Before the Open (Oct 14-18)

Good morning. Happy Friday.

The Asian/Pacific markets mostly did well. China, Hong Kong and Taiwan led to the upside. South Korea and Australia were weak. Europe, Africa and the Middle East are currently mostly up. Poland, France, South Africa, Finland, Hungary, Austria and the Czech Republic are up; Denmark and Turkey are down. Index futures in the States point to a positive open for the cash market.

————— VIDEO: A Look at the Major Sectors —————

The dollar is down. Oil is down; copper is up. Gold and silver are up. Bonds are up.

Stories/News from Seeking Alpha…

Crisis response

The world’s second-largest economy appears to be slowing. China’s economy grew at its weakest pace since the first quarter of 2023 amid a spiraling property sector, weak consumer demand, persistent deflationary risks and slowing export growth. This means that the government’s full-year growth target of “around 5%” will not come easily unless more stimulus is poured into the ongoing crisis.

Numbers say what? The Chinese economy expanded by 4.6% between July and September, compared to the previous quarter’s 4.7%; however, it was slightly better than estimates of 4.5%. On a quarterly basis, the economy grew by a seasonally adjusted 0.9%, below the 1.0% forecast. Additionally, data releases previously showed that exports slowed more than expected in September, growing 2.4% compared to 8.7% in August. China’s September inflation rate has also come in weaker than expected, with producer prices falling to the lowest level in six months.

Mo’ money: In a separate announcement, China’s central bank on Friday officially kicked off the previously announced 800 billion yuan ($112B) stock market liquidity measures that allowed funds and brokers to tap central bank facilities to buy equities in a bid to shore up the country’s capital markets. Additionally, keeping in mind the need to boost consumer spending, the People’s Bank of China commented on Friday that interest rate cuts of 25 to 50 basis points before the end of 2024 could be in the pipeline depending on the economy’s situation.

Market reaction: Initially, investors had cheered China’s major stimulus package, first announced in late September. However, the absence of key details in subsequent press briefings left the markets dismayed. Today’s announcement has helped restore investor confidence. China’s blue-chip CSI 300 Index (SHSZ300) jumped 3.6% higher, while the broader Shanghai Composite (SHCOMP) and Hong Kong’s Hang Seng Index (HSI) showed strength as well.

What else is happening…

World’s largest ETF hits historic milestone as it crosses $600B in AUM.

Netflix (NFLX) global streaming memberships maintain double-digit growth.

Raymond James’ top picks in restaurant sector before Q3 results.

Janet Yellen warns Trump’s proposed tariffs would reignite inflation.

Gold rises to another record; analysts see no price ceiling in sight.

Nvidia’s (NVDA) hold over market share leads BofA to raise EPS estimate.

European Central Bank delivers another 25 bps interest rate cut.

Crude oil snaps four-session losing streak on lower U.S. inventories.

OpenAI releases test versions of ChatGPT app for Windows.

History says the stock market’s bull run could keep going for years.

Today’s Economic Calendar
08:30 AM Housing Starts and Permits
09:30 AM Fed’s Bostic Speech
10:00 AM Fed’s Kashkari Speech
12:10 PM Fed’s Waller Speech
12:30 PM Fed’s Bostic Speech
01:00 PM Baker Hughes Rig Count

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Good morning. Happy Thursday.

The Asian/Pacific markets were active and mixed. Australia, New Zealand, Malaysia, Indonesia, Singapore and Thailand did well; China, Hong Kong, India and the Philippines were weak. Europe, Africa and the Middle East are also active,and they lean to the upside. The UK, Denmark, France, Germany, South Africa, Finland, Switzerland, the Netherlands, Italy and Sweden are up; Poland, the UAE, Hungary and Saudi Arabia are down. Index futures in the States point to a moderate gap up open for the cash market.

————— VIDEO: A Look at the Major Sectors —————

The dollar is down. Oil is flat; copper is down. Gold is up; silver is flat. Bonds are down.

Stories/News from Seeking Alpha…

Atomic shift

It looks like Big Tech is going big on nuclear power. Amazon (AMZN) has joined other tech giants Google (GOOGL) and Microsoft (MSFT), announcing $500M of investments in atomic energy in a bid to satiate its data center demands and artificial intelligence ambitions while continuing to meet its clean energy goals.

