TradingView Analysis of SVB Crash
“A lot of talk on who is to blame for the SVB Financial collapse – this is the first big casualty of rapid rate hikes and tighter policy, but who is to blame and what are the next steps? In the past 8 months they had NO risk manager. No one knows how they efficiently managed risk”.
SIVB: SVB Troubles Brew After 60% Stock Wash-out
Bad news for the firm clobbered the financial sector with $52bn erased from top banks’ market value.
- Silicon Valley Bank, better known as SVB, got demolished on Wednesday after the financial firm announced it had completed a firesale of its $21bn AFS bond portfolio. Things got from bad to terrible when investors discovered it did so by taking a massive $1.8bn loss on the sale.
- Not only did the news take out a huge 60% chunk of SVB’s stock valuation, but it also sent shockwaves across the financial sector. It incinerated as much as $52bn from the value of the top four US banks by assets – JPMorgan, Bank of America, Wells Fargo, and Citigroup.
- No matter how much SVB wishes it was Saturday, the market will open today. The firm’s shares haven’t done much better – the selloff continued with another 20% slide in after-hours trading before Friday’s opening bell. “What a week,” – the banking sector, probably.
A lot of talk on who is to blame for the SVB Financial collapse – this is the first big casualty of rapid rate hikes and tighter policy, but who is to blame and what are the next steps?
- SVBs management – they invested short-term deposits in longer term fixed income assets – where a large % of its $120b securities portfolio lacked any kind of interest rate hedge (payers swaps were clearly needed)
- SVBs management – In the past 8 months SVB had no risk manager – fortune.com/2023/03/…-chief-risk-officer/ – no one knows how they efficiently managed risk
- SVBs management – the accounts showed they held $91b of its $120b securities in its HTM (assets Held to Maturity) book – these are assets they intend to hold until maturity but the accounting rules detail, that they don’t need to mark-to-market the moves in the underlying and report the ballooning losses – which again were not hedged.
- SVB deposit mix – 93%+ were above the FDIC insurance limit – this makes depositors v sensitive to any capital concerns at the bank
- SVB deposit mix – VCs had a rapid cash burn, as projects they back are typically driven by changes in interest rates (think Net Present value and Internal rates of return) – depositors took cash off SVB’s balance sheet to fund operations – SVB subsequently had to sell assets as their liabilities fell – we then see realised losses from buying securities at much higher prices.
- Short sellers/investor base – shorts had an eye on unrealised losses from the worsening asset quality for weeks – the selling accelerated when the CEO/ CFO /CMO disclosed they’d sold a chunk of stock on 27 March – it was over when the SVB took a $1.8b hit on its AFS securities available for sale on Wednesday – management sold $21b of its $28b book and announced a $2.25b in equity/debt raising – investors knew with conviction that depositors were fleeing – who supports a raising when liabilities are falling – no one sensible, raising pulled
- The Fed – failing to know such a shift in rates would impact banks asset quality when its primary function is financial stability.
- Regulation – Basel 3 – banks being forced to buy govt paper against deposits – v low risk weighting (perhaps required a hedge
- Hard to pinpoint this on one aspect IMO – I think there is a perfect storm going on – a lack of hedging of interest rate risk was clearly a dominant factor behind this. Top down this is a function of rapidly tightening monetary policy and the impact this had on both the asset quality and liability side of the balance sheet – we should recall SVBs model is not the same as others in the banking space, so its hard to say this is systemic – still we wait for the outcome on next steps on how deposits over $250k will be dealt with – we’re hearing they may get 50% back initially but a buyer would be the best solution
- The issue for regional/smaller banks comes if is we see some sort of haircut on the deposits claim over $250k – that could see a loss of confidence in holding deposits with other smaller banks names – we shall hear more soon, but broad contagion through the financial system seems unlikely, but it is a possibility given nearly 1/3 deposits in the banking system are uninsured – any bank with a large asset base and low equity are in the spotlight
- As said Friday this could be a nothing burger or have real impactions on economics – the big issue happens this week if we see no clarity on how depositors are dealt (seems unlikely) with and we get a hot CPI print.
The Week Ahead for 3/12/2023
- What the SVB Financial Collapse Means for U.S. Banks. It is a dagger for shareholders who had seen $500 slashed from SVB’s share price since Nov 2021. Trading in the stock was halted on March 10th, 2023 after it plunged 60% the previous day. Wall Street research group Maxim then commented that SVB stock has “likely no value.”
