that might limit how far prices can rise. Public v privateFor much of 2020, bankers moaned about the difficulties of operating in a pandemic. But if the fewer physical meetings with clients, the lack of roadshows for initial public offerings and the uncertainty of the economic outlook have had deleterious effects, they are hard to find in the data. In the first 11 months of the year listings in America raised $147.8bn, more than twice the amount raised in the same period in 2020. Although the surge was most pronounced in the early months of the year, activity is still buoyant as 2021 draws to a close.The boom casts some doubt over the idea that public markets are being inexorably supplanted by private capital. The power of banks over the listing process may be ebbing, as companies going public can now opt for direct listings, or mergers with special-purpose acquisition companies (SPACs). So far in the fourth quarter, 621 companies have gone public worldwide—including through SPACs—a 16% increase over the past year. The wave of flotations suggests public markets are not out for the count. Green financeExecutives and investors keen to appear environmentally friendly have sometimes been objects of derision in recent years, and green finance in general has been regarded with (often justified) scepticism. But this year has seen concrete developments. Green government bonds have flooded the market, with at least 20 countries issuing such debt this year. In mid-October the European Union issued its first green bond, selling €12bn-worth ($13.6bn) to enthusiastic investors. Perhaps the most interesting developments have come from the private sector, though. Investment in climate-tech startups reached $60bn in the first half of 2021, more than triple that in the same period last year. There has been a huge surge of investor interest in electric-vehicle firms, from Tesla to CATL, the world’s leading battery-maker. Meanwhile, in May ExxonMobil lost a proxy battle against activist investors, who voted more climate-friendly directors to the oil firm’s board. And the oil majors are among the companies exploring hydrogen technologies.Finance will struggle to be truly green without a widespread carbon price. But the sector emerges from 2021 looking more mature and serious than when the year began. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

A top strategist suggests the market is settling down.
Despite Covid-19 omicron risks, Oppenheimer Asset Management’s John Stoltzfus suggests Tuesday’s market bounce is real.

“We believe in it. We think investors should as well,” the firm’s chief investment strategist told CNBC’s “Trading Nation.” “The selling that we’ve seen over the last few days was overdone.”
According to Stoltzfus, the month’s negative headlines surrounding the omicron variant and the Federal Reserve’s tightening plans flushed out investors with weak hands.
“Hopefully, next year the Covid-19 and its nasty variants move into the rear-view mirror,” he said. “We also expect to see the Federal Reserve successfully manage the process of tapering.”
The S&P 500 closed up 1.8% to 4,649.23 on Tuesday. It’s now 2% below its all-time high of 4,743.83, hit on Nov. 22. But the index is up 1.6% so far this month and up 23% for the year.
“Fundamentals are getting better going forward,” said Stoltzfus, a long-term bull. “Stocks are responding to that fact.”

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His 2022 year-end S&P 500 forecast is 5,330, a 15% jump from current levels.
Stoltzfus sees improved earnings ahead and lists information technology, consumer discretionary, financials and industrials as the biggest beneficiaries.
“You’re going to find that in the cyclical sectors as well as in technology,” said Stoltzfus, who expects the upgrade cycle for businesses and consumers to accelerate.
On Tuesday, the tech-heavy Nasdaq also staged a rebound. It jumped 2.4% to close at 15,341.09. The index is still negative for the month, down 1.3%.
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Stock futures opened flat on Tuesday night after the major averages rebounded from a three-day losing streak spurred by fears about the omicron Covid variant.
Dow Jones Industrial Average futures fell 0.03%. S&P 500 futures inched 0.06% lower and Nasdaq 100 futures slipped 0.1%.

