MidWeek Commentary

HI Market View Commentary 01-31-2023

HI Market View Commentary 01-30-2023

Let’s talk our market?= FOMC meeting tomorrow and Wednesday =

Market expects 25 basis point rate hike

WHY? Economy slowing down and inflation still present

DON’T be surprised with a 50 basis point rate hike

 

Recession we had two quarters of positive GDP

What right now is in a bullish market ? = Tech, metals 2020-2022

Sector or Stock picking is important in a fair valued 18X earnings S&P 500

What’s the deal game ?= AAPL, BIDU, BA, BAC, DIS, F, JPM, KO, LMT, MU, NVDA, LULU, UAA

Right now and through 2023 look for undervalued opportunities =

2020 we went a 5 month 20% stealth bear market

Right now we are in same cycle but it will take two or three years

The exponential returns happen with adding shares and having stocks fall horribly = You’ve taken the pain already, now lets get the rewards

BIG EARNINGS week this week

 

Earnings dates:

AAPL        – 2/02 AMC

BIDU         – 3/01

DIS            – 2/08  AMC

F                 – 2/02  AMC

GOOGL    – 2/02  AMC

META       – 2/01  AMC

MU            – 3/29

SQ              – 2/23  AMC

UAA          – 2/02  AMC

 

https://www.briefing.com/the-big-picture

 

The Big Picture

Last Updated: 27-Jan-23 15:13 ET | Archive

Running into a wall of valuation constraint

It is good to be an economic report these days, because the stock market likes you either way. If you are better than expected, then you are the picture of a soft landing. If you are worse than expected, then you are the reason why the Fed will stop raising the target range for the fed funds rate.

You can do no wrong — or so it seems — but in truth you are a problem either way.

Multiple Expansion

The problem isn’t so much the data as it is the position in which the stock market now sits.

With the run in stocks we have seen this month, the S&P 500 trades at 18.0x forward twelve-month earnings. That is a premium to the 10-year historical average of 17.2x, which has been established with the 10-yr note yield averaging 2.17% over the same period and core PCE price inflation averaging 2.12%. Today, the 10-yr note yield sits at 3.52% and core-PCE is up 4.4% year-over-year.

 

The multiple for the S&P 500, however, has expanded from 16.7x at the start of the year with price gains exceeding the change in earnings estimates. Specifically, the S&P 500 is up 6.5% year-to-date while the forward twelve-month earnings estimate has declined 1.2% over the same period to $226.59, according to FactSet.

Judging by the early returns of the fourth quarter earnings reporting period, the forward 12-month earnings estimate is not done going down yet either.

Accordingly, an economic report that gets the stock market excited about a soft landing at this point, and which drives stock prices higher, should create only fleeting satisfaction because it will also create a stiffer valuation headwind for the stock market.

In other words, the upside should be capped because a floor in earnings estimates hasn’t been reached yet.

That is where a weak economic report creates bigger problems, notwithstanding the notion that it will convince the Fed to stop raising interest rates.

There isn’t a floor in earnings estimates yet; hence, data that point to a continued deterioration in economic activity also point to the likelihood of a further deterioration in earnings estimates, which creates… valuation concerns.

An Open Question

In effect, the stock market, which has had an undeniably strong start to the year, is stuck between a rock and a hard place. That’s true because the economy appears to be stuck between a rock and a soft place, which is to say it is neither strong nor in recession.

The question is, does it get stronger or weaker?  The answer is self-evident with the long and variable lags of prior rate hikes that began last March. The open question is, just how much weaker will the economy get?

The answer is instrumental for earnings estimates, which in turn are instrumental for the stock market’s return prospects.

Judging by the price action alone to begin the year, the stock market thinks an inflection in the earnings estimate trend is near. We think the price action is misleading in that respect.

