Author: BlackMask Financial

The S&P 500 is on the verge of achieving its first “golden cross” in 2½ years, but that doesn’t mean stocks are destined for more gains over the coming year. The golden-cross indicator is used by technical analysts as a sign that a particular upward trend in markets or currencies is gaining momentum. Barring a massive selloff in stocks, the S&P 500’s 50-day moving average should cross its 200-day moving average in a matter of days. If it happens, it would mark the first such event since July, 2020, according to FactSet data. Data show it often does precede further gains for stocks over the following six months, or a year, but not always. The S&P 500 has seen 52 golden crosses since 1930, according to Dow Jones Market Data, which used back-tested data to account for the index’s performance prior to its creation in 1957. In that time, stocks were trading higher one year later 71% of the time.But there have been some notable exceptions during periods of heightened volatility.The S&P 500 SPX, +0.25% declined during the 12 months that followed the golden cross that occurred on April 1, 2019, according to Dow Jones Market Data.

This happened again in 1999 as the dot-com bubble burst, and also following a golden cross that occurred in1986, preceding the “Black Monday” crash.

Jan 26 (Reuters) – Intel Corp (INTC.O) said on Thursday it expects to lose money in the current quarter, surprising investors with a bleaker-than-expected outlook for both the PC market and slowing growth in its key data center division. The company’s shares fell 9.5% in trading after the bell.

“We stumbled, right, we lost share, we lost momentum. We think that stabilizes this year,”

Chief Executive Pat Gelsinger told investors on a conference call. He said Intel has been losing market share in the data center market, a nod at the strength of rival Advanced Micro Devices (AMD.O) Two of Intel’s most important markets are showing weakness after two years of strong growth as remote work boomed during the pandemic. Now, the PC industry is struggling with a glut of chips after demand for consumer electronics fell off a cliff and business customers wary of a recession are slowing spending on data centers. Gelsinger told Reuters that customers also were emptying inventory. “We expect some of the largest inventory corrections literally that we’ve ever seen in the industry taking place that’s affecting the Q1 guide in a meaningful way,” he said. “Everything hinges on the PC market recovery. AMD isn’t immune to this either,” said Wayne Lam, an analyst at CCS Insight. “Don’t think we’ve seen the bottom for INTC…They are not running a sustainable business model.”

Intel expects profit margins to fall further after dropping from 58.4% in the fourth quarter of 2020 to 43.8% in the fourth quarter of 2022. “Its safe to say that ambitions to return to a 60% margin in the future is light years away,” said CFRA Research analyst Angelo Zino.

Intel reiterated its medium-term goal of 51-53% gross margin, and 54-58% longer term. Shares of other microchip companies fell as well, with AMD down 2.6% and Nvidia Corp (NVDA.O) down 2%. PC shipments fell 16.5% to 292.3 million units in 2022, per data from research firm IDC, forcing chipmakers to cut back production and slash revenue forecasts.

Shrinking PC demand also pressured Microsoft Corp’s (MSFT.O) More Personal Computing segment, which includes Windows, devices and search revenue, leading to a 19% drop in the segment in its second quarter. Meanwhile, the data center market has also slowed from double-digit growth as businesses cut costs to ride out an economic slowdown. After Gelsinger returned to the company nearly two years ago, Intel has focused on regaining the lead in chipmaking technology. Outsourcing the chipmaking process has helped rivals like AMD make much smaller and faster chips and outpace Intel’s technology. The company forecast first-quarter revenue in the range of about $10.5 billion to $11.5 billion. Analysts on average were expecting total revenue of $13.93 billion, according to Refinitiv data. The company expects an adjusted loss of 15 cents per share versus expectations of a 24 cents per share profit. Revenue in the fourth quarter fell 32% to $14 billion. Analysts on average expected revenue of $14.46 billion.

In an about-face on the provision of Western weapons for Ukraine, and despite warnings from Moscow of a serious escalation, Washington has agreed to supply Kyiv with 31 Abrams tanks in a decision announced shortly after Germany agreed to deploy Leopard 2 tanks to Ukraine.  The German announcement preceded the U.S. announcement of tank provisions, with reports suggesting that Berlin required a similar commitment from Washington before agreeing to a deal.
The provision of U.S. Abrams tanks represent a complete reversal by the Department of Defense. It also represents a shift to heavy offensive weapons, while previous assistance in terms of heavy weapons has been defensive in nature.
Moscow responded to Germany’s announcement that it would provide 14 Leopard 2 A6 tanks to Ukraine by warning of dangerous escalation.

“This extremely dangerous decision takes the conflict to a new level of confrontation,” Russia’s Ambassador to Germany Sergei Nechayev said in a statement Wednesday, as reported by The Moscow Times. 