- Stocks are down sharply to end the week, and by now the reasons are all too familiar to investors. The bottom line is that the economy is struggling, and the Federal Reserve has no plans to come to the rescue. Today’s jobs number suggests that employment remains strong.
- Jea Yu’s advice to investors looking for dividend yield is to go where the money is. In this case, he means looking at regional banks stocks that can offer investors room for growth as well as dividend yields that are usually better than the market average. Yu double-dipped on dividend advice by offering investors two DRIP stocks for long-term investors looking to take advantage of compound interest. But if you’re an investor who is still looking for growth, Yu had a couple of stocks to look at in two hot sectors. Artificial intelligence remains as hot as ever.
- Are you looking for an under-the-radar AI stock? Schrodinger Inc. (NASDAQ: SDGR) sells AI-powered drug discovery software and services to the biopharma industry, but the company is not yet profitable and will burn cash for the rest of this year. And at a time when some investors are looking at gold and copper, Yu suggests looking at Cameco Corporation (NYSE: CCJ) which is the one of the world’s leading uranium producers.
Courtesy of MarketBeat.
The Top 5 Investment Plays for Blockchain
By: David Bartosiak
March 4, 2023
- The early days of blockchain are now behind us. The “Bitcoin Mania” of late 2017 has come and gone.
- Now, a new class of crypto has emerged. The space has evolved and profits will mount up for those who take advantage.
- New, exciting, ten-bagger profit potential themes are all around us. Rather than just searching for Bitcoin, big money has been made in non-fungible tokens (NFTs) and mem–coins like Dogecoin and Shiba Inu, while DeFi (decentralized finance) has become the name of the game.
- The new opportunities do not come without risk. Do a quick Google search for “Luna Terra Stablecoin” and you’ll see exactly what I mean. How do you know if the coin you’ve decided to load up on is going to hit or miss?
- In a world where Central Banks have opened the spigots and quantitative easing has become the norm, crypto is taking on a new role. Bitcoin has seen its legitimization as an asset class.
- Companies and shareholders alike are making the conscious decision to diversify their cash holdings by adding cryptocurrency. Huge corporations like Walmart, UnitedHealth, and BMW have been adapting blockchain technology to suit their needs.
- Companies all over the world are now accepting crypto as payment. You can now use Doge coin to buy a Tesla or even a trip to the movies at AMC.
When looking at the cryptocurrency ecosystem, you find that there are plenty of ways to invest in the blockchain. We can break down these stocks into five main categories:
- The “Picks and Axes” and Miners
- The Cloud
- Decentralized Finance (DeFi)
- Investors, Business Development Companies and Consulting
- Futures and ETFs
Zacks Research Update: Media and Biotech – 2 ETFs to Watch for Outsized Volume
Sweta Killa December 12, 2022
Two more specialized ETFs are worth noting, as both saw trading volume that was far outside of normal.
PBS: Volume 10.67 Times Average
- PBS: This media ETF was in the spotlight as around 80,000 shares moved hands compared with an average of 9,000 shares a day. We also saw some price movement as PBS gained 0.6% in the last session.
- The move was largely the result of improving consumer sentiment that would lead to higher spending and have a big impact on media ETFs like the ones we find in this ETF portfolio. PBS has climbed 2.3% over the past month and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
- FBT: Volume 3.21 Times Average
- FBT: This biotech ETF was under the microscope as nearly 114,000 shares moved hands. This compared with an average trading volume of roughly 37,000 shares and came as FBT lost 1.8% in the last trading session.
- The movement can largely be blamed on risk-off trading. FBT has gained 7.2% in a month and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Zacks.com Weekend Wisdom Saturday, 5 November 2022
- Historically Bullish Fourth Quarter Living Up to the Hype
The Presidential Election Cycle Theory:
This theory suggests that the stock market follows a pattern which correlates with a U.S. president’s four-year term. The election cycle consists of the post-election, midterm, pre-election and election years. 2022 is an example of a midterm year, or the second year in the 4-year presidential cycle.
The chart below shows the average price pattern for the US equity markets over the four-year election cycle. Notice how years three and four tend to be more constructive, with the third year the strongest of them all. Bear markets tend to put in a midterm year bottom sometime in the August-October timeframe just ahead of the midterm elections.
