Shares of DocuSign (DOCU) should have dropped on Friday. After all, almost everything technology was down on the day and the company reported that growth in demand for its electronic document-signing products, which had soared during the Pandemic, had slowed as more workers went back to the office. Earning for the third quarter were 58 cents a share on an adjusted basis. That was above the 46 cents a share expected by Wall Street analysts. However, revenue, including revenue from acquisitions, rose “just” 42% to $545.5 million Analysts were expected revenue of $594 million for the quarter. But a plunge of 42.2%? I’d argue that something else is going on, something that’s related to the market as a whole and not to DocuSign in particular.
Expect the the debate to go on. Are we seeing a top for this extraordinary rally? Are stocks headed to their first correction since dinosaurs walked the earth? (Actually stocks had their last 10% correction in February 2020 but almost nobody remembers because it didn’t last very long and soon stocks were on their way to infinity and beyond.) And will this correction be led by technology stocks, the stars of the last rally? Or is the huge and very quick drop in technology stocks and the smaller but still significant fall in a wider index such as the Standard and Poor’s 500 merely a rotation from one sector into another? For the record, as of the close on Friday, December 3, the S&P 500 was down 3.47% from its November 24 high. The NASDAQ Composite, with its heavier weighting in technology, was down 6.05% from its November 11 high.
Trick or Trend: Request from China’s Didi Global to delist in New York hammers U.S.-traded China stocks
On Friday news that China’s Internet food delivery giant Didi Global (DIDI) planned to delist its shares from the New York Stock Exchange hammered the stock in New York trading. Didi’s ADRs fell 22.24%. And other Chinese stocks with New York listings followed the path downward pioneered by Didi Global. Abibaba (BABA) closed down 8.29%. Tencent Holdings (TCEHY) slid 4.87%. And JD.Com (JD) dropped 7.71%.
I’m starting up my videos on JubakAM.com again–this time using YouTube as a platform. My seventy-sixth YouTube video “Quick Pick Veeva Systems” went up today.
On the one hand, the headline numbers in this morning’s jobs report were disappointingly weak. The U.S. economy added just 210,000 workers in November. That was less than half of the median estimate–550,000–in Bloomberg’s survey of economists. So the worry is that the U.S. economy is growing more slowly than expected. Weak growth is generally bad for stocks. But it might have helped the bond market because a weaker U.S. economy might delay plans for the Federal Reserve to raise interest rates.
But on the other, if you looked into the numbers, they seemed just downright odd. And didn’t provide much hope that the Fed would see this data as a reason to hold off on raising interest rates.
Congress votes to keep government open–through February 18–now it’s just the debt ceiling to worry about
Yesterday, December 2, the House and Senate both voted to approve a bill to fund the federal government to February 18. So no government shutdown this weekend. (Funding for the federal government was set to expire at midnight tonight.) Republicans in the Senate backed off on plans to delay at vote until after the weekend passed. The new agreement leaves a few items hanging.
But 2021 has been very, very good to the iPath B Bloomberg Coffee Total Return ETN (JO). A series of disruptions–weather in Brazil and Colombia, a shortage of shipping containers that curbed exports from Vietnam, a civil war in Ethiopia–sent coffee prices to a 10-year high on November 30. Despite the global Pandemic depressing demand from consumers who didn’t venture out of coffee shops during the worst of the virus outbreak. Now after a 73% gain for 2021 to date the question for investors after the is how much higher can coffee prices and this coffee ETF go?
The trend for the next year or two looks positive.
Today, December 2, the Federal Trade Commission sued to block Nvidia’s (NVDA) $40 billion acquisition of ARM. “The FTC is suing to block the largest semiconductor chip merger in history to prevent a chip conglomerate from stifling the innovation pipeline for next-generation technologies,” Holly Vedova, director of the commission’s Bureau of Competition, said in the statement.
I’m starting up my videos on JubakAM.com again–this time using YouTube as a platform. My seventy-fifth YouTube video “4 Picks for the Omicron Wave” went up today.
Want to know exactly how volatile the stock market is right now? Yesterday investors and traders got news that the first case of the Omicron Variant had been recorded in California. On that, and some “We’ll tighten sooner than expected” remarks from Fed officials, stocks plunged with the Dow Jones Industrial Average showing a 972 point swing from high at 11:25 and 34,994 to the close a 34,022. Today investors and traders got news of a second case–a Minnesota man who had attended an anime conference in New York. And the stock market didn’t just shrug; it rallied big time with the Standard & Poor’s 500 closing up 1.42%, the Dow Industrials u 1.85%, and the small cap Russell 2000 ahead 2.74%.
A stock isn’t a buy just because it’s cheaper than it was–Lessons from Disney on when to buy on the dip
After a huge rally like we’re had this year, it’s easy to fall into one of the most common buy on the dip traps. Just because a stock is cheaper than it was, it’s not necessarily a bargain. There’s nothing that says a stock has to return to its previous price after a dip. And especially that it has to return to that former price on your schedule. Let me use Disney (DIS), one of the stocks I’m tracking in my Dip-O-Meter, as an example.
After yesterday’s selling, we’re getting a bounce today. But, significantly, the bounce in stocks is much less “bouncy” than the Monday bounce from Friday’s plunge.
Congress may simply be out of time as it stares at a Friday deadline for keeping the federal government open. Republicans in the House and Senate seem determined to throw enough sand in the wheels to prevent a vote on funding the government after midnight on Friday.
Right now the stock and bond markets can’t decide if the Omicron Variant will crush the global economy badly enough to lead the Federal Reserve to delay its timetable for raising interest rates or if the U.S. economy is so strong and inflation so persistent that Jerome Powell and company will be pushed to accelerate the Fed’s tightening. Which makes Friday’s jobs report for November even more important than usual since it might provide the tipping data to send the Fed’s decision one way or the other. Right now economists at Argus forecast that the economy added 550,000 new jobs in November. That would be an increase from the 531,000 jobs created in October and from the 32,000 created in August.
I’m starting up my videos on JubakAM.com again–this time using YouTube as a platform. My seventy-fourth YouTube video “Quick Pick Wells Fargo” went up today.