U.S. President Joe Biden announced the tank deal, stressing that it did not represent an “offensive threat to Russia”.  While the German tanks are expected to arrive in Ukraine quickly, the U.S. tanks, according to The Moscow Times, will take months to reach the front line due to the procurement process, as well as requiring significant training. Training is also required for the German tanks.  Due to complications in procuring and deploying the American Abrams tanks, the move is being viewed as largely symbolic and intended to appease Germany and win a commitment for Leopard 2 tanks for Ukraine.  On Wednesday, Moscow warned that Western tanks would be destroyed on the Ukraine battlefield.  Russia media is also highlighting what it calls the German Foreign Minister’s declaration of “war” against Russia.

Trump warns of nuclear war as US sends tanks to Kiev

Former President Donald Trump warned Thursday that “nukes” could come in the wake of decisions from Western countries to send long-sought tanks to Ukraine amid its ongoing war against Russia. President Joe Biden announced Wednesday that the U.S. would send 31 M1A1 Abrams tanks to Ukraine, the equivalent of one Ukrainian battalion. Biden described the Abrams as the “most capable tanks in the world,” and said that U.S. Defense Lloyd J. Austin III had recommended providing them in order to “enhance the Ukraine’s capacity to defend its territory and achieve its strategic objectives.”  Biden’s announcement came shortly after German Chancellor Olaf Scholz announced Wednesday that Germany would provide 14 Leopard 2 A6 tanks to Ukraine, and other countries also in possession of the German-made tanks would be permitted to send them to Ukraine as well. Poland, which had been seeking to provide Leopard 2 tanks to Ukraine, officially requested Germany’s consent on Tuesday. A Truth Social post from Trump on Thursday appeared to react to the recent wave of announcements on Western tank deliveries.

“FIRST COME THE TANKS, THEN COME THE NUKES. Get this crazy war ended, NOW. So easy to do!” Trump wrote.

Some experts and officials are not convinced that Russian President Vladimir Putin’s regime would resort to deploying nuclear weapons as the war in Ukraine reaches 11 months. Others believe that a nuclear attack from Russia could be a possibility in some circumstances, such as if Putin faces defeat in the war. Regardless, Russian officials and media have heavily criticized the West’s tank decisions. Russian Ambassador to Germany Sergey Nechaev, for example, said in a statement on Wednesday that Germany sending Leopard 2 tanks to Ukraine is “extremely dangerous” and brings the war to a “new level of confrontation.” “Once again, we are convinced that Germany, like its closest allies, is not interested in a diplomatic solution to the Ukrainian crisis, it is set up for its permanent escalation and unlimited pumping of the Kyiv regime with more and more deadly weapons,” Nechaev said. “‘Red lines’ are a thing of the past.”  National Security Council spokesperson John Kirby addressed the U.S. decision on sending Abrams tanks on Wednesday. During a press briefing with White House Press Secretary Karine Jean-Pierre, Kirby noted that “a lot that goes into operating these tanks on the field,” such as training and maintenance requirements. But he stressed that the decision to provide the tanks is in line with discussions the U.S. has been having with Ukrainians for months “about making sure that they can fight on the terrain that they’re in and that they can prepare for operations going forward this year.”

NN: Russian Tanks versus German Tanks rolling on the great planes of Europe (no matter who the drivers are)…. again. It sure does not give me a warm and gushy feeling. Lets face facts for the good or the bad this is a escalation. NATO wants to be in a half war…. You got to take the war to your enemy… AND EUROPE IS NOT WILLING TO DO THAT.  By playing the energy and food card Putin has taken the war to Europe. I am afraid this is the start of what will be a Europe wide war……

Tesla Inc. reported better-than expected profits in the latest quarter, even as it gave mixed signals on the outlook for growth in vehicle deliveries. The EV market leader said it would increase output “as quickly as possible” — in line with previous guidance for average annual growth of 50% over multiple years. However, Tesla said it’s on track to deliver about 1.8 million vehicles this year, which would represent a production jump of about 37%. On a call with analysts, Chief Executive Officer Elon Musk said that outlook is conservative, saying that production could be closer to 2 million vehicles without unexpected disruptions. He sought to dispel questions about consumer demand for Tesla vehicles as the company ramps up production. “The most common questions we’ve been getting from investors is about demand. So I want to put that concern to rest,” Musk said, adding that Tesla is currently seeing orders at almost twice the rate of production following dramatic price cuts. “Demand will be good despite probably a contraction in the automotive market as a whole,” he said.  The automaker has become something of a bellwether for the global auto market as its deliveries grow and much of the industry shifts toward making battery-powered vehicles. It now has four auto plants on three continents, including its newest plant in Austin.  The stock rose 5.4% in extended trading at 7:07 p.m. in New York.  Tesla roughly doubled its production capacity in 2022. Its annualized production estimate for the fourth quarter was a new record, and near the company’s total production capacity for the first time.  Tesla also confirmed it’s still on track to start building the long-awaited Cybertruck in Austin later this year, with more details of its next-generation vehicle platform planned at an investor day on March 1.  Musk highlighted that Cybertruck production won’t happen at volume until 2024. That gives rival vehicles more time to enjoy a first-mover advantage in the nascent electric truck market, including Ford Motor Co.’s F-150 Lightning and Rivian Automotive Inc.’s R1T.

