Good morning. Happy Friday.
The Asian/Pacific markets were weak. Japan did well, but China, Hong Kong, South Korea, Singapore and Thailand did poorly. Europe, Africa and the Middle East are currently little changed. Turkey is up; Russia and Hungary are down. Futures in the States point towards a flat open for the cash market.
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The dollar is down. Oil is down; copper is flat. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
Bargain hunting
Inflation headwinds, higher interest rates, waning savings, and the resumption of student loan payments aren’t deterring Americans from going shopping this year. In fact, they might be encouraging them to do so, with everyone trying to spot a good deal in the current environment. An estimated 182M people across the country are planning to shop in-store and online from Thanksgiving Day through Cyber Monday, according to the National Retail Federation, which is 15.7M more people than last year and the highest estimate since NRF began tracking the data in 2017.
Snapshot: Black Friday continues to be the most popular day to scout out deals, with 72% (130.7M people) planning to shop, up from 69% in 2022. The numbers highlight the resilience of the American consumer, who is expected to spend an average of $875 on gifts, decorations, food and other key seasonal items over the winter holidays. To meet the demand of the season, NRF expects retailers will hire between 345,000 and 450,000 seasonal workers, in line with 391,000 seasonal hires of 2022.
The investing side of retail has also been a mixed bag this year. The S&P 500 Consumer Discretionary Index (SP500-25) has soared 33% YTD, led by names like Amazon (AMZN), Chipotle (CMG), Expedia (EXPE) and Royal Caribbean (RCL), while the S&P 500 Consumer Staples Index (SP500-30) has declined about 5%, weighed down by Conagra Brands (CAG), Dollar General (DG), Tyson Foods (TSN) and Walgreens (WBA). Divergence could also be seen throughout the retail sector last week, with shares of Target (TGT) soaring about 18% following its Q3 earnings report, while Walmart (WMT) dove 8% after striking a cautious tone on consumer spending.
Black Friday schedule: The stock market will shut early at 1 PM today, bond markets will close an hour later, while metals and U.S. crude oil will settle at 12:30 PM and 1:30 PM, respectively. Some history… Back in 1992, the major U.S. exchange operators called for a 2 PM ET for the Friday after Thanksgiving, two hours earlier than the regular close at 4 PM. The following year, the NYSE and Nasdaq chose to shutter markets at 1 PM, a schedule that is currently observed.
Heard in Europe
The Netherlands has shifted to the right with populist Geert Wilders’ Freedom Party’s massive win in the Dutch elections, putting him in the lead to become the next prime minister. Wilders still needs to form a coalition government, and so outgoing Prime Minister Mark Rutte will remain in a caretaker role till then. “The formation of the coalition is likely to take a very long time,” said ING. Wilders, referred to as the Dutch Trump, is known for his anti-immigration stance and calls for “de-Islamization” of the Netherlands. He also advocated for a referendum on leaving the EU, although he favors a Norway model, with full access to the single market. Apart from a major influx of migrants, Netherlands is also facing a cost-of-living crisis, with its economy in a technical recession. (5 comments)
Carbon con
Oil and gas producers need to abandon the “illusion that large amounts of carbon capture” will help solve climate change, and must instead spend more on clean energy, the International Energy Agency said ahead of the COP28 climate summit. “Producers looking to align with the Paris Agreement would need to put 50% of their capital expenditures towards clean energy projects by 2030,” the IEA warned, noting that they invested just 2.5% of their capex in clean energy in 2022. Oil giants such as Exxon Mobil (XOM) and Chevron (CVX) have been investing billions in carbon capture, while Shell (SHEL) and BP (BP) have taken a different approach. In other news, OPEC+ postponed its meeting from Sunday to Thursday, dragging oil prices given the uncertainty over further supply cuts. (4 comments)
Risk to humanity?
OpenAI researchers in a letter had warned the board of a powerful AI discovery that could potentially threaten humanity, which was likely a factor in CEO Sam Altman’s ouster. The breakthrough relates to a new Q* AI model that could solve certain mathematical problems, although at grade-school level. But it still indicates that the model could have greater reasoning capabilities, because of which researchers flagged its potential danger. After Altman was fired, he jumped ship to OpenAI backer Microsoft (MSFT). However, he returned to OpenAI after over 700 employees threatened to quit. Regardless of all the drama, Investing Group Leader The Value Portfolio believes Microsoft is a leader not just in AI, but also in commercializing AI. (120 comments)
Today’s Economic Calendar
9:45 PMI Composite Flash
4:30 PM Fed Balance Sheet
OPEC Meeting
NYSE Early Close at 1:00 PM
SIFMA Early Close at 2:00 PM
What else is happening…
Best stocks for when 10-year Treasury (US10Y) is falling.
