Good morning. Happy Friday.
The Asian/Pacific markets were mixed. Japan, India and New Zealand did well; China, Hong Kong, Thailand and the Philippines were weak. Europe, Africa and the Middle East lean to the upside. The UK, South Africa, Norway, Spain, Portugal, Austria and the Czech Republic are up; France, Russia, Greece, Finland and Hungary are down. Futures in the States point to a down open for the cash market.
————— VIDEO: Trading with Technical Indicators —————
The dollar is up. Oil is up; copper is down. Gold and silver are down. Bonds are up.
Stories/News from Seeking Alpha…
Game of monopoly
The federal government is not letting Big Tech out of its sights as the Biden administration hardens its playbook by taking a much tougher stance on antitrust. Last year, the DOJ filed a suit against Google (GOOG, GOOGL) over digital advertising, which comes on top of a legacy trial that focused on internet search. The Federal Trade Commission has also sued Amazon (AMZN) for illegally maintaining a monopoly by stifling competition, while the agency is also going after Meta (META) in an attempt to unravel its acquisitions of WhatsApp and Instagram.
Next up: It was a matter of time, but Apple (AAPL) has finally made the hit list. “Apple has employed a strategy that relies on exclusionary, anticompetitive conduct that hurts both consumers and developers,” U.S. Attorney General Merrick Garland declared, accusing the iPhone maker of violating federal antitrust law by monopolizing the smartphone market. “Consumers should not have to pay higher prices because companies break the law.” Following the news on Thursday, Apple shares slid 4% into the close, erasing over $110B in market value and bringing the stock’s year-to-date loss to 11%.
The DOJ’s allegations range from Apple violating the Sherman Act by using its iPhone to prevent other companies from offering competitive services (like digital wallets) to limiting the functionality of hardware and making it difficult for users to switch to and communicate with competitive devices (such as Android phones). “If successful, it would hinder our ability to create the kind of technology people expect from Apple – where hardware, software, and services intersect,” Apple responded in a statement. “It would also set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology.”
SA commentary: The Quantamental Investor said the lawsuit is another “headwind” for Apple (AAPL), while the timing “couldn’t have been worse” given the sentiment that the company has been “left behind in the AI gold rush.” He adds that while the DOJ will likely fail to prove Apple a monopoly in court, the ordeal will “create further negative sentiment towards the stock.” On the other hand, if the lawsuit does succeed in extracting a hefty fine or remedies, it “could force Apple to open up its ecosystem,” according to SA Investing Group Leader Jonathan Weber. Apple would still be “highly profitable, of course, but it might see its margins decline to some degree.” (261 comments)
Reddit recap
Shares of social media platform Reddit (RDDT) soared in their market debut, nearly 50% to over $50/share on Thursday, marking another success after semiconductor firm Astera Labs’ (ALAB) recent IPO. Reddit raised $748M in the offering, selling 22M shares amid strong investor appetite for all things AI-related. CEO Steve Huffman said there was a lot of momentum to keep the business success story on track, although some popular subreddits like r/WallStreetBets and r/stocks were bearish, calling it a “pump and dump scheme.” SA analyst PropNotes also called Reddit the ultimate boom or bust stock. (109 comments)
Burger by drone?
DoorDash (DASH), Wendy’s (WEN) and Alphabet’s (GOOG) (GOOGL) drone unit Wing are all making it happen. The service, which will start in Christiansburg, Virginia, will enable select local consumers to order eligible menu items from Wendy’s through the DoorDash marketplace and have them delivered via a Wing drone, typically in 30 minutes or less. While analysts have noted the need for drones in disaster zones, or in areas like critical medicine and healthcare support, the concept and success of delivery for discretionary items have been debated. (22 comments)
Movers and shakers
A number of notable names just disclosed their quarterly numbers as the Q4 earnings season comes to a close. Micron (MU) surged to an all-time high after Wall Street called it the next AI beneficiary following a set of results and guidance that blew past expectations. FedEx (FDX) also soared 13% AH on Thursday after its Express unit delivered a strong quarter. Not all were so fortunate, especially in the apparel sector. Nike (NKE) initially rose, but fell 5.6% AH after the company’s outlook disappointed investors, while Lululemon (LULU) tumbled 11% amid full-year guidance that landed short of expectations.
