HI Market View Commentary 04-12-2021
|WEEK OF APR. 5 THROUGH APR. 9, 2021|
|The S&P 500 index rose 2.7% last week to new record highs as the technology, consumer discretionary and communication services sectors led a broad climb. The market benchmark ended the week at 4,128.80, up from its closing level of 4,019.87 last Thursday, which was the last trading day last week due to the market being closed last Friday for the Good Friday holiday. Friday’s closing level marked the S&P 500’s highest close ever. It also set a fresh intraday record Friday at 4,129.48. The gains came as Federal Open Market Committee minutes released this week from the policy-setting committee’s March 16-17 meeting showed agreement among members that it “would likely be some time until substantial further progress toward the Committee’s maximum-employment and price-stability goals would be realized,” adding that asset purchases “would continue at least at the current pace until then.” Investor sentiment also improved as JPMorgan (JPM) Chief Executive Jamie Dimon said in a letter to shareholders he sees an economic “Goldilocks moment” ahead and expects an economic boom through 2023 thanks to excess savings, new stimulus savings, deficit spending and successful COVID-19 vaccines, among other factors. Progress continued to be made this week in vaccine distributions although newly reported COVID-19 cases in the US also rose amid spreading variants. Nearly 20% of the total US population has been fully vaccinated so far while almost 34% has had at least one dose. The weekly advance in US stocks was broad, with all but one sector posting weekly gains. The largest percentage increase was recorded by the technology sector, up 4.7%, following by a 4.2% climb in consumer discretionary and a 3.2% rise in communication services. The lone declining sector was energy, down 4%. The technology sector’s gainers included Mastercard (MA), up 4.6% on the week, as the US-based payment technology company said worldwide online retail sales increased by $900 billion in 2020. The company also reported US retail sales excluding automotive and gasoline increased 26% year over year in March while online sales jumped 57%. Mastercard plans to release Q1 results on April 29. Among consumer discretionary stocks, Norwegian Cruise Line (NCLH) shares climbed 10% as the cruise operator said it is planning to resume cruises from the US in July and has asked the US Centers for Disease Control & Prevention to lift the conditional sail order. The company plans to resume cruises outside the US with cruises in Greece in late July. In communication services, Twitter (TWTR) shares jumped 12%. A Bloomberg News report said Twitter has held deal talks with audio-based social network Clubhouse in recent months but the discussions are no longer ongoing, according to unnamed people familiar with the matter. On the downside, the energy sector’s drop came as crude oil futures slid. The decliners included Occidental Petroleum (OXY), whose shares fell 10% on the week amid a regulatory filing showing activist investor Carl Icahn sold 7 million shares of the company for $25.60 each, totaling about $180 million. Next week marks the unofficial kickoff of the Q1 earnings reporting season, with big banks JPMorgan Chase, Wells Fargo (WFC) and Goldman Sachs (GS) expected to release results Wednesday. Bank of America (BAC), Alcoa (AA) and PepsiCo (PEP) are among the companies expected to report Thursday, followed by Morgan Stanley (MS) on Friday. As for economic data, next week’s calendar features the March consumer price index on Tuesday, March retail sales on Thursday and March building permits and housing startsas well as April consumer sentiment on Friday. Provided by MT Newswires|
What am I looking this week?
- CPI Inflation numbers coming out tomorrow
- Already protected on our bank stocks
- Getting positions protected a little earlier than normal (3 weeks out or so) Volatility coming down significantly over the last month will make protection much cheaper.
- GUIDANCE, GUIDANCE, GUIDANCE
- No guidance or bad guidance will send the market down
- Possibly more important than earnings numbers
- We could have sold off our 320 Puts and bought 70% more stock.
- Why didn’t we? Because, it moved $25 dollars in 1 day. RIDICULOUS!! Instead we bought about 40% more stock and used the rest of what we made to add 195 puts.
- Rolled protection up to 215 strike puts out to May 28th.
- Dual list? Aren’t a ton of companies dual listed? Big deal!
- Delisting? We can manage the stock and sell for a profit and hold options to expiration. Or we can manage it in a foreign exchange through E*Trade.
- Looking to get it protected at 130
- Why has it worried the market?
- Higher interest rates.
- Powell said “we aren’t raising rates in 2021”
- The consensus is that they won’t raise rates in 2022 either
- What is the big deal? Less buying power
- Could head for hyperinflation like in the 80’s
- There has never been more dollars in the system and therefore not worth as much.