GM’s (GM) Cruise plots return, though likely in one city.
Nvidia (NVDA) delays launch of an AI chip for China.
Amazon (AMZN) set to win EU nod for iRobot (IRBT) deal.
SpaceX (SPACE) plans to sell shares at $150B valuation.
Novo Nordisk (NVO) to invest $2.3B to boost French output.
PayPal exec Auerbach discloses sale of over 64K shares.
Boeing (BA) bags FAA nod for 737 Max 10 certification flights.
Vista Outdoor (VSTO) gains after Colt proposes takeover.
Bill Gates says AI could pave way for three-day work week.
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Good morning. Happy Wednesday.
The Asian/Pacific markets were mixed. Japan, Singapore and the Philippines did well; China, Indonesia, Malaysia and Thailand were weak. Europe, Africa and the Middle East are currently doing well. France, Germany, Greece, South Africa, Switzerland, Spain, Israel and Sweden are leading. Futures in the States point towards a positive open for the cash market.
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The dollar is up. Oil and copper are down. Gold and silver are up small amounts. Bonds are up.
Stories/News from Seeking Alpha…
Gobble, gobble
Traders are looking forward to the turkey and trimmings, but there’s one more session ahead before they shut off their screens for Thanksgiving. Markets will be open again on Black Friday from 9:30 AM to 1 PM ET, but the holiday-shortened week is typically characterized by some of the lowest trading volumes of the year. Investors have a lot to be thankful for in 2023, provided they have invested wisely, with market benchmarks like the S&P 500 (SP500) and Nasdaq (COMP.IND) up 19% and 37% YTD, respectively.
At the register: Average turkey prices cost 5.6% less than last year, according to the Farm Bureau, coming in at $27.35 for a 16-pound turkey. That’s not all. Cranberries are down 18.3%, stuffing mix costs 2.8% less, pie crusts are 4.9% lower, while prices on whipped cream have slumped 22.8%. Other items have increased marginally, like dinner rolls, potatoes and pumpkin pie mix. Overall, the average price of a traditional Thanksgiving feast for 10 people in 2023 runs $61.17, or less than $6.20 per person, down 4.5% from a year ago.
Costs have not only been falling on the dinner table. Gas prices have declined for nine straight weeks now amid a drop in crude prices and seasonal weakening demand, with the national average for a gallon of regular gas standing at $3.28 on Wednesday, according to AAA. Lower prices are helping lead to a travel resurgence on highways and in the air, with 55.4M Americans traveling at least 50 miles from home between today and the Sunday after Thanksgiving. The TSA is also anticipating the busiest holiday travel season on record, expecting to screen 30M passengers during the Thanksgiving travel period (Nov. 17-27), marking a 9% increase Y/Y and up 1.7M passengers over pre-COVID record levels.
Some history: The first Thanksgiving between the Mayflower pilgrims, who founded the Plymouth Colony in Massachusetts, and the Wampanoag tribe, is said to have taken place in 1621. Thanksgiving proclamations were made in subsequent years, and in 1789, George Washington declared November 26 “as a day of public thanksgiving and prayer, to be observed by acknowledging with grateful hearts the many signal favors of Almighty God.” Americans still observed the holiday on differing dates, so beginning in 1863, President Lincoln encouraged Americans to recognize the last Thursday of November as “a day of Thanksgiving.” A few years later, in 1870, Congress followed suit by passing legislation making Thanksgiving a national holiday.
