September 20, 2024
What You Need to Know Today:
Saturday Night Quarterbacks says (on Labor Day), For the week ahead expect…
the next big jobs report, the Employment Situation from the Bureau of Labor Statistics for August will hit the wires before the stock market opens on Friday, September 6.
Has the 100% certainty among investors and traders that the Federal Reserve will cut interest rates at its September 18 meeting drained all of the drama out of the August jobs report?
Hold onto Nvidia for Blackwell chip launch–it’s a big deal even for the AI rocket
I can’t give you a definitive call on the top for this stock and this rally, but I cam sure of one thing, I don’t want to sell Nvidia before the company’s new Blackwell chip architecture has hit full launch speed in late 2024 and 2025. My read is that this is the “perfect” AI chip for this moment in the AI boom.
Saturday Night Quarterback (on a Monday) says, For the week ahead expect..
There won’t be any stock market reaction to the June jobs report due on Friday That’s because the market closes early on July 3 and stays closed for Friday’s Fourth of July holiday. And not because the report isn’t important as the Federal Reserve continues its search for evidence that the labor market is cooling enough to send inflammation down to the bank’s 2% target. The June report is expected to show that the economy added 188,000 jobs in June.
Watch the long-end of the Treasury market–interest rates could be headed up no matter what the Fed does
Wall Street strategists at influential investment giants are starting to recommend buying inflation hedges for 2025.
That means, at the moment, buying at the short-term end of the Treasury market–like 3-month to 12-month bills–and selling at the long-end–like 10-year notes.
BYD sells a record number of EVs in the second quarter as EU tariffs loom
BYD (BYDDF) sold a record number of electric and hybrid cars in the second quarter, according to sales data compiled by Bloomberg. The record sales were driven by price cuts and new technology that extended vehicle range. The record sales come as European Union...
Another reason to worry about U.S. economic growth
The pandemic savings cushions that helped Americans weather high prices in recent years are gone, according to calculations by the San Francisco Federal Reserve. The result is likely to be less spending and more debt pressure on consumers in the lower half of the income spread. Consumers at higher income levels will see any impact outweighed by gains from a booming stock market.
Special Report A New World for Dividend Investors Pick #4 Equinor
Equinor (EQNR) is Pick #4 in my Special Report A New World for Dividend Investors. I posted this pick in my long Special Report post. But I wanted to flag it here as well so no one wouldl miss the pick. Dividend Pick #4: Equinor (EQNR)
Live Market Report (20 minute delay)
Xi’s plan for stimulus and stock market boost fails to convince China traders
China will launch a new stabilization package including about 2 trillion yuan ($278 billion) to buy mainland shares via offshore trading links in the coming days, government sources say. This would come after a market rout that has erased more than $6 trillion in market value from mainland China and Hong Kong stocks since a peak reached in 2021. And certainly China’s stocks rallied on the news. The NASDAQ Golden Dragon Index of Chinese stocks traded in the United States closed up 4.84% today, Tuesday, January 23. But considering the extent of the losses and its duration, I’d count a less than 5% gain–especially since the index was up by more than 6% earlier in the day.
Please watch my new YouTube video: Trend of the Week Auto Semiconductors
Today's Trend of the Week is Auto Semiconductors. One of the biggest trends coming out of the Consumer Electronics Show this year was new technology for automobiles, including chips for automatic driving, entertainment, and advanced AI. Advanced Micro Devices (AMD)...
More fuel for this rally in Friday’s consumer sentiment news
On Friday the University of Michigan’s consumer sentiment index reported a rise of 9.1 points, the biggest monthly advance since 2005, to 78.8. The preliminary January reading stands at the highest level since July 2021. Consumer sentiment jumped 13% in January to its highest level since mid-2021. Since November, consumer sentiment has risen 29%, marking the largest two-month increase in more than 30 years. And that was just the top line in a report with lots of good news for stocks and the current rally.