Inventory Surplus

Tesla production exceeded deliveries by over 34,000 vehicles last quarter

Tesla’s fourth-quarter revenue was $24.3 billion, slightly topping market expectations. Gross automotive margins, however, were 25.9%, below analysts’ average estimate of 28.4% — a sign of potential concern for investors following a recent round of price reductions. In the year-earlier period, the gross automotive margin was 30.6%.

On the call, Musk said that 2022 was a difficult year due to shutdowns at Tesla’s China factory, higher borrowing costs and logistical issues. He added that the company’s recent price cuts were needed to make car more affordable to mass-market buyers.

Income from the sale of regulatory credits — used by other automakers to offset greenhouse gas emissions — came to $467 million, up from $286 million in the prior quarter and $314 million a year ago. Tesla has said it expects such revenue to shrink over time as competitors launch more EVs to comply with emissions regulations and meet growing demand. Musk’s comments on Wednesday were his first session with analysts since he bought Twitter Inc. for $44 billion in late October. His move to fund that acquisition in part by selling shares of Tesla has weighed on the stock, which has fallen 53% over the past 12 months. Musk said his presence on Twitter and his purchase of the social-media company, which has been flagged as an expensive distraction, is a net positive, citing his 127 million followers on the platform.

Tesla reported its second straight quarterly drop in customer deposits — down to $1.06 billion — after hitting an all-time high of $1.1 billion exiting the second quarter in 2022.

NN: They cant possibly make their forward guidance… Remember this earning season everyone got a boost on inflation and the captives being set free

Stocks slumped after Microsoft Corp. warned about a slowdown in sales, fueling concern that even stalwart of the technology industry is getting hit as the economy cools. Shares of the software giant tumbled more than 4%, putting the Nasdaq 100 on track for its worst rout in a month. Texas Instruments Inc., one of the world’s largest chipmakers, sank after suffering its first sales decline since 2020 and giving a tepid forecast. After the closing bell, two other bellwethers — Tesla Inc. and International Business Machines Corp. will report their numbers.

Fourth-quarter earnings for tech firms in the S&P 500 are projected to drop 9.2% from the same period a year earlier, the steepest slide since 2016, data compiled by Bloomberg Intelligence show. The speed of the deterioration in sentiment is notable: Three months ago, Wall Street merely saw profits coming in flat.

“If earnings reports continue to be disappointing, it’s going to be very hard to argue that the market can rally further because the negative news has already been priced-in, given that the stock market has rallied quite nicely so far this month,” said Matt Maley, chief market strategist at Miller Tabak. The US equity benchmark is poised for its best January since 2019 after a rally that was driven by expectations the Federal Reserve will moderate its rate hikes. Still, this year’s rebound comes at a time when the economy is heading for a downturn, which could set the stage for a selloff, according to JPMorgan Chase & Co.’s Marko Kolanovic. “Fundamentals are deteriorating, and the market has been moving up. So that has to clash at some point,” the bank’s chief global markets strategist told CNBC. In other corporate news, Boeing Co. reported a surprise loss to end 2022 — its sixth straight money-losing quarter — as higher costs slowed the planemaker’s recovery even though a late flurry of jet deliveries drove a surge in cash. AT&T Inc.’s profit and free cash flow forecast for 2023 missed analyst estimates as the wireless carrier invests in network improvements. NN: This stock market rally attempts are like sending a hooker flowers. Her and her pimp will have a big laugh and charge you double!

NN2: I am sure this war we are in is far from over. Its the most overvalued poised on the edge of a cliff market  i have ever seen. And i have seen a lot. I am sure a crash is coming… But the reality is we will be tested to our limits….. Is that really something new for you?

Bank of Spain is good… But the bank of New York is better cause they have far more money…. Besides they wore masks to.