Blowout report
Nvidia (NVDA) shares fell 1.7% AH to $490.75/share on Tuesday even as the semiconductor giant posted results and guidance that handily beat expectations. Revenue more than tripled from a year ago to $18.12B, surging past estimates, with data center revenue at a record $14.51B. While there was no “meaningful impact” from the Biden administration’s export controls in Q3, Nvidia expects sales in China to decline “significantly” in Q4. “We do not have good visibility into the magnitude of that impact even over the long-term,” CFO Colette Kress cautioned. While SA analyst Bill Maurer believes Nvidia’s valuation is still reasonable, Investing Group Leader Jonathan Weber said waiting for a better entry point might pay off. (170 comments)
He’s back
Sam Altman is returning to OpenAI as CEO after a drama-filled week that saw him jump ship to Microsoft (MSFT) and may include more surprises. OpenAI’s new initial board will feature former Salesforce (CRM) co-CEO Bret Taylor as chairman, ex-Treasury Secretary Larry Summers, and Quora CEO Adam D’Angelo. “When I decided to join Microsoft, it was clear that was the best path for me and the team,” said Altman. “With the new board and with Satya’s (Nadella) support, I’m looking forward to returning to OpenAI, and building on our partnership with Microsoft.” Most of OpenAI’s staff threatened to quit after Altman was ousted in what Wedbush called an “embarrassing circus show,” while SA analyst Michael Fitzsimmons said OpenAI was “hoisted by its own petard.” (28 comments)
‘Proceed carefully’
All Federal Reserve officials agreed to “proceed carefully” with interest rates, according to the minutes from the FOMC’s latest policy meeting. All members wanted rates to stay restrictive “for some time,” as inflation remains above the 2% objective, with virtually no interest in cutting rates anytime soon. Fed officials also see Q4 economic growth cooling “markedly” from the 4.9% jump in Q3. At the Oct. 31-Nov. 1 meeting, policymakers held the federal funds target range steady at 5.25%-5.50% – the highest level in 22 years – after boosting it in July. Traders are largely certain that the Fed will maintain rates this year, with the odds of a rate cut priced in for 2024. (3 comments)
Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 Durable Goods
8:30 Initial Jobless Claims
10:00 Consumer Sentiment
10:30 EIA Petroleum Inventories
12:00 PM EIA Natural Gas Inventory
1:00 PM Baker Hughes Rig Count
What else is happening…
WSB survey results: Honesty, integrity top qualities for CEOs.
Binance CEO Changpeng Zhao steps down, pleads guilty.
Lowe’s (LOW) stock slides as do-it-yourself demand fades.
China gives conditional nod for Broadcom-VMware (VMW) deal.
Ford (F) scales back EV battery plant, restarts construction.
PE firms near €14B deal for eBay (EBAY)-backed Adevinta.
Warren Buffett donates 2.4M Berkshire shares to charities.
Best Buy cuts holiday quarter outlook on ‘uneven’ demand.
Tim Cook discusses Apple’s ‘detailed’ CEO succession plans.
Existing home sales decline more than expected in October.
Judge sets deadline for Rite Aid (OTC:RADCQ) reorganization.
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Good morning. Happy Tuesday.
The Asian/Pacific markets leaned to the upside. South Korea, India, Taiwan, Malaysia and the Philippines did well; New Zealand, Indonesia and Singapore were weak. Europe, Africa and the Middle East currently lean down. Turkey and Israel are up; the UK, Denmark, Norway, Italy, Portugal and Austria are down. Futures in the States point towards a down open for the cash market.
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The dollar is down. Oil and copper are down. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
The AI pie
Speaking of the AI revolution in the wake of Sam Altman going to Microsoft, artificial intelligence giant Nvidia (NVDA) will gobble up attention today with its Q3 earnings report after the closing bell. The company is once again expected to smash third-quarter revenue expectations as it continues to benefit from broadening AI adoption across industries, though investors will focus on the sustainability of this growth due to expanding curbs on the sale of high-end chips to China and rising competition from rivals like AMD (AMD). Last week, Nvidia also announced its new H200 GPU, which allows for work on generative AI and large language models to be done even faster.
Quote: “When a stock is as much of a favorite of the crowd as Nvidia, many of the tools stock analysts use to ascertain value lose utility,” SA analyst Christopher Robb writes in an earnings preview. “In the case of Nvidia, the huge premium is justified by the breakneck pace of the company’s revenue and earnings growth. Similar to big wave surfing, the rules of investing in stocks with excessive valuation are different than normal investing.”
Hitting a fresh all-time high yesterday at $504 per share, Nvidia (NVDA) has surged over 252% YTD, helping it become the first trillion-dollar chip firm and the most important stock of 2023. In past quarters, guidance from the AI leader has often exceeded even the grandest of estimates, so keep an eye on today’s numbers, as well as the conference call featuring CEO Jensen Huang. To note, Nvidia’s guidance has generally only looked to the coming quarter instead of an annual outlook.