Today’s Economic Calendar
Fed’s Bowman Speech
9:00 Jerome Powell Speech
10:00 Fed’s Jefferson Speech
12:15 PM Fed’s Barr Speech
1:00 PM Baker Hughes Rig Count
4:00 PM Fed’s Bostic Speech
What else is happening…
World’s first pig-to-human kidney transplant performed in U.S.
Medicare expands coverage for weight loss drugs.
Papa John’s CEO takes Shake Shack (SHAK) top spot.
Non-binding: UN adopts first global resolution on AI.
Boeing’s (BA) airline customers seek meetings with board.
Disney (DIS) in focus as influential proxy firm backs Peltz.
Ex-Treasury Secretary Summers questions Fed’s rush to cut.
Coming up: Xi Jinping plans to meet U.S. CEOs in China.
Darden (DRI) dims outlook after soft quarter for Olive Garden.
DWAC vote: Trump stands to gain $3B if SPAC merger cleared.
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Good morning. Happy Thursday.
The Asian/Pacific markets did extremely well. Japan, Hong Kong, South Korea, India, Taiwan, Australia, Singapore, Thailand and the Philippines rallied more than 1%. Europe, Africa and the Middle East are currently doing great. The UK, Poland, Turkey, Greece, South Africa, Switzerland, Hungary, Spain, the Netherlands, Israel, Sweden and South Africa are up a bunch. Only Denmark is down notably. Futures in the States point to a relatively big gap up open for the cash market.
————— VIDEO: Trading with Technical Indicators —————
The dollar is up. Oil is down; copper is up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
r/IPO
The IPO market has been pretty quiet over the past two years, but that may be about to change. Investors witnessed a successful debut for AI chip play Astera Labs (ALAB) on Wednesday, which soared 72% in its first session, and suspense is building for another possible one today. Reddit (RDDT), one of the oldest and most popular social sites on the web, will list on the New York Stock Exchange this morning, and if all goes well, it can signal that interest in new issues has finally made a comeback.
By the numbers: Pricing at the high end of its targeted range, Reddit shares will be marked at $34 a piece, giving the company a valuation of $6.4B (including exercised options). The figure is around half the $10B valuation it reached in 2021, but that was during the era of cheap money and speculative boom that followed the onset of the COVID pandemic. Meanwhile, the social media platform, which had 267.5M weekly active users as of Dec. 31, generated $804M in revenue in 2023, up around 21% from a year ago, while its net loss narrowed to $90.8M, from $158.6M in 2022.
Reddit has reserved as much as 8% of its offering for power users, including its army of mods who help guide and create the platform’s many communities. Other oversubscribed shares will go to institutional investors, but getting the retail crowd involved is prompting speculation that RDDT could turn into a meme stock, with increased volatility or a major run-up that could leave unfortunate HODLers holding the bag. Hints of irony? Reddit forum r/wallstreetbets was behind the meme mania that took place in 2021, which involved players from Gamestop (GME) and AMC (AMC) to BlackBerry (BB) and Bed Bath & Beyond.
