Carry Trades Roar Back Into Favor as Emerging Currencies Rally
Emerging market carry trades are taking off again, as currency volatility subsides amid signs President Donald Trump's aggressive tariffs may not get fully enacted.
An index of carry returns — for which a trader borrows in a low-yielding currency and then invests in another offering higher returns, hit a seven-year high in late May. Asset managers have boosted long positions in developing-nation currencies in recent weeks, with those on Mexico's peso reaching a nine-month high, based on CME Group Inc. data.
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CNBC
16 minutes ago
- CNBC
We're raising our CrowdStrike price target after shortsighted post-earnings selling
CrowdStrike on Tuesday evening reported quarterly beats on many of the key metrics that investors focus on. However, it also delivered mixed guidance. As a result, we're not surprised to see some profit-taking in after-hours trading, following Tuesday's record-high close of nearly $489 per share. Revenue in the fiscal 2026 first quarter increased 20% year over year to $1.1 billion, landing right in line with estimates, according to LSEG. Growth was seen in all major geographic regions. Adjusted earnings per share (EPS) declined 8% annually to 73-cents in the three months ended April 30, but that was ahead of the 65-cent estimate, LSEG data showed. Annual recurring revenue (ARR) jumped 22% to $4.44 billion, also ahead of the $4.42 billion estimate, according to FactSet. This represented a net new addition of $193.8 million. Remaining performance obligations (RPO) increased 45% year-over-year to $6.8 billion, beating the $6.16 billion FactSet consensus. Management also announced a new $1 billion share repurchase authorization. CRWD YTD mountain CrowdStrike YTD With a lot to like about the quarter and guidance we can live with, we're raising our price target to $500 per share from $400. That reflects a premium of more than 9% to Wednesday's indicated open around $457. Even with an after-hours decline of more than 6%, the stock was still up over 40% from its 2025 low of $321.63 on April 4 — two trading days after President Donald Trump 's evening announcement on April 2 of much higher than expected "reciprocal" tariffs. CrowdStrike shares never deserved to be that low, but a move like that must be respected. So, we're maintaining our hold-equivalent 2 rating. Bottom line By nitpicking the results, the sellers Tuesday evening are missing the forest for the trees. Sure, CrowdStrike's current quarter and fiscal year 2026 guidance were mixed. But in both cases, profitability was better than expected. More importantly, CEO George Kurtz said on the post-earnings conference call that CrowdStrike's Falcon Flex subscription model is "accelerating platform adoption at a faster pace than we've ever seen before." The reality is that demand for best-in-class cybersecurity is only going to grow as artificial intelligence advances and hackers adopt increasingly sophisticated tools. Cybersecurity is not a discretionary buy for corporations, it's a critical expense that must be prioritized regardless of economic conditions or tariff fears. With net new ARR expected to accelerate in coming quarters — and management calling for further expansion of both adjusted operating income margin and free cash flow margin in its fiscal year 2027 to "at least 24%" and "more than 30%," respectively — the stock's post-release decline will likely prove to be a buying opportunity as it has in the past. Why we own it Cybersecurity is a must-have for companies in the digital age. Led by co-founder and CEO George Kurtz, CrowdStrike is one of the best there is (along with fellow Club name Palo Alto Networks ). The company specializes in endpoint protection through its AI-native platform called Falcon. Competitors: Palo Alto Networks, Fortinet , SentinelOne , Microsoft Portfolio weighting: 3.6% Most recent buy: March 10, 2025 Initiation date: Oct. 16, 2024 Quarterly commentary The hard work Kurtz and his team have been putting in since CrowdStrike's botched software update caused a global IT outage back in July 2024 continues to pay off, and the momentum we're seeing now may even accelerate in the quarters to come. On the call, Kurtz noted that the company's nearly $194 million net new ARR result came in "double-digit millions" ahead of the team's own expectations. He was also sure to call out that CrowdStrike's gross customer retention held in at 97%, in line with the prior two quarters. Subscription gross margin was also a bright spot, coming in at 80%, on an adjusted basis. Operating cash flow, meanwhile, represented a new quarterly record and helped drive the team to a 25% free cash flow margin and double-digit free cash flow growth, sequentially. Kurtz said on the call that customers who adopt the Falcon Flex subscription — over 820 accounts, so far — spend more, commit to longer durations, and tend to adopt the Falcon platform more quickly, with more than 75% of those contracts already deployed. The Falcon Flex model allows customers to achieve a low total cost of ownership while optimizing security by letting them swap one security module for another as needed. During the quarter, Kurtz noted that the team "added $774 million of total Falcon Flex account value, bringing the total deal value of accounts that have adopted Falcon Flex to $3.2 billion." That represents a 31% increase versus the prior quarter and a greater than six-fold increase versus the year-ago period. Given the strong momentum seen in the first quarter, Kurtz is confident that we will see even better sequential net new ARR growth in the current quarter, with an acceleration in the back half of the year, consistent with prior commentary. Guidance For full-year fiscal 2026, CrowdStrike management expects total revenue of $4.74 billion to $4.81 billion, unchanged from the prior guide. But at the midpoint, it was slightly below the $4.79 billion consensus estimate, according to FactSet. The company raised its adjusted EPS outlook to a range of $3.44 to $3.56, which at the midpoint was above the $4.46 expected. Adjusted operating income was also raised to between $970.8 million and $1.01 billion, which at the midpoint of $990.8 million outpaced the $976 million expected. For its 2026 fiscal second quarter, CrowdStrike's revenue guidance at the midpoint was $1.15 billion, a bit below the $1.16 billion consensus. The midpoint of guidance for operating income of $230 million and EPS of 83 cents, however, outpaced expectations of $227 million and 81 cents, respectively. While the team does not guide for net new ARR, CFO Burt Podbere commented on the call that this guidance for the current quarter assumes a "sequential net new ARR growth rate to be at least double over what we saw from Q1 to Q2 in the prior fiscal year." (Jim Cramer's Charitable Trust is long CRWD. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Yahoo