Nuclear funding: Amazon (AMZN) on Wednesday said it signed a deal with Dominion Energy (D) to explore building a small modular nuclear reactor near the North Anna station. Amazon would also invest in reactor developer X-energy and collaborate with regional utility consortium Energy Northwest. Just days before, Google (GOOGL) announced an agreement to purchase power generated from multiple small modular reactors to be built by nuclear energy startup Kairos Power. Not only this, Microsoft (MSFT) has also teamed up with Constellation Energy (CEG) to resurrect a unit of the Three Mile Island nuke plant in Pennsylvania.

Power hungry: The fact of the matter is that AI models require loads and loads of electricity. This is because of the vast amount of data that these models have to compute to generate responses. To give an idea, a basic text response from these AI models can consume enough energy to power a 10-watt LED bulb for an hour. In comparison, a typical Google search can consume electricity equivalent to powering a 10-watt LED bulb for about two minutes. In that context, nuclear energy appears favorable over wind or solar, as nuclear creates a larger amount of power that is stable and consistently available on demand.

Breathing new life: The recent nuclear bids from technology firms have raised the prospects of an entire sector. Nuclear power plant developers Oklo (OKLO) and NuScale Power (SMR) saw their stocks jump over 40% on Amazon’s news. Similarly, investors bought shares of established independent power producers with nuclear footprints like Vistra (VST), Constellation Energy (CEG), and Dominion Energy (D). Even uranium-related names joined the party, with Centrus Energy (LEU), Energy Fuels (UUUU), and Denison Mines (DNN) gaining.

What else is happening…

Trump win would give equities a 3- to 6-month rally before a snuff out.

Taiwan Semiconductor (TSM) soars after AI demand boosts outlook.

Expedia (EXPE) gains after report Uber (UBER) explored potential takeover.

Netflix (NFLX) subscriber addition, ad-tier growth in focus during Q3 results.

SpaceX sues California regulator, claiming political bias against launches.

Deere (DE) to cut nearly 300 more jobs in Iowa as farm economy weakens.

Apple (AAPL) could lose third of Google revenue by 2028 from antitrust case.

Moody’s lowers outlook for Southwest (LUV) as strategy initiatives present risks.

China’s housing ministry gears up to support struggling property sector.

Investors should add to small- and mid-cap stocks on valuations, Fed’s outlook.

Today’s Economic Calendar
08:30 AM Jobless Claims
08:30 AM Retail Sales
08:30 AM Philly Fed Business Outlook
09:15 AM Industrial Production
10:00 AM Business Inventories
10:00 AM Housing Market Index
10:30 AM EIA Natural Gas Inventory
11:00 AM EIA Petroleum Inventories
11:00 AM Fed’s Goolsbee Speech
04:00 PM Treasury International Capital
04:30 PM Fed Balance Sheet

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Good morning. Happy Wednesday.

The Asian/Pacific markets were mostly weak. Thailand did well, but Japan, China, South Korea, Taiwan, New Zealand and Malaysia did poorly. Europe, Africa and the Middle East are little changed. The UK and Portugal are up; France is down. Index futures in the States point to a slight up open for the cash market.

————— VIDEO: A Look at the Major Sectors —————

The dollar is down. Oil is flat; copper is up. Gold and silver are up. Bonds are up.

Stories/News from Seeking Alpha…

Surprise jitters

More than $420 billion. That’s how much value Bloomberg estimates chip stocks globally have shed after their Dutch peer ASML Holdings (ASML) lowered its forecasts for 2025 and revealed that it booked about half the orders Wall Street expected in the third quarter. While ASML’s shares tanked about 17%, the news also took down other semiconductor stocks: Nvidia (NVDA), AMD (AMD), Taiwan Semiconductor (TSM), Broadcom (AVGO), Intel (INTC), Applied Materials (AMAT), and Lam Research (LRCX).

Zoom in: On Tuesday, chip equipment supplier ASML slashed its net sales forecast to €30B – €35B ($32.7B – $38.1B) from previous expectations of €30B to €40B. The guidance came in about 15% to 20% below expectations. For Q3, ASML’s net orders were €2.6B compared to the consensus of €5.39B. Meanwhile, quarterly net sales were €7.47B, beating estimates of €7.17B. CEO Christophe Fouquet mentioned that while development in artificial intelligence remains robust, other market segments like logic and memory were taking longer to recover, and this trend would likely continue into 2025.