 

S&P 500 could drop 17% in 2023 to test 3,200 level

The hard part may still lie ahead, according to longtime stock market investor Jeremy Grantham. The legendary co-founder of Boston-based investment firm GMO argued in a Tuesday paper, cheerfully titled, “After a Timeout, Back to the Meat Grinder,” that “the first and easiest leg of the bursting of the bubble we called for a year ago is complete.” The 2022 rout left the most speculative growth stocks that led the market on the way up “crushed, while a “large chunk of the total losses across markets that we expected to see a year ago have already occurred.” It gets trickier from here. While the downturn has wiped the most “extreme froth” off the market, valuations remain well above long-term averages, he said, noting that in the past they have tended to overcorrect, falling below their long-term trend line as fundamentals deteriorate. Grantham estimated the trend line value of the S&P 500 index, adjusted upward for trend line growth and expected inflation, will be around 3,200 by the end of 2023. The investor said it was a 3-to-1 bet the S&P 500 reaches that level and spends at least some time below it this year or next. A drop to 3,200 would mark a roughly 17% fall for the year and a drop of around 20% from the S&P 500’s SPX, -1.26% Tuesday finish at 4,019.81. Such an outcome wouldn’t be “the end of the world but compared to the Goldilocks pattern of the last 20 years, pretty brutal. “To spell it out, 3200 would be a decline of just 16.7% for 2023 and with 4% inflation assumed for the year would total a 20% real decline for 2023 — or 40% real from the beginning of 2022,” he wrote. “A modest overrun past 3200 would take this entire decline to, say, 45% to 50%, a little less bad than the usual decline of 50% or more from previous similarly extreme levels.” Grantham said that while such an outcome remains highly likely, investors should have far less certainty about the timing and extend of the market’s next leg down. Grantham said. when it comes to the big picture for equities, long-run issues of declining population, shortages of raw materials and rising damage from climate change are beginning to “bite hard” into growth prospects, Grantham said. “The resource and geopolitical shocks of last year will only exacerbate those issues. And over the next few years, given the change in the interest rate environment, the possibility of a downturn in global property markets poses frightening risks to the economy,” he wrote.

Microsoft Corp’s (MSFT.O) lackluster quarterly outlook points to more gloom ahead for the tech sector, analysts said, after the tech bellwether warned its customers were cautious about spending in a turbulent economy. Microsoft, the second most valuable U.S. company, sounded a cautious note in its quarterly earnings report as a steep fall in client spending has sparked a series of high-profile layoffs in the tech industry.

Microsoft Corporation reported on Tuesday that its diluted earnings per share were 11% lower year over year, landing at $2.20 in the second quarter of fiscal 2023. Net income stood at $16.4 billion, 12% down from the second trimester of 2022 while operating income declined 8% to $20.4 billion.

The company’s Chief Executive Officer, Satya Nadella, and other Microsoft executives used the words “caution” and “cautious” at least six times on the one hour call on Tuesday. Analysts said the sharp slowdown in Microsoft’s revenue growth was a “warning sign” for the tech sector, with more weakness at its PC division than the cloud business.

“What we learned is that no one is immune to macro… what is telling is the quarter was largely fine, but we started to see softness in December and the outlook for this quarter was worse than expected,” said Rishi Jaluria, analyst at RBC. Companies from Amazon.com Inc (AMZN.O) to Facebook-parent Meta Platforms (META.O) are already preparing for tougher months ahead by slashing tens of thousands of jobs to keep their cash reserves high. Microsoft’s shares were down about 3% in pre-market trading on Wednesday. Shares of cloud companies including Alphabet Inc’s Google (GOOGL.O), Amazon.com, Salesforce (CRM.N), Cisco (CSCO.O) and Workday Inc (WDAY.O) all declined. NN: What part of a depression is coming is so hard to understand. If the biggest and the best and the brightest are battening down the hatches this must be seeing storm clouds…..

The possibility of a big COVID-19 rebound in China over the next two or three months is remote as 80% of people have been infected, a prominent government scientist said on Saturday.

The mass movement of people during the ongoing Lunar New Year holiday period may spread the pandemic, boosting infections in some areas, but a second COVID wave is unlikely in the near term, Wu Zunyou, chief epidemiologist at the China Center for Disease Control and Prevention, said on the Weibo social media platform. Hundreds of millions of Chinese are travelling across the country for holiday reunions that had been suspended under recently eased COVID curbs, raising fears of fresh outbreaks in rural areas less equipped to manage large outbreaks.

China has passed the peak of COVID patients in fever clinics, emergency rooms and with critical conditions, a National Health Commission official said on Thursday.

Nearly 60,000 people with COVID had died in hospital as of Jan. 12, roughly a month after China abruptly dismantled its zero-COVID policy, according to government data.  NN: Keep you eye on the money ball. Lets say China kills 10 million people…… Hell take the worse case they kill 100 million….. What does that do to a country with 1.4 BILLION people. To the commies they cull the old and sickly that can’t work anyway. China has a great big problem. Not enough jobs to go around. Working age population is 1 billion people. So that means they have 400 million people to young or to old to work. COVID has little effect on their working age population….. Basically a bad case of the flue. SO from a money ball stand point its everybody back to the factories and zoom Zoom ZOOM on oil consumption. And they cut their social welfare costs in the die off.