Dow dropped 95, decliners over advancers about 5-2 & NAZ went up 12. The MLP index was off 1 to the 236s & the REIT index sank 8+ to the 369s as yields rallied. Junk bond funds are out of favor by investors & Treasuries were heavily sold taking yields higher again (more below). Oil rose 1 to go over 80 (more below) & gold slid back 4 to 1970.
AMJ (Alerian MLP Index tracking fund)
Treasury yields rose as investors digested the Fitch Ratings decision to cut the US long term foreign currency issuer default rating & assessed fresh economic data. The 10-year Treasury was up about 10 basis points at 4.175%, trading around levels last seen in Nov 2022 & the yield on the 2-year Treasury added 2 basis points to 4.91%. Yields & prices move in opposite directions. One basis point equals 0.01%. Investors are assessing a series of economic data prints that offered fresh hints about the state of the labor market & could inform the Federal Reserve's next interest rate decision. This included in-line jobless claims numbers & stronger-than-expected productivity data for the 2nd qtr. All this comes after yesterday's stronger-than-expected ADP report & ahead of tomorrow's Jul jobs data. Also, the Bank of England announced a 25 basis point hike as it continues to battle persistently high inflation.
10-year Treasury yield climbs as investors digest U.S. rating downgrade
Qualcomm (QCOM) reported Q3 earnings that beat expectations, but revenue & guidance for Q4 came up short. QCOM expects EPS of $1.80-2.00
on $8.1-8.9B in sales in Q4,
short of expectations of $1.91 in EPS on $8.7B in revenue. Q3 EPS was $1.60, a staggering 52% drop from $3.29 reported a year earlier. QCOM is
exposed to the slumping smartphone industry because it makes the
processors at the heart of most high-end Android devices & many
lower-end phones. Shipments of new devices are expected to decline in 2023 & QCOM repeated that it expects
handset units to decline a “high-single digit percentage” this year,
partially due to a slow China recovery. However, the chipmaker said it
sees growth in handsets starting in the holiday season. CEO Cristiano Amon highlighted the chipmaker's artificial
intelligence strategy as semiconductor firms seek to
capitalize on the industry focus on the chips needed to run software
like OpenAI’s ChatGPT. He said QCOM's ability to run AI models on
phones, instead of on cloud servers, gives the company a chance for an
“inflection point” that could drive growth in the future. “In summary, we are uniquely positioned to help shape and capitalize on the upcoming on-device Gen AI opportunity,” Amon said. The stock dropped 13.75 (11%).
If you would like to learn more about QCOM, click on this link:
club.ino.com/trend/analysis/stock/QCOM_aid=CD3289&a_bid=6aeoso5b6f7
Qualcomm sales and forecast come up light as smartphone chip sales fall 25%
The Biden administration's efforts to restrict oil & gas production on federal lands are hurting the US economy's growth through inflation & higher energy costs, according to a leader of the American energy renaissance. Harold Hamm, chair & founder of Continental Resources & author of the book "Game Changer," said that the federal gov needs to "get on with the permitting" & "We need the moratorium taken off of federal lands, we’ve always developed federal lands." "What Biden did when he took all the federal lands – that’s 26% of the U.S. landmass – off the table, and about 35% of the productive capacity. So, they did that, and [what] did it do? You’re an economist – it drove inflation straight up, you know it cost more to consumers," Hamm continued. His firm pioneered fracking & horizontal drilling, techniques that made the US energy industry more competitive with overseas rivals. Pres Biden signed exec orders shortly after taking office that imposed a moratorium on issuing new oil & gas leases on federal lands & offshore waters. The policy was challenged in court & the administration eventually allowed new leases to be issued under a revised program with higher royalty payments to the gov. The Biden administration also suspended operations on issued leases along with a moratorium on new leases in the Arctic National Wildlife Refuge (ANWR), pending an environmental review, a draft of which is expected to be released in the 3rd qtr of 2023. Hamm said those higher costs don't go back down & are "very resilient," adding, "I’m talking about the inflationary costs that we’re paying today, they never go backward. So, once you drive them up, there they’re staying, they stick." Hamm said the price oil should be at enough to allow energy producers to generate profits & stimulate investment in the sector. $60 a barrel would be an economical target for them. Hamm added that oil should cost around $80 per barrel "because that’s what it takes to keep investing today in oil and gas." Oil prices are hovering around $80 a barrel. The Energy Information Administration noted that US crude oil inventories fell by 17M barrels, which is the largest drop, according to records, dating to 1982. The reduction was attributed to increased refinery runs & strong crude oil exports.
US economy needs more energy production from federal lands, warns expert
Higher yields will be tough for the bulls to make their case for buying stocks. Laggard earnings are coming in & they tend be weaker than earlier reports. Headwinds for stocks are strong.
Dow Jones Industrials
No comments:
Post a Comment