AI revolution: Traders have been quick to flag other AI favorites, like Microsoft (MSFT), which just recorded a fresh all-time high following the hiring of OpenAI’s top brass. In fact, Microsoft’s market cap of $2.8T is now worth over $1T more than that of Google (GOOG, GOOGL), though both of them and the entire “Magnificent Seven” group have propped up the market this year. These seven stocks have soared an average of 70% YTD, compared to the average 6% advance for the other 493 stocks in the S&P 500. (28 comments)
Off course
Daniel Kan, co-founder and product chief at General Motors’ (GM) self-driving unit Cruise, has resigned just a day after its CEO Kyle Vogt stepped down. The exits come less than a month after Cruise halted operations, issued recalls and halted production of its autonomous vehicles amid safety concerns. Cruise is under federal investigation because of a hit-and-run incident in San Francisco, after which California promptly suspended its licenses. GM CEO Mary Barra appeared to shrug off these setbacks, leaving many questions unanswered as to Cruise’s future. GM already lost $732M on Cruise in Q3 and around $1.9B in the nine months ended Sept. 30. (3 comments)
Made in India
Looking to boost domestic manufacturing, India will provide subsidies to 27 tech firms, including Dell (DELL), HP (HPQ) and Lenovo (OTCPK:LNVGY), under a production-linked incentive scheme for IT hardware. These companies are expected to invest around $360M, with the value of IT hardware production estimated at $42B. The move is part of Prime Minister Narendra Modi’s push to make India a global hi-tech manufacturing hub. Gartner has forecast that India’s IT spending will grow 2.6% in 2023, despite global inflation and the weakening rupee. Earlier this month, India also authorized 110 companies, including Apple (AAPL) and HP, to import laptops, tablets and PCs.
Unregistered
The crackdown on the U.S. cryptocurrency market is nowhere near its end, with crypto exchange Kraken becoming the latest target. The SEC has charged the platform for allegedly commingling customer money with its own and operating as an unregistered securities exchange and broker, leading it to make hundreds of millions of dollars unlawfully since at least Sept. 2018. The charges are similar to the ones the SEC brought against Binance and Coinbase (COIN). Binance is also facing investigation by the CFTC and DOJ, with the latter wanting the exchange to fork over $4B in penalties to resolve its probe. Bitcoin (BTC-USD) still traded in the green on Monday, crossing the $37K mark. (17 comments)
Today’s Economic Calendar
8:30 Chicago Fed National Activity Index
10:00 Existing Home Sales
11:30 Results of $26B, 2-Year FRN Auction
2:00 PM FOMC Minutes
What else is happening…
China is still buying chips from U.S. and might be improving them.
Citigroup (C) eliminates more than 300 senior manager roles.
Senate panel subpoenas Live Nation (LYV) over ticket pricing.
UAW members ratify new contracts at GM, Ford (F), and Stellantis.
Texas sues Pfizer for alleged Medicaid fraud over ADHD meds.
U.S.-listed Argentinian stocks soar after Milei’s presidential win.
White House and Biden join Threads (META) after Musk backlash.
McDonald’s (MCD) buys Carlyle’s minority stake in China business.
Zoom in charts: Enterprise revenue continues to grow, albeit slowly.
Top 10 value plays, according to Seeking Alpha’s Quant Ratings.
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets were mixed. China, Hong Kong and South Korea did well; Japan and the Philippines were weak. Europe, Africa and the Middle East are currently doing well. Poland, Turkey, South Africa, Norway, Spain, Portugal and Israel are up nicely. Futures in the States point towards positive open for the cash market.
————— Audio Course: Guidelines to Successful Trading – the Intangibles —————
The dollar is down. Oil and copper are up. Gold and silver are down. Bonds are down.
Stories/News from Seeking Alpha…
The C-Suite
It’s a classic tale in Silicon Valley, but the reverberations are still being heard across the investing world. Sam Altman’s bid to return to OpenAI after being ousted late on Friday has failed, with the board not agreeing to the proposed terms of his reinstatement in a drama-filled weekend. Instead, Emmett Shear, the former CEO of Twitch and a prior partner to Sam Altman’s startup accelerator Y Combinator, has been named interim CEO, while Altman – as well as OpenAI president and co-founder Greg Brockman – have found a new home at Microsoft (MSFT). More on that below, but expect more OpenAIers to also jump ship.
What happened? Since its founding in 2015, OpenAI’s mission has been to develop cutting-edge AI technologies that would “benefit humanity as a whole, unconstrained by a need to generate financial return.” Only a few years later, the non-profit formed a “capped profit” subsidiary, which eventually helped it attract the billions of dollars in investment that were needed to develop its large language models, ChatGPT, and other expensive generative AI offerings. Top talent was secured, equity was distributed to employees and it was now able to commercially license its technologies, but a schism was growing between Altman and the board skeptical of corporate expansion.