Please watch my new YouTube video: Quick Pick Merck
Today’s stock pick of the week is Merck, (MRK). Merck’s “problem” is that one of its biggest revenue streams comes from Keytruda, an oncology drug that will be going off-patent in 2028. In 2023, Merck projected new oncology drugs would bring in an additional $10 billion to replace Keytruda’s revenue. At this year’s JPMorgan healthcare conference, the company’s projection was even higher at $20 billion by the 2030s.
Will the Magnificent Seven stocks let the market down?
The Magnificent Seven stocks accounted for virtually all of 2023’s 24% stock market gain. The Magnificent Seven stocks are Alphabet (GOOG), Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA). And according to Wall Street analysts these stocks are set to do it again when they report fourth quarter earnings beginning this week (on Wednesday, Jonuary 24, with Tesla and continuing into the following week.The Magnificent Seven are expected to deliver combined earnings growth of about 46%, according to data from Bloomberg. That’s down slightly from the third quarter’s 53% expansion, but it still dwarfs almost all of the main sectors in the S&P 500 Index. It’s not surprising, therefore, that the long Magnificent Seven (and other tech stocks) is the most common trade in the current market. Nor that the options market is pricing in “virtually no risk” for mega-cap stocks, Brian Donlin, head of equity derivatives strategy at Stifel Nicolaus, told Bloomberg. All of which makes the recent weakness in some of the Mgnificent Seven stocks a bit worrying. Apple and Tesla are most likely to deliver disappointing numbers.
Saturday Night Quarterback says, For the week ahead expect…
On Thursday, the Bureau of Economic Analysis will deliver the initial reading on fourth quarter GDP. Economists project that the report will show the economy grew at an annualized 2% rate. That would be down from the 4.9% in the third quarter (however, no one expected a repeat of the annual rate) but together the two quarters would be the strongest back-to-back quarters for growth since 2021. A day later the Federal Reserve’s favorite inflation gage, the Personal Consumption Expenditures index, is expected to show a continued decline in inflation to annualized rate of 3% in December. This would be an 11th straight month of declining inflation.
China’s stocks set another kind of record (to the downside)
In a week where the U.S. Standard & Poor’s 500 and NASDAQ Composite and NASDAQ 100 set new record highs, China’s stock market turned in another big move to the downside. The Hang Seng China Enterprises Index has already lost 11% in 2024. That comes after a record four-year losing streak and the slump this year has just reinforced the opinion among money managers that “China is uninvestable now.” The Nasdaq Golden Dragon China Index slipped was down by as much as 2.2% at the start of US trading Friday, extending losses to a fifth consecutive day. The grim milestones keep accumulating.
Taiwan Semiconductor results set the chip sector on fire
Shares in Taiwan Semiconductor Manufacturing (TSM) were up almost 10% yesterday after the company announced an unexpectedly strong return to growth. That has in turn pushed chip stocks higher across the sector. For example, shares of Advanced Micro Devices (AMD), which were already moving higher this week ahead of the news, hit a new record high today. The good news from semiconductor companies and the moves on their stock have also rallied the general market.
Congress kicks the government shutdown deadline to March
Today, January 18, with plenty of time to beat the January 19 deadline for funding the government or shutting it down, Congress passed yet another temporary spending bill. The interim measure would fund some agencies-—set to run out of money after Friday–through March 1 and others through March 8.
Please Watch My New YouTube Video: Quick Pick Visa (V)
Today I posted my 319th YouTube video: Quick Pick Visa. And I’ll be adding the stock to another of my portfolios.
Please Watch My New YouTube Video: Exogenous Factors: Middle East and Taiwan
Today’s video is Exogenous Factors: Middle East and Taiwan. The market has been focused on earnings and the Fed as of late, but, there are a lot of big exogenous factors that should also be on the radar. Two of those factors are Taiwan and the Middle East.
Please Watch My New YouTube Video: Will We Have a Santa Claus Rally Hangover in January?