Where will our markets end this week?
DJIA – Bullish
SPX – Bullish
COMP – Bullish
Where Will the SPX end April 2021?
Wed: BBBY, GS, JPM, WFC
Thur: BAC, BLK, SCHW, C, DAL, PEP, AA
Fri: ALLY, BK, CFG, MS
Tues: CPI, Core CPI
Wed: Import/export price index, Fed Powell speech
Thur: Manufacturing, continuing claims, Initial Claims, Retail Sales
Fri: Building Permits, Housing Starts
Mon – EUR Retail Sales
Tues – CNY Import/Exports
Wed – ECB speech, industrial production
Thursday – EUR CPI
Friday- CNY GDP, Retail sales
How am I looking to trade?
Getting protection on a bit early for earnings season. AAPL tomorrow
www.myhurleyinvestment.com = Blogsite
Intel CEO Pat Gelsinger said Monday that he hopes that American companies will manufacture a third of semiconductor microchips in the U.S., up from about 12% today.
“I believe our moonshot should be that a third of the supply of semiconductors should be back on American soil by American companies,” Gelsinger said on CNBC’s “TechCheck.“
Gelsinger was speaking ahead of a virtual meeting on Monday held by the White House to discuss the global semiconductor shortage, which has snarled industries from automotive manufacturing to electronics.
The summit comes as the Biden administration has brought attention to the location of the global semiconductor supply chain. The top factories that manufacture chips are based in Taiwan and Korea, and U.S. government officials have been pushing to increase manufacturing on American soil for industries like defense, as well as to hedge against possible geopolitical events that could cut off U.S. chip supplies.
Earlier this year, Intel announced that it would invest $20 billion in new semiconductor factories, called fabs, in Arizona. It also said it planned to become a foundry, or a company that manufactures other companies’ chips for them.
Also participating in the summit are Taiwan’s TSMC and South Korea’s Samsung, which are the two biggest foundry firms and control more than 70% of that market. TSMC makes chips for companies like Apple and Amazon, and has a 54% share of the foundry market, according a Trendforce estimate.
On Monday, Gelsinger emphasized that while manufacturing on U.S. soil was important, he also believes that U.S. companies should own the intellectual property that makes advanced microchip manufacturing possible. “We want to have the R&D, the research, the ownership of the technology, not just the manufacturing by American companies on American soil,” Gelsinger said.
“It isn’t just manufacturing, it’s control and influence on the total control and technologies that go behind it,” Gelsinger said.
The Biden administration has backed $50 billion in funds for the American semiconductor industry through its $2 trillion infrastructure proposal. In Feburary, the White House also ordered a review of U.S. supply chains for several core products, including semiconductors. The 2021 defense bill included the Chips Act, which called for federal incentives for semiconductor manufacturing, but did not provide funding.
Baidu defeats U.S. shareholder lawsuit over China internet law compliance
By Jonathan Stempel
(Reuters) – A U.S. judge has dismissed a lawsuit accusing Baidu Inc of defrauding shareholders about its ability to comply with Chinese regulations governing internet content.
In a Wednesday night decision, U.S. District Judge Lucy Koh rejected claims in the proposed class action that 12 statements that Baidu made from March 2019 to March 2020 were false and misleading and inflated the Beijing-based company’s share price.
The statements included that the world’s largest search engine other than Alphabet Inc’s Google had “cleaned up” harmful or questionable content such as material related to drugs, gambling and pornography, giving users more confidence and potentially boosting online traffic and revenue.
Koh, based in San Jose, California, also found no proof of an intent to defraud, after the plaintiff Roger Ikeda argued that senior Baidu executives concealed compliance shortfalls to avoid fines and suspensions from the Chinese government.
Lawyers for Ikeda did not immediately respond to requests for comment on Thursday, nor did Baidu’s lawyers.
The lawsuit was filed last April, shortly after China’s internet regulator Cyberspace Administration of China ordered Baidu to halt the spread of “low-brow content,” prompting Baidu to suspend some channels on its mobile app.
Baidu resumed updating the channels two weeks later.
The proposed shareholder class included holders of Baidu’s American depositary shares from March 16, 2019 to April 7, 2020. Koh dismissed the lawsuit without prejudice, meaning the plaintiffs can amend their complaint.
The case is Ikeda v Baidu Inc et al, U.S. District Court, Northern District of California, No. 20-02768.
(Reporting by Jonathan Stempel in New York; Editing by Bill Berkrot)