During talks over the weekend, reports suggested that Altman – with the backing of Microsoft – proposed a series of notable tech executives to lead a new board more aligned with their business vision. Names included Bret Taylor, former co-CEO of Salesforce (CRM), Airbnb (ABNB) CEO Brian Chesky, and Sheryl Sandberg, the former COO of Meta Platforms (META). However, if OpenAI’s board was concerned about Altman’s lack of “candor in communications” and “commitment to ethical AI development,” the pitch only reinforced their position. Sources also say that Altman had recently devised plans for two new business endeavors, including a Jony Ive-led consumer hardware unit and a low-cost chip venture that would be used to train AI models, as well as publicized projects like the GPT App Store and crypto scheme Worldcoin.
As the negotiations failed, Microsoft (MSFT) stepped in to secure much of the talent behind its reported $13B investment in OpenAI, which some say gave it a 49% stake in a company that was recently valued at $86B. Microsoft then brought both Altman and Brockman into its ranks to lead a new advanced AI research team, a step seen as necessary to preserve generative AI secrets and keep the technology in-house. “We look forward to moving quickly to provide them with the resources needed for their success,” Microsoft CEO Satya Nadella wrote on X, as it looks to lead the AI revolution and cash in on its promise.
Thought bubble: Altman is sure to remain a force within AI markets and many are likening the situation to the 1985 ouster of Steve Jobs, who eventually returned and paved the way for Apple (AAPL) to become the most valuable company in the U.S. Microsoft intends to level up by integrating emerging AI technology within all of its products, such as its Bing search engine, Microsoft 365, GitHub coding tools and the Azure cloud. It remains to be seen what will be achieved, but what is clear for now is that incentives must be properly aligned, or they can create far-reaching governance and agency problems. Take the WSB survey. (37 comments)
A Musk problem?
Some longtime Tesla (TSLA) shareholders and supporters have criticized Elon Musk over his support of an antisemitic post on X, which led to companies pausing ads on the platform including Apple (AAPL) and IBM (IBM). Tesla shareholder and Future Fund Co-Founder Gary Black warned that Musk’s comments could alienate part of the customer base, and “can hurt the company’s valuation over the longer term,” while activist investor Nia Impact Capital’s head Kristin Hull said the inaction of Tesla’s board was concerning. The Elon Musk X distraction factor has been noted by Wall Street firms as well, including Wedbush and HSBC. Will the latest Musk drama have any lasting impact? (487 comments)
Going driverless
There are more stories from the C-suite as Kyle Vogt resigned as CEO of General Motors’ (GM) Cruise. It comes less than a month after the self-driving company paused all operations of its autonomous vehicles following California’s suspension of Cruise’s driverless permits in the wake of a hit-and-run incident. Cruise also recalled 950 driverless cars across the U.S. earlier this month, soon after it temporarily halted production of its Origin AV. SA analyst Michael McGrath still emphasizes Cruise’s substantial long-term potential, expecting autonomous ridehailing services to be a “very large market.” (4 comments)
Looking for magic
Pressure is also mounting on Disney (DIS) CEO Bob Iger, who retook the helm exactly a year ago in an overhaul that included job cuts and prioritizing streaming profitability. The stock has largely flatlined since then, but investors are hoping Iger’s upcoming town hall will discuss future opportunities for the company and give a clearer picture of his plans. Some shareholders aren’t too happy with Iger, as activist Nelson Peltz – with ex-Marvel head Isaac Perlmutter’s support – is threatening a proxy fight. Investing Group Leader Trapping Value rated Disney ‘Hold,’ with the team saying they would wait some more for Iger to work his magic. (2 comments)
Today’s Economic Calendar
10:00 Leading Indicators
1:00 PM Results of $16B, 20-Year Bond Auction
What else is happening…
October’s credit card data show continued deterioration of quality.
Spot bitcoin ETFs may add billions to crypto market cap – Coinbase.
Short seller Jim Chanos closing hedge funds, will shift to advisory work.
Check Point sees ‘fantastic’ year ahead despite rivals’ dim outlook.
SpaceX’s (SPACE) Starship progresses further on second test flight.
Moody’s lifts SoftBank’s credit outlook to stable after Arm (ARM) IPO.
M&A, GLP-1s to dominate healthcare themes in 2024 as COVID fades.
Needham: Macro factors limiting near-term growth in dental market.
Argentina elects chainsaw-wielding outsider Javier Milei as president.
Crude oil bounces as more OPEC+ production cuts may be on the table.
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