In our estimation, the price action is more tactical than fundamental. To that end, it has not escaped our eye that the gains this month have come on relatively light volume, that highly-shorted stocks have been some of the biggest winners, and that low-priced, profitless “story stocks” have found a following again. It has been fun, if not entirely fundamental.

Granted there is a fundamental component with long-term rates having come down, inflation improving, and some economic data not being as bad as feared, particularly the employment data. Still, a 16.6% year-to-date gain in the Invesco S&P 500 High Beta ETF underscores the tactical rush to capitalize on beaten-down growth stocks that suffered the final blow of 2022 in the form of tax-loss selling.

What It All Means

The rally to start the year has been a welcome sight for investors, yet it is pulling forward valuation concerns knowing that stock prices have been rising sharply while earnings estimates have been falling.

In turn, it has led to an easing of financial conditions, along with the decline in Treasury yields, that is running afoul of the Fed’s policy tightening efforts. How that registers at next week’s FOMC meeting remains to be seen, yet we suspect Fed Chair Powell will provide some pushback.

Even if he doesn’t, though, the main concern is that the stock market has gotten ahead of itself, having spun the economic reports in its favor whether they have been better than expected or weaker than expected.

The market, however, will do what it wants to do. In January it has wanted to trade higher, but it is running itself into a wall of valuation constraint.

With earnings estimates destined to keep slipping, and the 10-yr note yield and core PCE sitting well above their 10-yr average, the forward 12-month P/E ratio for the S&P 500 should not be trading at much of a premium, if any at all, to its 10-year average.

Our thinking is that the new year rally will be hitting a top soon given that the bottom is still falling out on earnings estimates.

Patrick J. O’Hare, Briefing.com

 

 

 

https://go.ycharts.com/weekly-pulse

 

Market Recap
WEEK OF JAN. 23 THROUGH JAN. 27, 2023
The S&P 500 index rose 2.5% last week, led by the consumer discretionary and technology sectors, as US Q4 gross domestic product came in better than expected, as did some companies’ financial results for the quarter.

The market benchmark ended Friday’s session at 4,070.56, up from last Friday’s closing level of 3,972.61. The index has risen in three of the four weeks of 2023, putting it up 6% for the year to date.

Last week’s climb came as data showed the US economy grew more than expected in Q4, though the pace of economic growth was slower than in Q3. Real gross domestic product in the December-ended quarter increased at a 2.9% annualized pace, according to the Bureau of Economic Analysis, surpassing the consensus estimate according to Econoday of a 2.7% rise. In the third quarter, real GDP advanced 3.2%. Despite the sequential slowdown, the better-than-expected report helped ease investors’ recession fears.

Some companies’ quarterly financial results also managed to surpass consensus expectations even as they are grappling with higher rates and inflationary pressures. While not all companies’ results have topped Street views, investors have been encouraged by those that have.

All but two sectors in the S&P 500 rose last week. The gainers were led by the consumer discretionary sector, up 6.4%, and technology, up 4.1%. Other strong gainers included communication services, up 3.3%; real estate, up 2.8%; and financials, up 2.5%.

Health care slipped 0.9% and utilities fell 0.5%.

The consumer discretionary sector’s gainers included shares of Tesla (TSLA), whose shares soared 33% on the week as the electric vehicle manufacturer reported better-than-expected Q4 results and said it plans to ramp up production “as quickly as possible.”

In the technology sector, shares of Seagate Technology (STX) jumped 16% as the data storage company reported fiscal Q2 adjusted earnings per share and revenue above analysts’ expectations. The results are encouraging and the company is likely to continue its recovery, Morgan Stanley analysts said in a note to clients after the report.

On the downside, the decliners in health care included shares of Intuitive Surgical (ISRG), which reported adjusted Q4 earnings per share below analysts’ expectations while revenue matched the Street view. Shares of the robotic-assisted surgery and minimally invasive care company fell 3.7%.