- Is a “Soft Landing” for the Economy Possible?
- The U.S. economy posted two consecutive quarters of negative GDP growth in Q1 and Q2 of this year. While this technically meets the definition of a recession, a recession is not what the U.S. economy has endured.
- The National Bureau of Economic Research (NBER) – which is the body that classifies recessions – did not declare one, because they also consider a wide range of factors beyond GDP, like productivity, gains or losses in the jobs market, and wages. These non-GDP fundamentals trended positive while output plateaued, signaling the economy was not necessarily ‘contracting’ but was more ‘holding its own.’
- Fast forward to Q3, and the U.S. economy grew by 2.6% according to last week’s initial release by the U.S. Commerce Department. Many naysayers point to the fact that a surge in exports contributed the most to the third quarter’s output, a temporary boost that will fade quickly, they say, and eventually, give way to the recession almost everyone is anticipating.
- Bottom Line for Investors: Historically, recessions are best characterized by a decline in production and output, a rupture in the credit markets and household finances, and some amount of job loss. As I write, we have not seen any meaningful sign of these negative factors appearing yet.
SeekingAlpha Oct 7 ’22
- “For the first time since the Cuban Missile Crisis, we have a direct threat to the use of nuclear weapons, if in fact things continue down the path they’ve been going,” President Biden declared.
- Nuke risk: As the threats and warnings increase, the U.S. Department of Health and Human Services shelled out $290M on Amgen’s (NASDAQ:AMGN) new drug called Nplate, which is used to treat acute radiation sickness in the event of a nuclear emergency.
- Watching employment: While the Challenger Job Cuts Report showed a 68% Y/Y jump in job cuts in September to almost 30K, with the most coming from retail (9,273) and technology (4,212), for the YTD figures, job cuts of 209,495 declined 21% from the same period a year ago. The gap between labor supply and demand also remains significant, as there were 1.7 jobs available for each unemployed worker in August.
- Tilray and other cannabis stocks soar as Biden calls for marijuana scheduling review.
- The Tesla stock has plunged 25% to $236 over the past two weeks on the concerns, as well as a reality check that Musk (who’s personally on the hook for $33.5B) could be forced into another selldown of his TSLA shares.
- Luna Classic: Dead Coin Walking
In Asia, Japan -0.7%. Hong Kong -1.5%. China closed. India -0.1%.
In Europe, at midday, London +0.1%. Paris flat. Frankfurt -0.1%.
Futures at 6:30, Dow +0.1%. S&P -0.2%. Nasdaq -0.4%. Crude +1.1% to $89.38. Gold -0.3% to $1716. Bitcoin -0.9% to $19,957.
Ten-year Treasury Yield +3 bps to 3.85%
Unemployment rate drops to 3.5% in September as U.S. economy gains 263,000 jobs (MarketWatch)
The Pup’s Weekend Dig – Earnings Season Rally or Bust?
|$SMH will be my top watch this week.|
$VERU – HIGH RISK TRADE
Why Veru Stock Soared 15% Higher on Monday
Veru (VERU 10.24%), a somewhat under-the-radar coronavirus stock, landed on the radars on many investors at the start of the trading week. An analyst tapped the stock as one of his choice selections, and the market collectively responded by trading the biotech’s shares nearly 15% higher on the day.
The attention Veru has gotten is due to sabizabulin, an experimental drug that treats Covid. Monday morning, Oppenheimer prognosticator Leland Gershell reiterated his bullish view on the stock, which he currently recommends as an outperform (i.e., buy) at a $36 per share price target.
Monday, July 18, 2022
Stocks Up Sharply On Friday, Pacing Higher For The Month
- Friday’s better than expected retail sales numbers, which showed m/m sales up 1.0% vs. estimates for 0.9% (ex-vehicles was up 1.0% vs. views for 0.6%; ex-vehicles & gas was up 0.7% vs. views for -0.2%), showed the resilience of the consumer and helped spark Friday’s rally.
- More good news from the Empire State Manufacturing Index which came in at 11.1 vs. last month’s -1.2 and the consensus for -1.3, also added to the rally.
- Industrial Production slipped a bit, ticking down -0.2% m/m vs. estimates for 0.1%. Same for Manufacturing Output, which was down -0.5% vs. the consensus for 0.2%.