Export curbs at play? For ASML, a larger worry is the business they are losing in China due to current U.S. and Dutch export restrictions set in place to curb China’s AI capabilities. “So we expect China to come in at around 20% of our total revenue for next year. Which would also be in line with its representation in our backlog,” ASML CFO Roger Dassen said. This means a massive reduction, as revenue from China accounted for 49% of ASML’s revenue in the previous quarter. Separately, a recent Bloomberg report mentioned that U.S. officials have also been in talks to set a cap on export licenses for certain nations in the interest of national security.

SA commentary: “With a primary growth driver, China, gone, it could be a while before investor sentiment on ASML Holding N.V. stock turns around. I don’t think shareholders need to sell, but we could be range-bound for the foreseeable future,” said Kumquat Research in ASML: Export Restrictions Kill Key Growth Driver. Expecting ASML’s revenue growth to be driven by high numerical aperture EUV products, Hunter Wolf Research said, “I think the headwinds are fully priced in their current stock price. I am buying the dip today.”

What else is happening…

Meta (META) must face lawsuits over profiting from youth social media addiction.

United Airlines (UAL) beats Q3 estimates as it sheds ‘unprofitable capacity’.

Qualcomm (QCOM) to wait until after US election to make Intel decision.

Fund managers move away from defensive sectors and rotate into cyclicals.

Google (GOOGL) Cloud says Nvidia Blackwell line ‘running in our labs’.

LVMH (OTCPK:LVMHF) trades lower after China weakness drags down results.

Consumers see higher probability of missing debt payments in next 3 months.

Tesla (TSLA) lands key approval in Germany as it looks to ramp up production.

Bitcoin hits 2-month high above $67k after ‘monster’ inflows into spot ETFs.

Harris or Trump? Shouldn’t matter for markets – Oppenheimer.

Today’s Economic Calendar
07:00 AM MBA Mortgage Applications
08:30 AM Import/Export Prices
11:00 AM Treasury Buyback Announcement
2:00 PM Treasury Buyback Results

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Good morning. Happy Tuesday.

The Asian/Pacific markets were mixed. Japan, Australia, Indonesia and the Philippines did well; China, Hong Kong and Taiwan were weak. Europe, Africa and the Middle East are mixed. Turkey and Greece are up; Denmark, Finland, Norway, Portugal and South Africa are down. Index futures in the States point to a flat open for the cash market.

————— VIDEO: Old School Large Caps are Leading the Market —————

The dollar is down. Oil and copper are down. Gold and silver are up. Bonds are up.

Stories/News from Seeking Alpha…

Performance check

Wall Street is decked out for its quarterly festival of earnings. Companies are ready with their commentary, analysts are prepared with their projections, and investors are eager to place new bets on the markets. With the S&P 500 and Dow posting new record highs on Monday, the market sentiment looks entirely positive.

Contenders this week: About 40 S&P 500 companies are going to report their third-quarter performance to investors over the next couple of days, which includes Goldman Sachs (GS), Bank of America (BAC), UnitedHealth Group (UNH), Walgreens Boots Alliance (WBA), Taiwan Semiconductor Manufacturing (TSM), Netflix (NFLX), and Procter & Gamble (PG). That gives investors a plethora of data points to assess the health of the U.S. economy as Wall Street awaits the November elections. For the S&P 500 as a whole, EPS growth is expected at 5% in Q3 ’24, on 4.7% revenue growth.

Bull run: Wall Street’s bull market has entered its third year, climbing a total of 62.5% over a total of 502 trading days. The S&P 500 (SP500) bottomed out at 3,577 on October 12, 2022, and has since rallied to the top. Factors boosting this run include the advent of artificial intelligence and a Federal Reserve that looks to be on track to deliver a soft landing. Among the bunch, the Magnificent 7 have done most of the heavy lifting in the bull run.

Bar too low? With quarterly earnings seeming to be off to a good start, Christine Short notes in a third-quarter results preview that sell-side analysts have ratcheted down their estimates more than usual this earnings season. Since June 30, Q3 earnings estimates have come down by 3.6 percentage points, more than the 3.3 percentage points that have been seen on average over the last 10 years. While expectations have tempered since earlier in the year, the corporate sector remains strong, with ample buffers given elevated profit margins and strong balance sheets, counters Principal Financial Group in Earnings Season: Starting From A Place Of Resilience.