The utilities sectors’ decliners included NextEra Energy (NEE), which reported Q4 adjusted earnings per share above analysts’ mean estimate but had lower-than-expected revenue for the quarter. Analysts at BofA Securities downgraded their investment rating on NextEra’s stock to neutral from buy after the report while lowering its price target on the shares to $80 each from $94. Analysts at firms including UBS, Credit Suisse and Guggenheim also lowered their price targets on NextEra’s stock, which posted a weekly decline of 7.6%.

Next week’s earnings calendar features companies such as Exxon Mobil (XOM), Pfizer (PFE), McDonald’s (MCD), United Parcel Service (UPS), Caterpillar (CAT), Facebook parent Meta Platforms (META), Apple (AAPL), Google parent Alphabet (GOOGGOOGL), Amazon.com (AMZN), Eli Lilly (LLY) and Merck (MRK).

Economic data being released next week include January consumer confidence on Tuesday. However, a Federal Open Market Committee meeting that begins that day and concludes on Wednesday, as well as January employment data due on Friday, will receive the most investor attention.

Provided by MT Newswires

 

 

Where will our markets end this week?

Higher

 

DJIA – Bullish

SPX –Bullish

COMP – Bullish

 

Where Will the SPX end January  2023?

01-30-2023           +2.0%01-23-2023          -2.0%

01-17-2023           -2.0%

01-09-2023           -4.0%

 

 

 

Earnings:  

Mon:          WHR

Tues:          CAT, GLW, XOM, GM, IP, MCD, PFE, PHM, UPS, AMD, AMGN, EA, WDC

Wed:          MO, BSX, HUM, TMUS, WM, ALL, EBAY, META

Thur:         AMZN, BABA, COP, LLY, EL, GWW, HOG, HSY, HON, ICE, MRK, BZH, GOOGL, AAPL, CLX, QCOM, X, F,

Fri:             CI

 

 

Econ Reports:

Mon:         

Tue             Chicago PMI, Employment Cost Index, FHFA Housing Price Index, Case-Shiller, Consumer Confidence

Wed:          MBA, ADP Employment, Construction Spending, ISM Manufacturing, JOLTS, FOMC RATE HIKE

Thur:          Initial Claims, Continuing Claims, Productivity, Unit Labor Costs, Factory Orders,

Fri:             Average Workweek, Non-Farm Payroll, Private Payroll, Unemployment Rate, Hourly Earnings, ISM Services

 

How am I looking to trade?

Currently running mostly stocks with protection getting ready for earning by protective puts and full collar trades

We are starting to add leaps = BA, BIDU, JPM,

Next week Jan 31 we can add back in tax selling shares = META, DIS, BAC

We also add SPY puts for the rate hike

 

www.hurleyinvestments.com 

www.myhurleyinvestment.com = Blogsite

info@hurleyinvestments.com = Email

 

Questions???

I need a trade?  JBLU you could do a 3, 6, Leap bull Call – 8.50 (long call) – 10/11 strike (short calls)

Get out Wednesday pending rate hike announcement

 

 

https://www.cnbc.com/2023/01/29/stock-market-news-live-updates-futures-open-to-close.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail

S&P 500 slides as traders brace for a busy week of earnings, Fed rate decision

Sarah Min

Jesse Pound

The S&P 500 traded lower Monday amid a January rally as investors braced for the busiest week of earnings season and a possible interest rate hike from the Federal Reserve.

The broader market index fell about 0.9%, while the Nasdaq Composite dropped by nearly 1.7%. Meanwhile, the Dow Jones Industrial Average slid 75 points, or about 0.2%.

Ford shares fell more than 1% after the automaker said it’s cutting prices and ramping up production on its electric Mustang Mach-E crossover, following a similar announcement from Tesla. Carvana shares were briefly halted after a 27% surge in the stock price.

Still, the S&P 500 is headed for its best January since 2019 when it gained nearly 8%. As of Monday morning, the broader market index is up 5.2% for 2023 following a 19% loss last year.