- But Business Inventories rose 1.4% m/m vs. last month’s upwardly revised 1.3% and views for 1.2%.
- And Consumer Sentiment came in better than expected as well at 51.1 vs. last month’s 50.0 and views for th e same.
- Earnings season continues this week with another 331 companies set to report. And then another 1,014 companies on deck for next week. And 1,911 the week after that.
- But the event everybody is really waiting for is next week’s FOMC Announcement where we’ll hear how high the Fed raises interest rates. After last week’s hotter than expected inflation report, 55% believe the Fed will raise rates by 75 basis points (just like the last time).
Seeking Alpha Weekly Update
Monday, July 18, 2022
- The aerospace and travel industries are setting their sights on the Farnborough Air Show, which takes place this week for the first time since the pandemic. More than 80,000 people are expected to attend the five-day event, where more than a thousand exhibitors will showcase their products and aviation services. With demand for flights soaring this summer, much of the focus will be on manufacturing giants Boeing (NYSE:BA) and Airbus (OTCPK:EADSY), which hope to pick up some big orders as airline passenger numbers bounce back.
- Tech Chip funding – The Senate could vote on a slimmed-down measure to boost the U.S. semiconductor industry as soon as this week as lawmakers struggle to compromise on broader legislation targeting Chinese competitiveness. The scaled-back bill would likely provide $52B in grants, tax credits and other financial incentives to build out the American chip sector, but until now, it has been held up over R&D subsidies, as well as the possibility of it being attached to a broader reconciliation package. Congress will need to kick things into high gear before the August recess, which is only several weeks away.
- Should you buy chip stocks? Market direction has been uncertain in recent weeks, though some buyers seem to be keen on the advancing chip legislation.
- Global health emergency? As the number of monkeypox cases rises in the U.S., requests for vaccines are increasing, and in many areas, there are even reports of demand greatly outstripping supply. In response, the federal government has ordered an additional 2.5M Jynneos doses from Bavarian Nordic (OTCPK:BVNKF), which is the only FDA-approved product against monkeypox. As of July 15, there were 1,814 confirmed cases across the country, with all but seven U.S. states recording cases of the disease.
- Over in Colombo – Sri Lanka could be the first domino to fall in a global economic crisis set to envelop many poorly-managed developing countries. Pakistan is having major problems with its debt, as well as a number of African and Latin nations, spelling trouble across the emerging markets. “With the low-income countries, debt risks and debt crises are not hypothetical,” World Bank Chief Economist Carmen Reinhart declared. “We’re pretty much already there.”
Sunday, 19 June 2022
|Crypto||* Bitcoin, Ethereum and nearly every other cryptocurrency are mired in their own bear market.|
* We may not have found a bottom yet, especially if inflation doesn’t show signs of tapering.
* Total crypto market cap is now below $900 billion, a whopping 70% decline off the November 2021 peak.
* Ethereum finds weak support here, but more solid demand should appear down at the $650 level.
|ETF||* VIGI: Diversification Opportunity For Dividend Growth Investors|
* PDO And PAXS: PIMCO Taxable Fixed Income CEFs Trading At A Discount
|Dividend||* This bear market is the 2nd worst start to the year in US stock market history.|
* And cracks are beginning to form in credit markets that could potentially send stocks falling even lower in the coming months.
* Fortunately, the world’s best high-yield blue-chips are ready to protect your hard-earned savings while helping you retire in safety and splendor.
* MO, ENB, MMM, VFC, NVS, ESS, RHHBY, FMS, MDT, SWK, TGT are 11 high-yield low-risk Ultra SWAN quality dividend aristocrats you can trust in even the most extreme economic and market conditions.