Show me the money: Reddit has never turned a profit in its nearly two-decade existence, but it is touting some big plans ahead of the IPO. “We believe there is an emerging opportunity in data licensing,” noted the company, which recently inked an AI content agreement with Google (GOOGL), and could bring in more deals to help train large language models. Reddit is also planning to build features like a marketplace for products and services, and projected its total addressable market for global advertising to be $1.4T by 2027. (3 comments)
Hat trick
The Federal Reserve continues to expect three interest rate cuts this year, according to its closely-watched dot plot released on Wednesday. That was enough to push Wall Street to fresh record highs, while gold also scored a new record, jumping above $2,200 an ounce. Meanwhile, the FOMC’s policy rate remained unchanged at 5.25%-5.50%, but Jay Powell warned that bumpy inflation may mean rates could be restrictive for longer and dialed back on the scope of cuts in 2025 and beyond. Speaking of monetary policy, the Swiss National Bank got a head start on the Fed overnight, surprising investors with the first rate cut for developed countries. (141 comments)
Hypersonic testing
The U.S. Air Force has conducted the final test of an air-launched hypersonic missile developed by Lockheed Martin (LMT), but it did not specify the speed at which the weapon flew or the test’s objectives. It comes amid warnings that America is lagging behind similar programs from Russia and China despite increased budgets for defense spending. Hypersonics are being designed to evade defense systems while flying at speeds greater than Mach 5. The objective for them is to travel at such a high velocity and low altitude that make them difficult to intercept, while they can maneuver in-flight compared to the fixed sub-orbital trajectories of ballistic missiles. (10 comments)
Brain-computer interface
Elon Musk’s Neuralink has released a clip featuring the first patient with its brain chip implant. Noland Arbaugh, a 29-year-old quadriplegic patient who received the device in January, was able to move a computer cursor to play chess using only neural signals. While the demonstration wasn’t the first in the brain implant field, Neuralink’s device goes deeper into the brain and contains far more electrodes that target individual neurons (instead of groups or clusters). Most of Neuralink’s competitors are also not publicly traded, including Synchron, Onward, Precision Neuroscience and Blackrock Neurotech.
Today’s Economic Calendar
8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
8:30 Current Account
9:45 PMI Composite Flash
10:00 Existing Home Sales
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
4:30 PM Fed Balance Sheet
What else is happening…
Nearly $6B in student loans for public service workers to be forgiven.
Paramount (PARA) jumps on report of $11B offer from Apollo (APO).
Micron (MU) soars as Q2 results, guidance blow past expectations.
More scrutiny: SEC seeks to classify ether (ETH-USD) as a security.
Disney teams up with Google, Trade Desk on ad platform update.
More scrutiny: DOJ plans to sue Apple (AAPL) over antitrust issues.
Tim Cook visits China again, meets with suppliers amid sales pressure.
Chevron (CVX) pays fines for dozens of past California oil spills.
Endo (OTC:ENDPQ) gets nod for Chapter 11 reorganization plan.
ETFs top new milestone as managed assets cross $12.25T globally.
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Good morning. Happy Wednesday. Happy Fed Day.
The Asian/Pacific markets leaned to the downside. China and South Korea did well; Taiwan, Malaysia, Indonesia and Thailand were weak. Europe, Africa and the Middle East leaned to the upside. Turkey, Greece, South Africa, the Netherlands and Israel are up; France and Saudi Arabia are down. Futures in the States point to a flat open for the cash market.
————— VIDEO: How I Flip Through Multiple Time Frames with TOS —————
The dollar is up. Oil and copper are down. Gold and silver are down. Bonds are up.
Stories/News from Seeking Alpha…
Rate expectations
The Federal Reserve is taking center stage today, and with inflation proving stickier than expected, the central bank finds itself balancing between a hawkish and dovish view. While the policy-setting FOMC is widely expected to hold interest rates steady at the 5.25%-5.50% range for a fifth straight meeting, the bigger item to watch will be the so-called dot plot. Policymakers will update their rate and economic projections for the first time since December, potentially deviating from the three rate cuts they previously penciled in by the end of 2024.
Snapshot: A months-long standoff between markets and the Fed has drawn to a close, as a slew of economic data in recent weeks has reinforced the monetary authority’s case for caution. In January, fed funds futures traders had priced in six to seven quarter-point rate cuts by the end of the year. Now, with inflation falling slower than expected, traders see three reductions starting in June or July, aligning with the Fed’s December Summary of Economic Projections.
Earlier this month, Fed Chair Jerome Powell emphasized in congressional testimony that the central bank’s inflation battle has made good progress towards its 2% goal, though “just a bit more evidence” is needed before implementing the first rate cut. “We’re not far from it,” he declared at the time, setting up investors to pay close attention to any follow-up commentary in today’s post-meeting press conference at 2:30 PM ET. Reporters may ask how the combination of this year’s sticky inflation prints and weaker retail sales data affects his thinking, while taking into account the central bank’s dual mandate of stable prices and full employment.