However, there are several tests this week for the 2023 rally. About 20% of the S&P 500 will report earnings this week, including McDonald’s and General Motors on Tuesday followed by tech giants AppleMeta PlatformsAmazon and Alphabet later in the week.

The Federal Open Market Committee meets on Tuesday and Wednesday, when the Fed is expected to hike rates by one-quarter of a percentage point. Investors will be looking for clues about how much higher the central bank will take rates in the fight against inflation. Traders have pushed stocks higher this year in part because of softer inflation reports, which they suspect could cause the Fed to soon pause its hiking campaign.

“While there have been several positive developments, we think the good news is now priced, and reality is likely to return with month end and the Fed’s resolve to tame inflation,” wrote Mike Wilson, chief U.S. equity strategist for Morgan Stanley, in a note Monday.

The S&P 500 was trading nearly 0.9% lower Monday morning, with communications services and information technology falling the most in the broader market index.

Communication services was down about 1.9%. Information technology was about 1.8% lower.

Mega-cap tech stocks dragged on communication services. Shares of Meta Platforms and Alphabet were down nearly 3% each.

Shares of semiconductor company Advanced Micro Devices was off by more than 3%.

— Sarah Min

Shares of used car company Carvana were briefly halted Monday morning amid a 28% surge in the stock price. The stock was paused from about 9:45 a.m. ET until 9:50 a.m. ET according to Nasdaq Trader.

The surge could be due to a short squeeze, or when traders betting against the company are forced to sell to cover their losses, sending shares higher. Nearly 60% of the float, or outstanding shares of the company, are currently sold short, according to the latest figures from FactSet.

The company has been struggling, and the stock has shed nearly 100% since the all-time high it hit in 2021.

—Carmen Reinicke

Shares of Ford dipped more than 1% during early morning trading after the automaker said it’s cutting prices but ramping up production for its electric Mustang Mach-E crossover.

It comes in response to Tesla’s announcement earlier this month that it will cut prices on vehicles in the U.S. and Europe.

Ford said it will lower prices by $4,500 on average based on the model.

— Samantha Subin, Michael Wayland

Goldilocks will continue for now, according to HSBC.

The investment bank expects “better-than-consensus” growth in the first half of 2023, implying recession concerns would be pushed out to the latter half of the year, according to a Monday note.

“So rather than being the dismal start, H1 could in fact turn out to be a period of ‘easy gains,’” wrote Max Kettner, chief multi-asset strategist at HSBC Bank.

The strategist cited expectations for falling inflation, as well as a possible temporary recovery in consumer sentiment for his view.

“For H1 this all creates the perfect backdrop for a temporary goldilocks period – something our machine learning models agree with,” Kettner wrote.

— Sarah Min

Stocks open lower

Stocks opened lower on Monday.

The Dow Jones Industrial Average slipped 83 points, or about 0.3%. S&P 500 fell 0.6%, and the Nasdaq Composite dropped by 1%.

Berenberg upgraded Tesla to buy from hold, noting it was worth buying after the electric vehicle maker cut prices and saw shares tumble in recent months.

Analyst Adrian Yanoshik upgraded the stock to buy from hold. Yanoshik lowered his price target by $55 to $200, which still implies a 12.4% upside from where the stock closed Friday.

“We believe that Tesla’s price cuts reflect its cost leadership strategy,” Yanoshik said in a note to clients Friday.

CNBC Pro subscribers can read the full story here.

— Alex Harring

Natural gas contracts on Monday continue their downward spiral

March natural gas contracts tumbled as low as $2.612 per thousand cubic feet early Monday — the lowest since April 2021 when natgas touched $2.583.

Month-to-date natgas has collapsed nearly 40% and is on pace for its worst month and worst start to the year since January 2001, when natgas slid almost 42%.

United States Natural Gas Fund (UNG) is off 6.6% in premarket trading Monday, while EQT Corp. (EQT) is down 1.1%, Black Stone Minerals (BSM) is lower by 0.2% and Woodside Energy (WDS) dropped 0.3%.