* They are 28% historically undervalued, yield a very safe 4.1%, and analysts expect them to deliver 12.5% long-term returns, just as they’ve done over the last 26 years. They are so undervalued that analysts think they will deliver 31% total returns in the next year, though 46% returns would be justified by their fundamentals.
|Stocks||* Brookfield Infrastructure Partners: A Reliable Risk-Adjusted Bet For Long-Term Investors|
* Intel Returns To Fair Value
|Global Investing||* Alibaba Is Cheaper Than Ever|
* Vonovia: 50% Discount To Net Assets, Forward Yield Of 6%, German Residential Apartments
Sunday, 12 June 2022
Bitcoin: July Could Be One Of The Most Critical Months In Its History
Bitcoin dips below $30K as May inflation comes in hotter than expected
Soluna: Delivering Green Bitcoin Mining
Circle: A Compelling Crypto SPAC
Medtronic: Buy The Dip And Start The DRIP
Atlassian: Backbone Of The Software Industry
5 Best CEFs To Buy This Month – $AGD, $AOD, $ASG, $BST, $BUI
Buy Today: Residential REITs Are A Huge Inflation Beneficiary
Nvidia Stock: Secular Growth Provides Hope
Energy Transfer: More Upside Is Warranted
Trading View Weekly Update
In the example chart above we use the moving average convergence divergence ( MACD ) indicator to illustrate the concept of divergence, to forensically evaluate Bitcoin and to make some forward looking observations on the gold market. Negative Divergences Often Warn of Impending Declines: Bitcoin Highlighted…. Is Gold Next?
• Negative momentum divergences often warn of impending price consolidations or declines.
• Divergence forms as price moves to a new high while the oscillator fails at a lower high, creating a negative divergence between the oscillator and price.
• Divergences of this type suggest that the underlying momentum may be waning.
Divergences carry different implications depending upon their time frame.
• Daily perspective divergences suggest either a consolidation, or a pullback in an ongoing uptrend.
• Weekly perspective divergences suggest a more sustained consolidation or even a reversal of trend, particularly if important support is violated.
• Monthly divergences have the potential to result in a more sustained decline or even to reverse an uptrend.
MACD sell signals give validity to divergences.
• Monthly signals have much more weight than weekly and daily.
• Monthly divergences don’t always occur prior to monthly MACD sell signals
• But when a sell signal does occur it offers a structural warning.
See the chart above:
The March 2021 high (A) was followed by a roughly equal price high (B). However, the MACD momentum peaked at a significantly lower high (Line A1-B1), forming a classic divergence that suggested that upward momentum was fading.
• At point C, the weekly MACD moved onto a sell signal (the fast moving average crossed below the slower moving average) strongly suggesting that positions should be either lightened or sold.
• After the sell signal was generated, price declined from 50 to 24.
• A weekly MACD buy signal was then generated at point D. The subsequent rally carried price near the prior high.
• The failure of the MACD to match its prior high warned of potential weakness.
• The MACD generated another sell signal at point E, suggesting lightening or selling positions. Price offered another decline from 50 to 24.
• After a multi-week consolidation in March-April 2022, price broke below the support @24 (S1-S2).
• MACD continues to decline, suggesting that the price decline may not be over, notwithstanding interim rallies.
• Before considering a new long, evidence of stabilization at a low and the gradual reversal of the daily, weekly and eventually, monthly MACDs would be required.
Tuesday, 7 June 2022
May 26, 2022 Pup’s Weekday Dig
Remember, this is a bear market rally, keep a level head and make sure you are managing your risk to the upside.
Charts Reviewed in yesterday’s office hours: $SPY $QQQ $IWM $VXX $XLE $XLU $TAN $ADM $AR $AVD $BMY $CCJ $CELH $COP $FANG $INSW $LMT $MSFT $NFE $OXY $SBOW $STNG $SWN $TALO $XEL $ZIM
TradingView Stock Analysis
Following the above opinion, let’s look at $SPY
A high Advance-Decline Ratio (ADR) might signal an overbought market, while a low ratio means an oversold market. Meanwhile, a steadily increasing ratio might signal a bullish trend, as shown above.
Let’s look at $QQQ
The accumulation/distribution indicator (A/D) is a cumulative indicator that uses volume and price to assess whether a stock is being accumulated or distributed. The A/D measure seeks to identify divergences between the stock price and the volume flow. This provides insight into how strong a trend is.
In general, a rising A/D line helps confirm a rising price trend, while a falling A/D line helps confirm a price downtrend.
Friday, 27 May 2022
ASML: The Bursting Of The Semi Stock Bubble
Alibaba Earnings: Back Up The Truck
ETF & Portfolio Strategy:
MLPX: Best In Class Midstream Energy Fund
Chevron: The Crude Reality
Industrial REITs: Amazon Cuts Deep
Palantir: This Is A Game Changer
Nasdaq leads the way as U.S. stock indexes stake out higher ground early Friday
This Is Google Stock’s Decade:
- Investors seem overly concerned about being in a new “dot-com” bubble, despite the fact that Google brings in a quarter trillion dollars in annual revenue.