Risk of acting too late: Should the Fed make a hawkish shift, markets will take that as a higher-for-longer stance, which could be interpreted as “higher-until-recession,” according to SA analyst Damir Tokic. Logan Kane also sees a risk of a recession, citing state-level economic data from the Philly Fed, and other figures from high-income countries that show their business cycles are ahead of the U.S. and suggest that the global economy is cooling. For another take on the rate dilemma, check out Fed Must Risk A Small Recession Now by Investing Group Leader James Kostohryz. (14 comments)
Cutting the burrito
What do you do when your company’s stock price is worth thousands of dollars? Implement a 50-for-one stock split. The news, which sent shares of Chipotle (CMG) up 6% in premarket trade, will be subject to shareholder approval at its annual meeting on June 6. If approved, the company’s shares are expected to begin trading on a post-split basis on June 26. Chipotle also announced a special one-time equity grant for all restaurant general managers as well as crew members with more than 20 years of service. (35 comments)
Silicon rush
The U.S. government is awarding Intel (INTC) about $20B in grants and potential loans, which includes up to $8.5B in direct funding through the CHIPS and Science Act. All that money will advance Intel’s commercial semiconductor projects across Arizona, Ohio, New Mexico and Oregon. “It’s a huge deal,” Secretary of Commerce Gina Raimondo declared. “It means bleeding-edge semiconductors made in the USA, keeping the USA in the driver’s seat of innovation.” It also follows Intel’s plans to invest over $100B in America over five years to boost domestic chipmaking capabilities critical to emerging technologies like AI. (9 comments)
Going private
New ownership in the retail space? It sure looks like. Two major department store chains are exploring private options against a backdrop of macro challenges and low foot traffic. Nordstrom’s (JWN) founding family has been involved in several reports, while Macy’s (M) might be going down a similar route. The latter has even opened its books to Arkhouse and Brigade Capital to allow due diligence that could lead to a raised take-private offer. High inflation is another factor in the decision making, with budget-conscious consumers shopping at discount retailers such as T.J. Maxx (TJX) and Burlington (BURL).
Today’s Economic Calendar
MBA Mortgage Applications
10:00 Atlanta Fed’s Business Inflation Expectations
10:30 EIA Petroleum Inventories
2:00 PM FOMC Announcement
2:30 PM Chairman Press Conference
What else is happening…
Unilever (UL) to separate ice-cream business, slash 7,500 jobs globally.
Dividend watch: JPMorgan Chase (JPM) raises dividend by 10%.
Planet Fitness (PLNT) faces boycott over transgender incident.
Slowing EV shift: Fuel economy ratings scaled back; emissions next.
JetBlue (JBLU) reduces flights to focus on ‘bread and butter’ routes.
Super Micro Computer (SMCI) issues clarification after CEO interview.
Huang: Nvidia will gain larger data center share than other firms.
Intel (INTC)-backed Astera Labs (ALAB) prices IPO at $36 per share.
Boeing (BA) mulls sales of defense assets to bolster balance sheet.
Saudi Arabia plans to create $40B fund to invest in AI technology.
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Good morning. Happy Tuesday.
The Asian/Pacific markets leaned to the downside. Japan and New Zealand did well; China, Hong Kong, South Korea and India were weak. Europe, Africa and the Middle East are mostly down. Turkey and Spain are up; Denmark, Poland, Russia, Greece, South Africa, Switzerland and Portugal are down. Futures in the States point to a moderate gap down open for the cash market.
————— VIDEO: State of the Market —————
The dollar is up. Oil is up slightly; copper is down. Gold and silver are down. Bonds are up.
Stories/News from Seeking Alpha…
No more negativity
It took nearly a decade, but the Bank of Japan has finally called time on negative interest rates. It’s even more notable when zooming out, as the BOJ hasn’t raised rates in almost 17 years. Giving investors some more to chew on overnight, the central bank will also dismantle yield-curve control, which ensured that monetary policy remained loose by holding down the 10-year yield. The BOJ is also ditching purchases of risk assets like ETFs and REITs, while reducing purchases of commercial paper and corporate bonds.