— Scott Schnipper, Gina Francolla

Stocks making moves in the premarket

Here are some of the names making moves in premarket trading:

  • Boot Barn — The retailer shed 2.5% in premarket trading after being downgraded by Baird to neutral from outperform. The Wall Street firm cited concerns over macroeconomic risks for the sector.
  • Retail stocks — Macy’s rose 0.48% in early trading after Goldman Sachs said it is best-positioned in retail with solid upside. Kohl’s slipped 2.8% after the firm rated it a sell.
  • Intel — The chipmaker shed 1.5% in the premarket, after its fourth-quarter financial results missed Wall Street’s expectations on Friday. Intel, which lost 9% on Friday, also forecast a loss for the current quarter.

Click here for more premarket movers.

— Michelle Fox

Traders expect small Fed hike this week

Traders are overwhelmingly confident that the Federal Reserve will hike its benchmark interest rate by one-quarter of a percentage point on Wednesday.

According the CME FedWatch tool, there is a 99.9% probability of that relatively small hike this week.

If that proves true, the Fed’s new target range will be between 4.50% and 4.75%.

— Jesse Pound

S&P 500 lows are not in, could fall to 3,000, BofA’s Subramanian says

The S&P 500 has not yet hit its bear market low and could swing down as far as 3,000, Bank of America’s Savita Subramanian said, while adding that it is not her base case for the market’s performance this year.

The biggest catalyst is how the Federal Reserve continues to fight inflation, she said.

“Let’s say the Fed hasn’t controlled inflation, they’re going to tighten much more aggressively than what the market is pricing in,” she said on CNBC’s “Squawk Box” on Monday.

She added that markets are pricing in inflation of about 3%.

“We’re nowhere near that,” she said. “So that’s the swing factor that could make things worse rather than better.”

—Carmen Reinicke

7 HOURS AGO

Renault slashes Nissan stake as the automakers overhaul their decades-long alliance

Automobile giants Renault and Nissan on Monday agreed to restructure their decades-long alliance, in a move that would see Renault’s shareholdings in Nissan reduced from around 43% to 15%.

The deal, which still pends board approvals, would equalize the companies’ cross-shareholdings, with the carmakers now able to “freely exercise the voting rights attached to their 15% direct shareholdings, with a 15% cap,” the companies said.

Read the full story here.

– Elliot Smith

17 HOURS AGO

Stock futures opened little changed

U.S. equity futures had a quiet open on Sunday night. The futures for the three major averages all showed losses of about 0.1%.

— Jesse Pound

17 HOURS AGO

Dow riding six-day winning streak as January comes to a close

Last week’s market rally put the three major averages comfortably higher for the month of January. Here’s where things stand after Friday’s results:

S&P 500:

  • Gained 2.47% for the week
  • Up 6.2% for the month

Nasdaq Composite:

  • Gained 4.32% for the week
  • Up 11.04% for the month

Dow Jones Industrial Average:

  • Gained 1.81% for the week
  • Up 2.5% for the month
  • Six-day winning streak

— Jesse Pound, Christopher Hayes

https://www.cnbc.com/2023/01/27/what-is-a-rolling-recession-and-are-we-in-one-experts-explain.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail

What is a ‘rolling recession’ and how does it affect consumers? Economic experts explain

PUBLISHED FRI, JAN 27 202310:40 AM ESTUPDATED FRI, JAN 27 20231:36 PM EST

Jessica Dickler@JDICKLER

KEY POINTS

  • There’s a lot of speculation about whether a recession is coming in 2023.
  • Some economists say the country is already experiencing a “rolling recession,” rather than a broad contraction to come later.
  • There are certain steps Americans can take now to prepare for successive downturns.

By most measures, the U.S. economy is in solid shape.