All three of the major averages rallied in regular trading, pushing their weekly gains into the green. The Dow added 560 points, or 1.6%. The S&P 500 rose 1.8% and the Nasdaq Composite gained 2.4%.
Travel-related stocks were in relief rally mode as investors put Covid-related fears aside and bought the dip. Delta Air Lines rose 5.9%, United Airlines gained 6.9% and Carnival added 8.7%. 
“Some of the best performing stocks are ‘re-opening’ stocks, also indicating that investors are still willing to look through the headwinds from the rise in virus cases,” Goldman Sachs’ Jeff Currie said in a note Tuesday. “The reaction to the virus perhaps signifies an acceptance (at least for now) of the ‘new normal’ … in which investors may be determining that Covid waves are becoming a regular thing – seasonal like the flu perhaps.”
President Joe Biden in a press conference Tuesday urged Americans to get their booster shots, saying those who have are “highly protected.” He also reiterated that the U.S. will not bring back the strict lockdowns that were imposed at the start of the pandemic. Earlier Tuesday, Biden said his administration will deploy 1,000 medical personnel from the military to back up hospitals facing a surge of Covid patients and that it will purchase 500 million at-home Covid tests that will be free to Americans through a website starting next year.
With the delta variant, “the economy was able to sustain better than most expected,” said Keith Buchanan, portfolio manager at Globalt Investments. “A lot of people will say that the economy held up because there was more monetary stimulus. Coming into Omicron, that’s not necessarily the case as much as it was in Delta and this is another test of a different flavor. It’s testing if the economy and the market can hold up given the much less accommodative fiscal and monetary policy.”

Investors are looking forward to economic data being released Wednesday morning, including home purchases, existing home sales, GDP and consumer confidence numbers.
CarMax is set to report quarterly earnings before the bell on Wednesday.

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Pedestrians cross a street in front of a Rite Aid store in Oakland, California.
David Paul Morris | Bloomberg | Getty Images

Check out the companies making headlines in midday trading.
Rite Aid — Shares of Rite Aid rallied 21.3% after it reported a quarterly profit of 15 cents per share, smashing analysts’ expectations for a quarterly loss of 32 cents per share. The drugstore chain also announced a store-closure program it expects will help save about $25 million annually.

Citrix Systems — Citrix shares surged 13.6% after Bloomberg reported that Elliott Investment Management and Vista Equity Partners are considering a joint bid for the software maker, which has been exploring options including a potential sale since September.
Braze — The software company’s shares soared by 17.9% following a quarterly report that included a lower-than-expected loss and better-than-expected revenue. It was Braze’s first earnings report since going public last month.
Micron — Shares of the semiconductor company surged 10.5% after it beat estimates on the top and bottom lines for its fiscal first quarter. Second-quarter guidance also impressed analysts and helped Mircon earn an upgrade from Bank of America.
Nike — Shares jumped 6.1% after the athletic apparel brand posted a better-than-expected quarterly report despite supply chain issues. The company reported quarterly earnings of 83 cents per share, 20 cents a share above the Refinitiv consensus estimate. Revenue also came in above forecasts.
General Mills — The consumer-food giant’s shares fell 4% after the company reported quarterly earnings of 99 cents per share, which missed estimates by 6 cents. General Mills beat revenue estimates for the quarter and raised its full-year sales forecast. On the downside, it said it’s dealing with higher input costs and supply chain disruptions.

Boeing — The aircraft maker’s shares rose 5.8% after UPS placed an order for 19 of the company’s 767 freighters. Also on Tuesday, RBC named Boeing a top stock pick for 2022, saying it sees free cash flow improving.
Pfizer, Moderna — Vaccine stocks traded lower after the Centers for Disease Control and Prevention director said initial Covid-19 shots “may not be enough” to prevent infection and noted that the omicron variant has more than 50 different mutations. Shares of both Pfizer and Moderna fell about 3%.
Kellogg — The maker of cereal and other foods saw its shares slip by 2.6% after it announced union employees have ratified a previously announced tentative agreement for a master contract at its four U.S. cereal plants. The contract covers about 1,400 union-represented employees at plants in Battle Creek, Mich., Omaha, Neb., Lancaster, Pa., and Memphis, Tenn.
SolarEdge — On a strong day for solar stocks, SolarEdge outperformed and rose more than 8.8% after Cowen named it a top stock pick for 2022. The investment firm said in a note to clients that SolarEdge can benefit from both the residential and commercial rooftop solar markets.
 — CNBC’s Jesse Pound and Hannah Miao contributed reporting

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Take a look at some of the biggest movers in the premarket:
Nike (NKE) – Nike jumped 3.5% in the premarket after it reported quarterly earnings of 83 cents per share, 20 cents a share above estimates. Revenue was slightly above forecasts, but the athletic footwear and apparel maker said sales were hurt by a slowdown in production and transportation of its goods.