I’m back! It’s been a long hiatus since I moved to Venice in September (yes, Italy, and not California or Florida) but I’m back and I’ll be resuming my videos from here on out. Today’s video is: Will We Have a Santa Claus Rally Hangover in January?
Here’s the 3-year road map for AI hardware–and a buy on AMD
It’s important to remember exactly how young artificial intelligence is as a market product. I certainly don’t think it’s possible to project the long-term winners on either the software or hardware side. Remember the days when Apple (AAPL) thought it was worth buying a Super Bowl add to urge consumers to smash the IBM PC empire? But I do think the hardware road map is petty clear for the next two to three years. Which is why I’m adding shares of Advanced Micro Devices to my portfolios tomorrow.
Not so fast–the rethink of when the Fed will start to cut rates continues to hit stock and bond prices
Last month, the bond market was almost fully pricing the first interest rate cuts from the Federal Reserve in March. Now, though the odds for a 25 basis point cut are down to more like 50/50. Today, January 17, the yield on the 10-year Treasury rose another 5 basis points to 4.10%.
China economic growth hit official target in 2022, but population plunge accelerates
Well, what did you expect Chinese officials to talk about at Davos? Yesterday, Premier Li Qiang said in a speech at the World Economic Forum in Davos, Switzerland, that China’s economy is expected to have grown 5.2% in 2023. Which would exceed the government’s target of “around 5%” set in March. Li’s estimate roughly agrees with the average 5.3% expected by economists. In 2022, China’s economy grew at a 3% rate.But also yesterday, the National Bureau of Statistics said that China’s population decline has accelerated.
Good news/bad news from China on stimulus
Chinese officials have indicated that the government is considering issuing 1 trillion yuan ($139 billion) of new debt under a special sovereign bond plan. The plan would sell ultra-long sovereign bonds to fund projects related to food, energy, supply chains, and urbanization. The sale of this type of ultra-long bonds is rare: In the aftermath of the Asian Financial Crisis in 1998, for example, the government issued special debt to replenish capital for major state-owned banks. The most recent sale was in 2020, when authorities issued 1 trillion yuan worth of those bonds to pay for pandemic response measures. The new round of stimulus is good news for a global economy that has been struggling with lagging growth as China’s economy has slowed. But the plan is bad news for anyone worried about the deep structural problems facing China’s economy.
Nothing exceeds like excess–too much of a good thing for bond prices
Mae West said, “Too much of a good thing is never enough.” For the financial markets that’s just not true, however. The markets are prone to swing to excess and then to painfully retrace the extreme end of the swing. You can see it happening now with interest rates and the bond market.
Hertz pulls the plug on electric cars–especially Tesla
Hertz (HTZ) plans to sell a third of its U.S. electric vehicle fleet and reinvest in gas-powered cars. The company says the shift is due to weak demand and high repair costs for its electric vehicle fleet. Which is dominated by Telsa’s electric vehicles. Electric vehicles make up about 11% of the Hertz fleet and 80% of those electric vehicles are Tesla. The news certainly isn’t a plus for electric cars and electric car makers. But I think it’s also important not to forget that Hertz is struggling to show improvements to its bottom line. Tesla’s price cuts–and their effect the resale value of the Hertz fleet–may have more to do with this abrupt about face than weak demand and higher repair costs.
Special Report: 10 Great Growth Stocks that Are Getting Greater–today my 10th (and final) pick QCOM
GREATER Growth Stock Pick #10: Qualcomm (QCOM). I think the market and the current stock price are missing a good prt of the growth story for Qualcomm. Which is why I find the stock undervalued enough to buy here. Right now the market disagrees. However, I’ll be adding the stock to my Jubak Picks and Volatility Portfolios on Tuesday, January 16.
Saturday Night Quarterback says, For the week ahead expect…
Like every season of earnings reports, this one will be chock full of real earnings news and will come complete with strenuous efforts at gaming those real results. Three big questions for the week-and for earnings season. First, question: How much “bad news” has been already discounted by analyst cuts to earnings expectations?
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