34 minutes ago
- Yahoo
Corporations Are Pulling Financial Support From Pride — Even Beyond Trump's Reach
LGBTQ+ pride festivals around the country have lost millions of dollars in corporate sponsorships this year, as more companies fear being targeted by the Trump administration over their diversity, equity and inclusion initiatives. Nearly a fourth of corporate donors to NYC Pride, including Mastercard, Citi, Pepsi, Nissan and PwC, pulled sponsorships totaling an estimated $750,000. At WorldPride, held this year in Washington, D.C., consulting giants Booz Allen Hamilton and Deloitte dropped their sponsorships and have lost nearly $260,000 in funding. Anheuser-Busch, the brewer for the brands Budweiser and Bud Light, withdrew sponsorship from pride events in San Francisco and Columbus, and in St. Louis where the company is headquartered. The sharp decline in corporate sponsorship for pride festivals this year comes as President Donald Trump has threatened anything related to DEI and associated with the LGBTQ+ community ― and corporations have retreated their support. On his first day in office, Trump signed an executive order declaring DEI initiatives 'illegal and immoral discrimination,' and announced the termination of all federal offices and grants related to DEI training. In a second order, Trump vowed to end the federal funding of 'gender ideology,' a right-wing term that is used to refer to the existence of transgender people and their rights. Over the last decade, corporate America began to increasingly support Pride festivals after the Supreme Court ruled in favor of same-sex marriage in 2015. Pride-themed and rainbow-colored products, from clothing to credit cards, had become so universal at retailers each June that some began to critique corporate support as 'rainbow capitalism.' Critics lamented that corporations only supported LGBTQ+ communities with big displays during Pride while being silent the rest of the year ― or in some cases donating millions to anti-LGBTQ politicians. Some have argued that corporate support was at odds with the liberatory origins of the festivities. 'The older generation was fighting for acceptance. They said, 'We want to be part of the whole, we don't want to be separated from everybody. We want to be part of the group,'' Tim Bennett, the former marketing director at Subaru told Marketplace in 2021. 'And Pride is, you know, more of a festival and a corporate party in some regards. It's no longer the kind of activism that it used to be.' The first Pride parade was held in 1970 in New York City, one year after trans and queer people spent several days protesting police harassment outside of the Stonewall Inn in what became known as the Stonewall Uprising. But now, as the Trump administration has launched a war against LGBTQ+ rights and DEI initiatives, we're seeing that corporate America is too scared to don a rainbow flag even outside of the country. Five prominent American companies ― Google, Home Depot, Nissan, Adidas and Clorox ― said they were suddenly pulling their financial support of Pride Toronto, Canada's largest pride festival. 'These are American companies and they are showing their true colors, Kojo Modest, the executive director of Pride Toronto told the Guardian. 'We thought they were with the community, but clearly, they're not.' The corporate exodus from Pride events follows a trend of companies shifting away from publicly supporting LGBTQ+ communities in recent years, as dozens of states have passed laws restricting trans people's rights to access medical care, play school sports, use bathrooms and participate in public life. In the past two years, right-wing social media influencers have targeted specific companies that have publicly supported LGBTQ+ communities. In 2023, conservatives pressured consumers to boycott Anheuser-Busch's beer, Bud Light, after Dylan Mulvaney, a trans TikTok personality, appeared in a short video promoting the beer. Republican Senators Ted Cruz and Marsha Blackburnlater called for a Senate investigation into the company's partnership with Mulvaney, baselessly claiming that the company was marketing products to young audiences. That same year, conservatives also boycotted Target's line of Pride Month merchandise, and the company saw its first quarterly sales drop in six years. In the aftermath of the boycott, Target officials told investors that the company would have to 'adapt and learn.' Trump's open hostility toward the trans community coupled with his efforts to reduce government spending and implement tariffs have made this year's economic climate less than opportune for investors looking to support Pride events. The downward trend has even trickled down to local pride events that have already struggled to garner financial support. Last year, Stevie Miller helped start up the first pride event in West Plains, a deep red city in southern Missouri. With a shoestring budget, he and his co-organizers were able to host 900 people. Since then they have turned the festival into a nonprofit organization to support drag shows, educational panels and community events throughout the year. Miller said he tried to get in contact with various corporate sponsors without much luck, and said that the nonprofit is largely supported by LGBTQ+ organizations within Missouri and from funds raised through a drag and art show. 'There has been a level of difficulty due to hostility,' Miller said to HuffPost. 'There is a small town mentality that would rather we left than proudly celebrate here so many local businesses have been silent.'