Although the first half of 2022 started off with negative growth, a strong labor market and resilient consumer helped turn things around and give hope for the year ahead.

A further stock rally will be ‘like bathing in lava’ for market bears, BofA says

Jeff Cox

3 DAYS AGO

Gross domestic product, which tracks the overall health of the economy, rose more than expected in the fourth quarter, and the Federal Reserve is widely expected to announce a more modest rate hike at next week’s policy meeting as inflation starts to ease.

Still, some portions of the economy, such as housing, manufacturing and corporate profits, have shown signs of a slowdown, and a wave of recent layoffs fueled fears that a recession still looms.

“There’s no scarcity of economists with strong opinions,” said Tomas Philipson, a professor of public policy studies at the University of Chicago and former acting chair of the White House Council of Economic Advisers. “There’s a lot of scarcity of economists with the right opinion.”

A ‘rolling recession’ may already be underway

Rather than an abrupt contraction Americans need to brace for, a “rolling recession” is already in progress, according to Sung Won Sohn, professor of finance and economics at Loyola Marymount University and chief economist at SS Economics. “This means some parts of the economy take turns suffering rather than simultaneously.”

In fact, the worst may even be over, he said.

A large portion of the reaction to the Fed’s moves has worked its way through the economy and the financial markets. Businesses trimmed inventories and cut jobs in some areas, and consumers refinanced their homes ahead of rising rates.

“It is time to think about an exit strategy,” Sohn said.

This cycle has proven so many of our traditional theories wrong.

Yiming Ma

ASSISTANT FINANCE PROFESSOR AT COLUMBIA UNIVERSITY BUSINESS SCHOOL

“Expectations about a recession have been pretty inaccurate,” added Yiming Ma, an assistant finance professor at Columbia University Business School.

“This cycle has proven so many of our traditional theories wrong,” Ma said.

In fact, this could be the soft landing Fed officials have been aiming for after aggressively raising interest rates to tame inflation, she added.

What this means for consumers

But regardless of the country’s economic standing, many Americans are struggling in the face of sky-high prices for everyday items, such as eggs, and most have exhausted their savings and are now leaning on credit cards to make ends meet.

Several reports show financial well-being is deteriorating overall.

“For consumers, there’s a lot of uncertainty,” Philipson said. For now, the focus should be on sustaining income and avoiding high-interest debt, he added.

“Don’t plan any major future expenses,” he said. “No one knows where this economy is going.”

How to prepare your finances for a rolling recession

While the impact of inflation is being felt across the board, every household will experience a rolling recession to a different degree, depending on their industry, income, savings and job security.

Still, there are a few ways to prepare that are universal, according to Larry Harris, the Fred V. Keenan Chair in Finance at the University of Southern California Marshall School of Business and a former chief economist of the Securities and Exchange Commission.

Here’s his advice:

  • Streamline your spending. “If they expect they will be forced to cut back, the sooner they do it, the better off they’ll be,” Harris said. That may mean cutting a few expenses now that you just want and really don’t need, such as the subscription services that you signed up for during the Covid pandemic. If you don’t use it, lose it.
  • Avoid variable-rate debts. Most credit cards have a variable annual percentage rate, which means there’s a direct connection to the Fed’s benchmark, so anyone who carries a balance has seen their interest charges jump with each move by the Fed. Homeowners with adjustable-rate mortgages or home equity lines of credit, which are pegged to the prime rate, have also been affected.
  • Stash extra cash in Series I bonds. These inflation-protected assets, backed by the federal government, are nearly risk-free and are currently paying 6.89% annual interest on new purchases through this April, down from the 9.62% yearly rate offered from May through October last year.
    Although there are purchase limits and you can’t tap the money for at least one year, you’ll score a much better return than a savings account or a one-year certificate of deposit. Rates on online savings accounts, money market accounts and CDs have all gone up, but those returns still don’t compete with inflation.

Subscribe to CNBC on YouTube.