Micron Technology (MU) – Micron beat estimates by 5 cents a share, with quarterly profit of $2.16 per share. The chip maker’s revenue also came in above consensus. Micron gave an upbeat forecast, amid continued strong demand for its chips. Its shares leaped 8.2% in premarket action.
Braze (BRZE) – Braze reported a lower-than-expected loss and better-than-expected revenue in the cloud computing company’s first report since going public in mid-November. The stock surged 11.9% in the premarket.
Citrix Systems (CTXS) – Citrix shares surged 7.8% in premarket trading following a Bloomberg report that Elliott Investment Management and Vista Equity Partners are considering a joint bid for the software maker.
General Mills (GIS) – General Mills missed earnings estimates by 6 cents a share, with quarterly profit of 99 cents per share. The food producer’s revenue was above Wall Street forecasts. The company raised its full-year sales forecast, as at-home dining demand remains elevated, but said it is still dealing with higher input costs and supply chain disruptions. Its shares fell 1.9% in the premarket.
Rite Aid (RAD) – The drugstore chain earned a profit of 15 cents per share, compared to expectations of a 32 cents per share quarterly loss. Rite Aid also announced a store closure program, initially targeting 63 stores with an expected annual savings of about $25 million. The stock rallied 4% in premarket trading.

FactSet (FDS) – The financial information provider earned $3.25 per share for its latest quarter, 25 cents a share above estimates. Revenue came in above consensus as well, boosted by higher sales of analytics and research solutions.
Moderna (MRNA) – Moderna CEO Stephane Bancel told a Swiss newspaper that work on a booster to protect against the Covid-19 omicron variant could begin within a few weeks, adding that only minor adjustments would be needed. Moderna had said earlier this week that a booster dose of its current vaccine increases protection against the omicron variant by 37-fold.
Nikola (NKLA) – The electric vehicle company will pay a $125 million civil penalty to settle Securities and Exchange Commission charges that it had allegedly defrauded investors. Nikola said the settlement resolves all outstanding issues and investigations. Its shares added 3.1% in the premarket.
SolarEdge Technologies (SEDG) – The solar equipment maker’s stock rose 2.5% in premarket trading after it was named a “top pick” at Cowen. The firm said investor enthusiasm remains high for both solar and fuel cell technology, despite a move by California to dampen solar incentives.
Nvidia (NVDA) – The graphics chipmaker’s stock added 3% in the premarket after it was named a “top pick” at UBS, which notes Nvidia’s “wide moats” in its markets.

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PNC Financial is throwing cold water on the fourth-quarter rally.
Covid omicron fears will take a heavy toll on risk appetites over the next two weeks, according to Chief Investment Officer Amanda Agati.

“We’ve already gotten the Santa rally,” she told CNBC’s “Trading Nation” on Monday. “We’re seeing a little bit of investor fatigue here.”
The major indexes kicked off the week in the red. The S&P 500 is down 3% over the past three days. It’s the index’s worst three-day slide since September.
Meanwhile, the tech-heavy Nasdaq is down almost 4% in the same time span.
“In addition to the omicron fears and negative headlines swirling around, I think investors are kind of locking in some of those gains and ready to go on Christmas vacation,” she said.
Yet, she doesn’t see a deeper problem.

“We don’t think this is going to lead to a significant market correction,” said Agati, who noted liquidity is fairly low this time of year.
Agati’s optimism hinges on omicron having fewer severe repercussions than previous Covid-19 strains. Her longer-term 2022 forecast, which came out Monday, is built on the assumption omicron won’t lead to hospitalization spikes, economic shutdowns and more supply chain trouble.
Even though her top wildcard is Covid, her base case is that 2022 will be a strong year for the market. Plus, she believes one of this year’s biggest losers will stage a major rebound.
“EM [emerging markets] is very well positioned, but it’s been absolutely punished from the regulatory overhangs. What I think will be interesting in 2022 is we’ll start to see some of that… China regulatory backdrop fade,” Agati said. “That would really be the shot in the arm that emerging markets need to outperform in 2022.”
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