- Google is well positioned to weather even the worst recession, with a huge balance sheet and tons of FCF.
- The company has never traded at such a low P/E ratio in its recent history.
- Google continues to pour tens of billions into R&D, which is paying off, along with its growing FCF and FCF margin.
- The only tangible long-term risk to Google is antitrust infringement complaints, which it has often faced in the past.
Cryptocurrency Daily Digest
As of Fri, May 27, 2022 08:00 ET
- Bitcoin dumps further below $30K, while stocks catch a bid
- Coinbase stock climbs as Cowen points to structural advantages over rivals
- JPMorgan Chase tests blockchain technology for collateral settlement
Wed, May 25, 2022 08:00 ET
|* Coinbase becomes first cryptocurrency firm to enter Fortune 500 list|
* Launching BlockChain Reaction: Investment Research For Crypto Contrarians
* Shark Tank’s Kevin O’Leary says crypto will be the 12th S&P 500 sector
* MicroStrategy’s Michael Saylor says Bitcoin mining is world’s most lucrative use of energy
* Is Coinbase Stock A Buy Or Sell Amidst Cryptocurrency Crash?
|Top GainersTop Losers: Tezos: +13.36% Lido DAO: -5.73% Terra: +11.08% Curve DAO Token: -3.24% Ethereum Classic: +11.07% ApeCoin: -3.15%|
OXY Stock Update Wednesday, 25 May 2022
OXY Stock Technical Analysis 17 May 2022
AAPL Stock Technical Analysis 19 May, 2022
20 Top Social Media Sites
Inflation-Resistant Stocks to Buy
Data-Driven ML Credit Card Fraud Detection
Weekly newsletter of Alex Z. Data4u #Va #Data Science #Investments – Issue #11
|Stocks Down, S&P On Pace For 7th Weekly Loss In A RowFrom their all-time high close to yesterday’s close the Dow is down -15.1%, the S&P -18.7%, and the Nasdaq by -29.1%.The word ‘recession’ continues to be thrown around with some saying we may already be in one.The market has not yet priced in the worst case scenario. But the S&P’s testing of the -20% level and bear market territory shows plenty of traders are expecting that.SeekingAlpha Wall Street BreakfastTrillions in value erased: Only eight companies (of the 500 in the index) are responsible for nearly half of the weighted benchmark’s year-to-date losses. Declines at Netflix (NFLX) have reached 70%, Meta (FB) and Nvidia (NVDA) are each down 43%, while Microsoft (MSFT), Apple (AAPL), Amazon (AMZN), Alphabet (GOOGL) and Tesla (TSLA) have fallen between 23% and 36% YTD.Outlook: Some say it’s too early to call the end of Big Tech dominance, but value and energy stocks like Exxon Mobil (XOM), Chevron (CVX) and ConocoPhillips (COP) have been supporting the S&P 500 this year.|
Altria Vs. Philip Morris: The Better Buy Might Surprise You
Long-Term Stock Ideas:
- Amazon And Netflix: Dot.Com Bubble 2.0?
- Shopify: Long-Term Profits Over Short-Term Returns
Shopify’s stock is down over 70% since the beginning of the year and is now looking like it is trading near fair value.
The company’s Q1 report is not good news, but management appears to be focusing on long-term health over short-term profits.
- AT&T: Dividend Increase Is Not Coming Until 2024
- Salesforce Is Not Undervalued Yet
Seeking Alpha Market Digest May 15, 2022
- Bitcoin is ‘not immune’ from stock market volatility, Morgan Stanley says.
- Lending platform Upstart, crypto bank Silvergate Capital lead weeks’ financial losers
Daily Market Snapshot Friday, 6 May 2022
- US markets saw a major sell off yesterday, the worst since the early days of the coronavirus pandemic in 2020. The NASDAQ100 plunged 5%, the SPX500 was down 3.56% and the DJ30 3.12%. Shares were wiped out as ebullience after Wednesday’s Fed decision collapsed. Major tech names saw their values plummet including Tesla (-8.25%), Amazon (-7.58%) and Apple (-5.37%). Worst performer in the SPX500 was Etsy, down 16.77% while Cognizant Technology was down 12.73% and eBay fell 11.69%. Among few risers in the session, best performers included Albemarle (+9.87%), Kellogg (+3.43%) and Booking Holdings (+3.28%).