 

https://www.cnbc.com/2023/01/26/intels-horrible-quarter-inventory-glut-and-underused-factories.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail

Intel’s horrible quarter revealed an inventory glut and underused factories

PUBLISHED THU, JAN 26 20236:58 PM ESTUPDATED THU, JAN 26 20238:13 PM EST

Kif Leswing@KIFLESWING

KEY POINTS

  • Intel’s December earnings showed significant declines in the company’s sales, profit, gross margin, and outlook, both for the quarter and the full year.
  • In short: Intel had a difficult 2022, and 2023 is shaping up to be tough as well.

Intel’s December earnings showed significant declines in the company’s sales, profit, gross margin, and outlook, both for the quarter and the full year.

Investors hated it, sending the stock over 9% lower in extended trading, despite the fact that Intel did not cut its dividend.

The earnings report, which was the eighth under CEO Pat Gelsinger’s leadership, shows a legendary technology company struggling with many factors outside of its control, including a deeply slumping PC market. It also highlights some of Intel’s current issues with weak demand for its current products and inefficient internal performance, and underscores how precarious the company’s financial health has become.

“Clearly, the financials aren’t what we would hoped,” Gelsinger told analysts.

In short: Intel had a difficult 2022, and 2023 is shaping up to be tough as well.

Here are some of the most concerning bits from Intel’s earnings report and analyst call:

Weak and uncertain guidance

Intel didn’t give full-year guidance for 2023, citing economic uncertainty.

But the data points for the current quarter suggest tough times. Intel guided for about $11 billion in sales in the March quarter, which would be a 40% year-over-year decline. Gross margin will be 34.1%, a huge decrease from the 55.2% in the same quarter in 2021, Gelsinger’s first at the helm.

But the biggest issue for investors is that Intel guided to a 15 cent non-GAAP loss per share, a big decline for a company that a year ago was reporting $1.13 in profit per share. It would be the first loss per share since last summer, which was the first loss for the company in decades.

An inventory glut

Management gave several reasons for the tough upcoming quarter, but one theme that came through was that its customers simply have too many chips and need to work through inventory, so they won’t be buying many new chips.

Both the PC and server markets have slowed after a two-year boom spurred by remote work and school during the pandemic. Now, PC sales have slowed and the computer makers have too many chips. Gelsinger is predicting PC sales during the year to be around 270 million to 295 million — a far cry from the “million units-a-day” he predicted in 2021.

Now, Intel’s customers have to “digest” the chips they already have, or “correct” their inventories, and the company doesn’t know when this dynamic will shift back.

“While we know this dynamic will reverse, predicting when is difficult,” Gelsinger told analysts.

Dropoff in gross margin

Underpinning all of this is that Intel’s gross margin continues to decline, hurting the company’s profitability. One issue is “factory load,” or how efficiently factories run around the clock. Intel said that its gross margin would be hit by 400 basis points, or 4 percentage points, because of factories running under load because of soft demand.

Ultimately, Intel forecasts a 34.1% gross margin in the current quarter — a far cry from the 51% to 53% goal the company set at last year’s investor day. The company says it’s working on it, and the margin could get back to Intel’s goal “in the medium-term” if demand recovers.

“We have a number of initiatives under way to improve gross margins and we’re well under way. When you look at the $3 billion reduction [in costs] that we talked about for 2023, 1 billion of that is in cost of sales and we’re well on our way to getting that billion dollars,” Gelsinger said.

The not-so-bad news: Dividend and self-driving

Long-term investors have always closely watched how the company balances the near-term need to placate shareholders with the massive capital spending needed to stay competitive in the semiconductor manufacturing business.

If Intel is cutting costs and still needing to invest in chip factories to power its turnaround, analysts say it may want to reconsider its dividend. Intel spent $6 billion on dividends in 2022, but did not cut its dividend on Thursday.