Backdrop: The decision marks the end of a global era of cheap money that began in the 2010s and was employed across Europe and Japan. NIRP focused on reflating growth along with massive monetary stimulus, but inflationary pressures since the COVID pandemic and war in Ukraine resulted in aggressive tightening cycles. The Bank of Japan had been the last remaining holdout, with policymakers viewing recent price increases as imported from elsewhere, but that stance has now formally come to an end.
Helping to tame the market reaction after its latest decision, the BOJ telegraphed some of its intentions ahead of time, like the tweaking of its YCC stance. While the yen fell to 150 per dollar overnight, it didn’t hamper gains for the Nikkei 225 (NKY:IND), which is continuing its record run in 2024 (+19% YTD). The move towards policy normalization also suggests the BOJ is confident it has emerged from the threat of deflation, and any rate increases over the medium term are likely to be gradual.
What about the balance sheet? “We will continue to buy roughly the same amount of bonds as in the past,” BOJ Governor Kazuo Ueda said during a press conference. “As for the future, we will at some point eye shrinking our balance sheet given we’ve ended our extraordinary monetary easing, but I don’t have any specific idea in mind on whether the next rate hike will proceed a tapering in our bond-buying or reduction in our balance sheet, or vice-versa.”
Supercomputing
Nvidia (NVDA) made several announcements at its highly anticipated GTC developer conference on Monday, including pushing the world into accelerated computing that has “reached the tipping point.” “We’re gonna have to build even bigger GPUs. Hopper is fantastic, but we need bigger GPUs,” CEO Jensen Huang declared, introducing the new Blackwell GPU platform, as well as the new GB200 super chip. In other AI-related news, Apple (AAPL) is in discussions to fit Google’s (GOOG) (GOOGL) Gemini into the iPhone and is also reportedly considering using OpenAI’s AI model. (153 comments)
Seismic fraud
China’s securities regulator has accused Evergrande (OTCPK:EGRNQ) of inflating revenues by more than $78B in the two years before its debt default. As a result, the troubled property developer was fined $581M, one of the largest penalties imposed in China. The inflated figures far exceeded that of Luckin Coffee and Enron, and could spell trouble for the underwriters of Evergrande’s bonds that were issued based on these falsified numbers. The penalty also doesn’t bode well for the company’s former auditor PricewaterhouseCoopers and the reputation of Chinese regulators. (3 comments)
EV realities
Fisker (FSR) is halting production for six weeks as the cash-strapped electric vehicle maker goes into overdrive to avoid a similar fate to that of Lordstown Motors (OTCPK:RIDEQ) and others. The news weighed on FSR shares, which have been in freefall since it flagged going concern doubts. Fisker did secure a $150M financing commitment from an existing investor, contingent on conditions including continuing talks with a large automaker for a potential investment, but warned that it still may have to curtail operations. “Fisker’s last hope may be an investment from Nissan (OTCPK:NSANY) or another major car manufacturer,” SA analyst The Asian Investor wrote last week. (2 comments)
Today’s Economic Calendar
FOMC meeting begins
8:30 Housing Starts and Permits
1:00 PM Results of $13B, 20-Year Bond Auction
4:00 PM Treasury International Capital
What else is happening…
WSB survey results: Business automation seen as biggest AI niche.
Again? FedEx (FDX), Amazon (AMZN) held talks on partnerships.
Intel (INTC)-backed Astera Labs (ALAB) boosts size of planned IPO.
Super Micro Computer (SMCI) gives up gains after joining S&P 500.
Bitcoin (BTC-USD) drops from all-time high, drags crypto stocks down.
Guyana rights dispute: Exxon (XOM) not trying to buy Hess (HES).
DocuSign (DOCU) shares quickly gain amid activist speculation.
Joann (JOAN) files for Chapter 11 bankruptcy as anticipated.
Cisco (CSCO) completes $28B deal to acquire Splunk (SPLK).
Major disruption: AI PCs set to grow share in global PC shipments.
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets leaned to the upside. Japan, China, South Korea and Taiwan posted solid gains. Europe, Africa and the Middle East are mostly doing well. Poland, the UAE, Russia, Norway, Hungary, the Netherlands and Israel are up; Switzerland and Sweden are down. Futures in the States point to a big gap up open for the cash market.