What else is happening…

Medical Properties Trust (MPW) findings refute short sellers’ allegations.

Google’s (GOOG) operating income, EPS estimates, at risk from capex.

Phillips 66 (PSX) to sell 49% stake in Coop Mineraloel in $1.24B deal.

Coty (COTY) warns of slower U.S. growth, more cost-cutting measures.

Frontier’s (FYBR) major holder plans to vote against sale to Verizon (VZ).

California governor signs law aimed at preventing spiking gas prices.

Acting Labor Secretary visits Seattle in bid to end strike at Boeing (BA).

Auto parts retailers face macro headwinds, but which can outperform?

Stronger M&A activity among small caps will boost their performance.

Bitcoin spikes to over $65K after China’s weekend stimulus announcement.

Today’s Economic Calendar
08:30 AM Empire State Mfg Index
11:00 AM Treasury Buyback Announcement (Preliminary)
11:30 AM Fed’s Daly Speech
01:05 PM Fed’s Kugler Speech
07:00 PM Fed’s Bostic Speech

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Good morning. Happy Monday. Hope you had a good weekend.

The Asian/Pacific markets leaned to the upside. China, South Korea, India and Singapore did well; Hong Kong and New Zealand were weak. Europe, Africa and the Middle East are mixed. Finland, Spain, Italy and Israel are up; Turkey, Portugal, Austria and Saudi Arabia are down. Index futures in the States point to a positive open for the cash market.

————— VIDEO: Old School Large Caps are Leading the Market —————

The dollar is up. Oil and copper are down. Gold and silver are down. Bonds are down.

Stories/News from Seeking Alpha…

Eventually Mars

Imagine catching a 20-story building midair. That is exactly what Elon Musk’s SpaceX (SPACE) achieved on its fifth test flight. It not only launched the mammoth Starship rocket but also caught the rocket’s Super Heavy first-stage booster as it returned towards the launchpad with a pair of mechanical arms called “chopsticks.”

Extraterrestrial ambitions: This historic engineering feat furthers the goals of the private spacecraft maker toward its ultimate aim of developing a commercially reusable rocket that could be used to transport cargo and humans to space, thus reducing the cost of launching space vehicles. For NASA, the test flight bolsters its plan to resume lunar probe, which includes setting up an outpost in the South Pole region and kickstarting its exploration of Mars.

Test flight improvements: The latest uncrewed test that launched near Boca Chica Beach in South Texas on Sunday was the fifth in the development of SpaceX’s Starship program. Starting in April 2023, the first three test flights ended in flames as the vehicle blew up before it could perform most of its mission goals. The fourth test, which happened in June 2024, was a successful one, with the Super Heavy first stage booster and Starship achieving controlled splashdowns.

What’s next? Going ahead, SpaceX can be expected to perform tests that aim to bring the Starship back to the landing site to attempt a catch similar to the latest test. The idea is for Starship and Super Heavy to become a fully reusable launch system, meaning that they would be able to land, refuel, and take off again. Currently, NASA has picked the Starship for its crewed Moon mission called Artemis 3, scheduled for launch in September 2026.

What else is happening…

Weight loss drugs have a major issue; these firms aim to fix it.

Which stocks would be most impacted by increased tariffs?

Real US GDP to rise 3.2% in Q4, Wells Fargo (WFC) says.

How does Apple (AAPL) stack up with teens? It’s complicated.

China’s stimulus plan lacks details; Sep CPI hits three-month low.

Netscape turns 30: Lessons an obsolete browser offers for today.

Google (GOOGL) seeks delay on sweeping Play store ruling.

JPMorgan’s (JPM) Jamie Dimon, analysts discuss 2025 NII outlook.

Wall Street bull run turns two: A look at major assets & their returns.

U.S. is said to expect Israel to strike Iranian military, energy sites.

Today’s Economic Calendar
9:00 AM Fed’s Kashkari: “Fiscal Deficits, Monetary Policy and Inflation”
3:00 PM Fed’s Waller: Economic Outlook
5:00 PM Fed’s Kashkari: “The Current State of U.S. Monetary Policy”

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