- UK100 trades flat as Bank of England hikes rates. The UK100 traded largely flat yesterday as investors digested the news that the Bank of England was raising its base rate to 1%. The Bank also warned of a possible recession coming in 2023 for the UK economy and that inflation would exceed 10% by the end of the year. Best performing stocks in the session included Aveva (+4.71%), Mondi (+4.51%) and Avast (+3%). Among the worst performers were Hikma Pharmaceuticals (-9.42%), Ocado (-6.97%) and Antofagasta (-5.72%).
- Cryptos crash: Major cryptos had a rough day with Avalanche down more than 14%, Solana falling almost 12%, and Cardano dropping almost 10%. Bitcoin was trading around $36,500 at time of writing, down 8% over the past 24 hours.
- Oil flat after rollercoaster: Over the past 24 hours the price of oil peaked over $110 before dropping below $106, and finally rallying to just under $108, similar to its price on Thursday morning.
- Asian markets mixed: The HKG50 and China50 were down more than 1% at time of writing, while the JPN225 was up almost 1%.
- Etsy plunges 16%: Global ecommerce platform Etsy tumbled 16% after it reported that its pace of growth is slowing. The company said that consumers are returning to traditional stores as the pandemic has waned and movement restrictions removed.
Nike, Home Depot, AmEx and Disney are top decliners as Dow skid continues
FLC: Looking Like A Solid Buy These Days
IEO: Outperforming Oil Stocks ETF Has More Upside In 2022
AT&T: Safe Haven During Times Of Duress
Zacks Research Update
Key Takeaway: Stocks Erase Intraday Losses To Close With Solid Gains
Inflation continues to weigh on stocks. Not just because of the burden it puts on the consumer, and therefore the economy (since roughly 70% of GDP is comprised of consumer spending), but also due to uncertainty over what the Fed’s response will look like.
On Wednesday, 5/4, the Fed concludes their 2-day FOMC meeting and will announce how much they’re increasing interest rates, and how aggressive they will be in reducing their record $9 trillion balance sheet.
The Fed is widely expected to raise rates by 50 basis points, and announce the beginning of their balance sheet reduction.
But traders will also be listening to what the Fed has to say about rate hikes for their next meeting in June. Fed Funds traders have placed a 91% chance that rates will go up by 75 basis points in June.
The Fed raising rates is a bullish event.
An aggressive move by the Fed will show they are serious about combating inflation.
Yes, there’s some worry that an overly aggressive Fed could slow down the economy too much. Those concerns were magnified last week when Q1 GDP came at -1.4% vs. the consensus for a gain of 1.1%.
But in spite of last week’s headline miss on GDP, the details showed that consumer spending was up 2.7% q/q, which was a faster growth rate than the previous quarter’s 2.5%; business investment was up 9.2%; residential investment was up 2.1%; and final sales to private domestic purchasers were up 3.7% vs. last quarter’s 2.6%.
Because the economy is so strong, Fed Chair, Jerome Powell believes the economy will “flourish in the face of less accommodative monetary policy.”
But all eyes will be on Wednesday afternoon’s FOMC announcement.
SeekingAlfa Update 05/02/2022
Investing During Stagflation 101
- Bonds and growth stocks tend to have the most trouble.
- Value stocks, commodities, and real estate are typically the places to be. Some cash can also help with rebalancing.
Japan Is Back On The Risk Radar
- Last week, despite raising its own inflation forecasts, the BoJ kept its main policy rate negative and doubled down on yield-curve control purchases.
- The BoJ retains a “transitory-inflation” mindset, forecasting a peak at 1.9% this year.
- In our view, Japan should be looming much larger in investors’ minds than it is.
- Following earnings shockers from Netflix (NFLX) and Amazon (AMZN), the week ahead features more tech heavyweights stepping into the earnings confessional and a good dose of reporters from the energy sector.
- On the macroeconomic front, the two-day meeting of the policy-making committee of the Federal Reserve will be in the spotlight.