————— VIDEO: State of the Market —————
The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
GTC 2024
Nvidia (NVDA) CEO Jensen Huang will take the stage later today, drumming up enthusiasm for the latest breakthroughs in the AI revolution. The company’s annual developer gathering, called GTC, or the GPU Technology Conference, is kicking off at the San Jose Convention Center, with a keynote from Huang slated for 4 PM ET. More than 300,000 people are expected to be in attendance, either virtually or in person, showing just how important the event has become in recent years.
What’s on the menu? Nvidia is expected to unveil successors to its key revenue drivers, like Hopper graphics architecture and the H100 GPU, which is currently the go-to processor for training and deploying AI models. The new architecture is believed to be codenamed Blackwell, while the energy-intensive B100 GPU will command far better performance (and likely ship later this year). Another exciting development will be updates to the company’s CUDA software, which ties developers to the Nvidia network, as well as the introduction of a dedicated chip for the Chinese market, which has fallen under technology curbs from the U.S. government.
“GTC has become the world’s most important AI conference because the entire ecosystem is there to share knowledge and advance the state of the art,” Huang said in a press release ahead of the event.
Market movement: While retracing some territory in recent weeks, Nvidia (NVDA) shares are still up 77% YTD after topping the $2T market cap milestone in late February. Analysts now see EPS growth topping 90% Y/Y in 2024, while revenue is forecast to surge 81% to over $110B. “Nvidia has posted a 5% on average over the course of the four-day event, followed by an immediate, yet brief, pullback, which could mark an opportunity for upside potential leading up to its next earnings release,” writes SA Investing Group Leader Livy Investment Research. Take the WSB survey.
Dive into anything
Reddit’s (RDDT) initial public offering is said to be 4-5 times oversubscribed, with strong demand likely helping the social media platform reach its valuation goal of $6.5B. However, oversubscription isn’t necessarily an indicator of the stock’s performance and the marketing of the IPO is still ongoing. SA analyst Mountainside Research is bearish on Reddit, given its lack of profitability and reliance on advertising. “Based on how other recent IPOs have been received by the market, Reddit may have a rocky start,” he noted, though others think it may have the potential to become a meme stock given its ties to r/WallStreetBets. (30 comments)
Out of commission
The National Association of Realtors has agreed to pay $418M over about four years to resolve claims of collusion aimed at maintaining artificially high agent commissions. NAR will also revise multiple regulations that will likely result in a substantial drop in the cost of selling a home. If approved by a federal court, the deal would mean that home listings across much of the U.S. would no longer feature upfront offers to buyers’ agents, allowing buyers the opportunity to directly negotiate compensation beforehand. While the news broke on Friday, many are still discussing what it might mean for real estate platforms such as Compass (COMP), Zillow (Z) and Redfin (RDFN). (57 comments)
Spy network
SpaceX (SPACE) is reportedly building a network of hundreds of spy satellites under a classified contract with the National Reconnaissance Office, a U.S. government agency involved with space-based intelligence. The network, which involves a $1.8B contract signed in 2021 and SpaceX’s Starshield unit, demonstrates the Pentagon’s willingness to invest in low-Earth orbiting satellite systems. There has also been a lot of talk about SpaceX going public, but that could bring a whole lot more scrutiny to a firm that might be closely working with U.S. military and spy agencies. (41 comments)
Today’s Economic Calendar
10:00 Housing Market Index
Companies reporting earnings today »
What else is happening…
Meta (META) under federal probe over role in illegal drug sales.
Largest U.S. grid could see 58 GW of power generation shut by 2030.
ByteDance’s TikTok faces slowing U.S. growth as users leave app.
Putin hails election victory after harshly suppressing opposition voices.
U.S. warns Europe that reviving metals dispute may hurt WTO reform.
Survey finds GLP-1 users more inclined to get aesthetic procedures.
FAA to probe missing panel in United’s (UAL) Boeing (BA) 737 flight.
‘Kung Fu Panda 4’ keeps top spot at box-office for second weekend.
Microsoft’s (MSFT) LinkedIn to launch an online gaming platform.
Citi analysts screen for 25 stocks with growth capex opportunity.
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