CNBC
34 minutes ago
- CNBC
CNBC Daily Open: Recent gains in markets are likely just short-term optimism
Over the past week, Washington and Beijing have been trading barbs about violating their preliminary trade deal. Aside from that, higher steel and aluminum tariffs announced by U.S. President Donald Trump will kick in Wednesday. Amid all the trade tensions, the Organisation for Economic Co-operation and Development slashed its U.S. and global growth forecast for this year and the next, citing "barriers to trade tighter financial conditions, weaker business and consumer confidence and heightened policy uncertainty." Investors, however, are still pushing up stocks, with Nvidia on Tuesday regaining the crown of most valuable public company. That said, CFRA Research's Sam Stovall thinks that the market is "going to just sort of bob and weave in the meantime until we start to get a clearer understanding, if we get one, of the outlook for earnings, GDP growth, etc." In other words, recent gains in markets aren't likely to be indicative of a longer-term trajectory. Where stocks go will depend on where the U.S. economy lands amid the developments surrounding tariffs. Markets in U.S. and Europe riseU.S. stocks climbed Tuesday, boosted by rises in chip stocks and more-than-expected job openings in April. The S&P 500 gained 0.58%, the Dow Jones Industrial Average advanced 0.51% and the Nasdaq Composite closed 0.81% higher. Europe's Stoxx 600 index edged up 0.09%, reversing losses from earlier in the day. Nvidia is king againNvidia shares added 2.8% Tuesday to close at $141.22, giving it a market capitalization of $3.45 trillion. That move puts the chipmaker ahead of Microsoft's $3.44 trillion cap, which means Nvidia is again the most valuable publicly traded company in the world. The stock has surged more than 23% over the past month as Nvidia's growth has persisted even through export control and tariff concerns. OECD slashes U.S. and global growth rate The Organisation for Economic Co-operation and Development drastically cut its growth forecast for the U.S. to 1.6% in 2025 from an earlier estimate of 2.2%, according to a Tuesday report. OECD also lowered global economic growth this year to 2.9% from 3.1%. "Substantial increases in barriers to trade" is one factor weighing down growth prospects, the report said. Inflation in the euro zone dips below 2%Euro zone inflation fell to 1.9% in May — below the European Central Bank's 2% target — on sharp declines in services, flash data from statistics agency Eurostat showed Tuesday. Economists polled by Reuters had expected the May reading to come in at 2%, compared to the previous month's 2.2% figure. Core inflation, which excludes energy, food, tobacco and alcohol prices, also eased, falling to 2.3% in May from 2.7% in April. Trump's bill is a 'disgusting abomination': MuskElon Musk in a Tuesday post on X described U.S. President Donald Trump's "big, beautiful bill" as a "disgusting abomination" and subsequently wrote that the bill "will massively increase the already gigantic budget deficit to $2.5 trillion (!!!)" Trump is still pressuring U.S. lawmakers to pass the bill, blasting Rand Paul after he said on CNBC's "Squawk Box" that he is "just not open" to supporting a $5 trillion increase in the debt ceiling. [PRO] Watch out for new stocks in S&PSeveral financial services stocks could be rotated into the S&P 500, according to Bank of America. Stocks added to the index often rise in value because funds that track the benchmark will add it to their portfolios, so investors should pay attention to the moves, which will be announced by the end of the week. Tesla's planned robotaxi launch in tech-friendly Austin has Musk playing catch-up in his hometown Tesla's long-awaited entry into the robotaxi market — expected later this month — will begin in Austin, Texas, which has emerged as a key battleground for self-driving technology. CEO Elon Musk wrote in a post on X last week that the company has been testing Model Y vehicles with no safety drivers on board in the Texas capital for several days. But while the market remains nascent, Tesla already faces a hefty amount of competition. Alphabet's Waymo, Amazon's Zoox, Volkswagen subsidiary ADMT and startup Avride are already present in Austin. "The winners of the space are emerging, and it's just a matter of scaling," said Toby Snuggs, head of sales and partnerships at Avride.