- The economic calendar also includes updates on construction spending, durable goods orders, trade balance, and the highly-anticipated U.S. jobs report.
- Analysts forecast a payrolls gain of 390K for April and an unchanged unemployment rate of 3.60%. A slight downtick in hourly earnings growth to 5.4% is anticipated as well.
eToro Daily Update 04/29/2022
- Musk sells $4 billion in Tesla stock
- Meta soars as Wall Street unphased by falling US GDP
- Standard Chartered sends UK100 higher
- Bitcoin hovers around $40,000
- Oil continues to climb
- Asian markets higher
- Europe opens higher
MarketWatch Top Stories 04/28/2022
- Amazon stock drops 10% after earnings slammed by Rivian stock decline
- The 30-year mortgage rate dips slightly to 5.1%
- Apple earnings beat as sales hit a record, stock gains with billions being sent back to investors.
Apr. 26, 2022 Stocks To Avoid With EPS Downward Revisions.
Real estate – the glue that holds the world together:
Apr. 25, 2022: FedEx Is An Attractive Addition To Dividend Growth Portfolios.
Earnings spotlight: Wednesday, April 27 – Boeing (NYSE:BA), Humana (NYSE:HUM), T-Mobile US (TMUS), Ford Motor (F), Meta Platforms (FB), Kraft Heinz (NASDAQ:KHC), and Amgen (AMGN).
Earnings spotlight: Thursday, April 28 – Twitter (TWTR), Comcast (CMCSA), Merck (MRK), Caterpillar (CAT), Northrop Grumman (NOC), Amazon (NASDAQ:AMZN), Apple (AAPL), Intel (INTC), Altria (MO), Domino’s Pizza (NYSE:DPZ) and PayPal (PYPL).
IPO watch: IPOs expected to price in the week ahead include Tenon Medical (TNON) and SaverOne (SVRE) on April 27.
Projected dividend increases: A heavy slate of earnings means that more dividend payout increases could be on the way. Apple (OTC:APPL) is one of the more interesting companies that could reward shareholders with a dividend rate boost to $0.24 from $0.22 forecast. Other notable companies expected to boost their quarterly dividend payouts include Parker-Hannifin (PH) to $1.37 from $1.03, Marathon Oil (MRO) to $0.08 from $0.07, Regal Rexnord Corporation (RRX) to $0.36 from $0.33, Avery Dennison (NYSE:AVY) to $0.74 from $0.68, American Water (NYSE:AWK) to $0.650 from $0.6025, PepsiCo (PEP) to $1.150 from $1.075, Raytheon Technologies (RTX) to $0.545 from $0.510, Ameriprise Financial (AMP) to $1.20 from $1.13, and Exxon Mobil (XOM) to $0.92 from $0.88.
This week we witnessed a broader market sell-off with very few stocks showing relative strength (R/S).
Sectors On Watch
$JETS $XLRE $XLP (clickable links)
Last week’s chart of interest was $AAL, which ended the week + 6.5%.
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3 Tormented Tech Stocks To Avoid
- tech stocks experienced a boom over the last few years, especially during the pandemic, but many are feeling the bust in 2022, down more than 60% over the last year.
- With market volatility, war in Europe, ballooning inflation, and a rising interest rate environment, several tech companies do not possess the fundamentals to endure this climate.
- In light of tech and growth equity indexes trading down, 3 stocks may underperform their benchmarks and should be avoided based upon limited growth & valuation frameworks:
- PayPal (NASDAQ:PYPL), DocuSign (NASDAQ:DOCU), and Zoom (NASDAQ:ZM).
Occidental Can Keep Rising: It Just Won A Huge Bet And May Be Cheaper At $60 Than It Was At $10
- To outbid Chevron for Anadarko CEO Hollub essentially bet the company which almost went bankrupt when the oil price collapsed; OXY recovered brilliantly as oil recovered.
- OXY may have overpaid, but if the price of oil holds up for a few years it will pay back debt, repurchase shares, and own Anadarko’s shale assets for free.
- Operating cash flow now comes in at all time highs every quarter and may surprise positively for Q1; Wall Street analysts anticipate a 26% cash flow return.
- OXY has also made headlines for its climate-friendly initiatives.
- Having sold at the bottom, Buffett bought heavily as OXY rallied, while CEO Hollub made a large buy in March rather than using free cash to diversify her holdings.
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