I’ll be selling Nvidia out of my Volatility Portfolio tomorrow
I’m going to take advantage of today’s pop in Nvidia (NVDA) to sell the shares out of my very short-term Volatility Portfolio tomorrow, Tuesday, October 2. The shares closed up at the close today at $447.82, a gain of 2.95% on the day. I initiated the position in the Volatily Portfolio on Mach 25, 2023. It was up 66% as of the close today So why sell Nvidia here?
A tough day for tech–Part 2, Bad news from Adobe (and selling Adobe out of my Volatility Portfolio)
Now that Fed day is done and behind us, we return to our regularly scheduled programming. Back on September 15, I posted “A tough day for tech–Part 1” after news on Taiwan Semiconductor Manufacturing (TSM) reporting that the company was slowing orders with suppliers of chip making equipment because of sluggish demand for chips from its customers. Now onto Part 2 of bad news for tech stocks.
Saturday Night Quarterback (on a Monday) says, For the week ahead expect…
Ho, hum, it’s a quiet week with nothing much going on. Oh, except for the meeting the Federal Reserve’s interest-rate setting Open Market Committee on Wednesday, July 26. Oh, and earnings from Microsoft (MSFT) and Alphabet (GOOG) on July 25, and Meta Platform (META aka Facebook) on July 26. Apple (AAPL) and Amazon (AMZN report on August 3.
If we’re in a growth recession, the upcoming earnings season is going to be wild
Right now economists are projecting that the U.S. economy didn’t slip into a recession in the second quarter that ended on June 30. But those same forecasts are looking for a further slowdown in economic growth in the quarter.
On July 3 the GDPNow forecast from the Atlanta Federal Reserve Bank put second quarter growth at an adjusted annual rate of 1.9%. That’s down from the model’s 2.2% forecast on Jone 30. And that rate of growth would be a further deceleration from the 2.0% growth rate (that was an upward revision from a first estimate of just a 1.3% growth rate) in the first quarter and the 2.6% growth in the fourth quarter of 2020. The very recent downward revision in the GDPNow forecast is a result of a drop in private domestic investment growth to 8.8% from 10.4%.So now recession–good news–but a further slowdown in the economy–expected with the Federal Reserve raising interest rates. And a continued drop in company profits.
Saturday Night Quarterback says, For the week ahead expect…
I expect technology earnings to hold center stage as investors and traders wait for the Federal Reserve to speak on interest rates next week on Wednesday, February 1. I think what companies say about expectations for revenue and earnings for the first quarter of 2023 will be more likely to move stocks significantly than what they report for the fourth quarter.
Repeat after me: The stock market isn’t the economy
The stock market action last week provided a very pointed reminder, if you needed one, that the stock market isn’t the economy. (At least not in the short run.) Companies that threw in the towel on revenue growth for 2022 (and maybe 2023) were among the big gainers for last week. Companies that slashed staff? Up big time even when the cuts raised questions about the company’s future products. Explain to me, if you can, what the long-term positive story is in a company slashing staff and admitting that it doesn’t have a clear path to revenue growth. In the short-term, the stock market was willing this week to reward companies for cutting costs in the near term–even at the cost of future growth. But in the long term, these “rewarded” companies are going to have to figure out a growth strategy or the stock market will take back its enthusiasm. And there are implications for the stock market as a whole.
Part 2 Saturday Night Quarterback (on a Sunday) says, For the week ahead expect…
Earnings. Earnings. And more earnings. From the big bellwether technology stocks: Apple, Amazon, Microsoft, Meta Platforms, and Alphabet. Wall Street has already slashed earnings forecast for these stocks so there’s a good chance these companies will report earnings that surpass expectations even if only by a few pennies. By and large, though, these reports will show either an absolute drop from the September quarter of 2021 or, at best, a slowing of revenue and earnings growth. Key to the market’s reaction will be what these companies say about expectations for the next quarter or two. Will they emphasize what are already clear slowdowns in PC and smartphone sales? Will they speak to the elephant in the room–the U.S/China trade war? Will they say that a strong dollar plus inflation is cutting into sales outside the United States and U.S. sales to domestic customers who are showing signs of “price fatigue”?
Analysts cutting earnings forecasts for third quarter that ends on September 30 (and what 3 sectors they do like)
Earnings forecasts are falling as we get close to the end of the quarter on September 30 and the start of earnings season in early October. Aggregate earnings per share estimate for companies in the Standard & Poor’s have dropped 5.5% in the past two months, according to Credit Suisse.
This looks like the Bear Market rally I’ve been waiting for
After looking like it was over earlier in the week with a significant pull back on Tuesday, July 26, stocks have rallied in the last two days, gaining 3.85% by the Thursday, July 28 close from that Tuesday low. And right now all the ducks are lined up in a row for a strong move higher. (But you know what they say about Bear Market rallies right? They’re really hard to trade and they’re even harder to sell into.)
Those ducks?
Saturday Night Quarterback says, For the week ahead expect…
This week brings an interest rate decision from the Federal Reserve (75 basis point increase?), market reaction to the Russian attack on Ukraine’s major grain port, and earnings from Alphabet, Microsoft, Amazon, and Apple. Here’s my preview of what we might see–or at least what to look for–this week.
Apple’s plan to slow hiring sends stocks into reverse
The Standard & Poor’s 500 was on track for a decent day–the index was up 0.79% at 12:43 p.m. New York time–and then Bloomberg broke a story, picked up everywhere, reporting that Apple (AAPL) intended to slow hiring and reduce spending growth next year. The S&P 500 finished the day down 0.84% and Apple shares closed down 2.06%.
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