Meanwhile, the company said it wants to cut $3 billion in costs for 2023 and analysts believe it wants to spend around $20 billion in capital expenditures to build out its factories.

Gelsinger was asked about this dynamic on Thursday.

“I’d just say the board, management, we take a very disciplined approach to the capital allocation strategy and we’re going to remain committed to being very prudent around how we allocate capital for the owners and we are committed to maintaining a competitive dividend,” Gelsinger replied.

There was at least one bright spot for Intel on Thursday.

Mobileye, its self-driving subsidiary that went public during the December quarter, reported earlier in the day, showing adjusted earnings per share of 27 cents and revenue growth of 59%, to $656 million. It also forecast strong 2023 revenue of between $2.19 billion and $2.28 billion. Shares rose nearly 6% during regular trading hours Thursday.

 

https://www.cnbc.com/2023/01/22/self-made-millionaire-3-traits-that-set-highly-successful-people-apart.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail

Self-made millionaire: These 3 traits separate highly successful people from everyone else at work

Published Sun, Jan 22 202310:00 AM EST

Morgan Smith@THEWORDSMITHM

Success isn’t always linear, and it doesn’t have a standard definition, either.

While people might measure and achieve success differently, there are some traits that set high achievers apart from others.

These attributes don’t just happen by accident or luck — they’re built through intentional habits, practiced every day until they become second nature.

The habits of successful people tend to be profoundly powerful, yet “incredibly simple,” says Steve Adcock, a self-made millionaire who retired at 35.

In 2016, he and his wife Courtney retired after accumulating about $870,000 working in information technology. With the right investments, their net worth increased to $1 million shortly after.

Adcock credits much of his success to smart habits he adopted in his 20s, modeled after the traits of high-achieving mentors and colleagues he admired throughout his career.

There are three traits in particular that set successful people apart from everyone else in the workplace, Adcock says — here’s how to develop them:

Optimism

“Believing in yourself and having the confidence to put yourself out there is the first step to success. If you adopt the mindset that you can do almost anything you set your mind to, that level of optimism will shine through in the work that you do and make it 10x better.

Optimism isn’t just about being more positive about the future of your career — it’s about having a sunny outlook on life in general, too. If you smile a lot and are kind to people, you are going to instantly separate yourself from 99% of the population because most people just don’t do that.

At the start of my career, I quickly noticed that people wanted to work with the people who walked into the office smiling, who said hello to everyone, who just had a natural, upbeat personality. I started following their lead, and that attitude got me way more opportunities both inside and outside of the office than if I had been sullen and serious all the time.”

Emotional Intelligence

“For a long time, I thought that your intelligence quotient (IQ) determined your future success — I wasted a lot of time trying to impress people with my knowledge about random things.

But as I progressed through my career, I learned that IQ is only a small part of the success equation. Developing a strong emotional intelligence (EQ), or a heightened awareness of other people’s emotions, as well as your own, will get you much farther in life.

People with strong EQ are more self-aware and willing to take responsibility when things go wrong instead of blaming someone else, which is a bad habit that a lot of people do. But to build wealth and be successful, you need to be willing to learn from your mistakes and understand your shortcomings.

Improving your emotional intelligence can also help you navigate challenging situations calmly and rationally, and work with many different types of personalities more effectively. Practicing EQ helped me become a better communicator and build stronger relationships with my bosses.”

Perseverance

“I hate the phrase ‘never give up,’ because rich and successful people give up all the time. What’s more important is knowing when and how to give up, and not giving up on your dreams too quickly.

Accept and anticipate change: You’re going to encounter problems that are small and manageable, as well as ones that feel so big and disarming that you might want to give up on your dreams entirely.

That’s where perseverance comes in: If you believe in yourself and are consistent about working hard to achieve whatever goals you set out for yourself, you’re unstoppable.

Be patient, know your absolute limits and try your best to cope with any challenges that arise before throwing in the towel entirely, because success could be just around the corner.”

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