- Asian Stocks Rise After Another S&P 500 Record: Markets Wrap
(Bloomberg) — Asian equities opened higher on Wednesday after a surge in chipmakers drove US stocks to yet another record-breaking session on Wall Street. Shares in South Korea jumped about 1% and those in Japan also climbed, while the Australian benchmark was little changed. US traders pushed the S&P 500 closer to the historic 5,500 mark, betting the potential for Federal Reserve rate cuts will keep fuelling the tech industry.
- Putin Arrives in North Korea for First Visit in 24 Years
(Bloomberg) — Russian President Vladimir Putin arrived for his first visit to North Korea in 24 years as the US warned the meeting could further arms transfers from Kim Jong Un’s regime that aid the Kremlin in its assault on Ukraine. Kim personally greeted and hugged Putin after he touched down at Sunan International Airport, which serves the capital Pyongyang, early Wednesday, and then they drove away in Putin’s limo, according to video posted by Russian state news agency TASS.
- Netanyahu Spars with White House Over Claim of a Weapons Halt
(Bloomberg) — Israeli Prime Minister Benjamin Netanyahu said President Joe Biden is withholding weapons amid the war against Hamas as his country is “fighting for its life,” an accusation the White House denied.
- Fed’s Kugler Says Rate Cut Likely Appropriate Later This Year
(Bloomberg) — Federal Reserve Governor Adriana Kugler said it will likely be appropriate for the central bank to lower interest rates later this year if economic conditions unfold as she anticipates. While inflation remains too high, Kugler said, recent data have made her cautiously optimistic that the Fed is on track and making headway toward the central bank’s 2% goal.
- Biden Enlists Bill and Hillary Clinton to Counter Trump Windfall
(Bloomberg) — President Joe Biden was joined by former President Bill Clinton and former Democratic presidential nominee Hillary Clinton at a Virginia fundraiser on Tuesday, part of a week of furious fundraising to neutralize a flood of donations to former President Donald Trump. The event, which also featured former Virginia Governor Terry McAuliffe, came just days after Biden held a high-powered Hollywood fundraiser with former President Barack Obama, late night host Jimmy Kimmel, and celebrities including George Clooney and Julia Roberts in Los Angeles.
- Japan PM Set to Face New Calls for Election in Leaders’ Debate
(Bloomberg) — Japanese Prime Minister Fumio Kishida is likely to face renewed pressure to call a general election in the first party leaders’ debate since he came to office, which comes as his support hits record lows. Kishida’s rivals in Wednesday’s debate will include Kenta Izumi, leader of the main opposition Constitutional Democratic Party, which is closing in on Kishida’s scandal-ridden Liberal Democratic Party in terms of voter intentions for the next election.
- Messy Politics in France Is Bad News for Japan: Taking Stock
(Bloomberg) — Investors in Tokyo are nervous that a butterfly effect from seemingly distant political turmoil in France will hit Japanese stocks hard. The worries aren’t unwarranted. Japanese shares performed poorly when uncertainty over the French presidential election in 2017 put investors on edge.
- Fed Officials Urge Patience on Rate Cuts, Offer Hints on Timing
(Bloomberg) — A chorus of Federal Reserve officials on Tuesday emphasized the need for more evidence of cooling inflation before lowering interest rates, with a couple policymakers offering insight into the potential timing of such a move. Fed Governor Adriana Kugler said it will likely be appropriate for the central bank to cut rates “sometime later this year” if economic conditions unfold as she anticipates. St. Louis Fed President Alberto Musalem said in his first major policy speech that it could take “quarters” for the data to support a cut.
- Traders Bet on a Treasury Rally with Two 2024 Fed Cuts Priced In
(Bloomberg) — Traders are piling into bets for a surge in US Treasuries, re-entering a bullish trade they’d fled in the runup to last week’s inflation data and Federal Reserve decision. Demand for futures contracts that stand to benefit from a rally in the bond market has roared back in the past week, with investors reinvigorated by economic indicators — from ebbing price-pressures to weak retail sales — that bolster the case for lower US interest rates. The market is pricing in two quarter-point rate reductions in 2024, compared to Fed officials’ projection for one.
- Stocks Rise as Bullish Nvidia Call Boosts AI Trade: Markets Wrap
(Bloomberg) — A rally in chipmakers drove stocks to another record, with traders betting the potential for Federal Reserve rate cuts will keep fueling the industry that has powered the equity market this year. The S&P 500 came closer to the historic 5,500 mark. Nvidia Corp. became the world’s most-valuable company — topping Microsoft Corp. — to extend this year’s record-breaking surge.
- Norinchukin to Sell $63 Billion of US, European Sovereign Bonds
(Bloomberg) — Norinchukin Bank plans to sell roughly 10 trillion yen ($63 billion) in US and European sovereign bonds to stem losses from wrong-way bets on interest rates, according to a spokesperson for the Japanese agriculture bank. The bond sales, amounting to almost a sixth of the bank’s global portfolio, will take place by the end of March, the bank said.
- Steve Cohen’s Point72 Readies New Hedge Fund Targeting AI Stocks
(Bloomberg) — Steve Cohen’s Point72 Asset Management is seeking to raise about $1 billion for a new stock-picking hedge fund focused on artificial intelligence, according to people familiar with the matter. The fund will bet on and against AI hardware and semiconductor companies globally and will be the firm’s first new hedge fund in decades, the people said, asking not to be identified because the information is private.
- Trump’s Threatened Tariffs Hold Inflation Risk, McCormick Says
(Bloomberg) — David McCormick, the former hedge fund executive turned Republican Senate candidate, said he’s concerned that Donald Trump’s tariff proposals could stoke inflation, but blamed recent high prices on President Joe Biden’s spending and student loan forgiveness plans. “I do think that there’s the risk of inflationary impact,” McCormick said Tuesday in an interview on Bloomberg Television when asked about Trump’s tariff hike plans.
- Brazil Fintech PicPay Is Said to Work with Citigroup on US IPO
(Bloomberg) — PicPay, the Brazilian mobile banking app owned by the billionaire Batista family’s holding company, is working with Citigroup Inc in order to try to do an initial public equity offering in the US, said people familiar to the matter. The company is aiming to do the transaction as soon as market conditions allow, the people said, asking not to be identified.
- Nvidia shares climbed 3.5% to $135.58, lifting its market capitalization to $3.335 trillion, just days after overtaking iPhone maker Apple to become the second most valuable company.
Nvidia has also become by far the most traded company on Wall Street, with daily turnover recently averaging $50 billion, compared to around $10 billion each for Apple, Microsoft and Tesla. The chipmaker now accounts for about 16% of all trading in S&P 500 companies.
- Dell Technologies shares rose 5% on Tuesday as Bank of America talked up the personal computer and server maker’s artificial-intelligence-related growth prospects.
Demand for computing hardware from governments represents another big future opportunity and Dell’s storage margin is expected to improve throughout the year, BofA’s Wamsi Mohan wrote in a research note following investor meetings with CEO Michael Dell and CFO Yvonne McGill. “We walked away confident in the multi-year opportunity related to AI,” the analysts wrote. Peers including Super Micro Computer and HP Enterprise also rose on Tuesday.
- Lennar shares fell 5% after the homebuilder’s forecast for deals in the third quarter missed consensus expectations.
SECOND QUARTER RESULTS: Adjusted EPS $3.38 vs. $2.94 y/y, estimate $3.24. Revenue $8.77 billion, +9.6% y/y, estimate $8.57 billion. Net new orders 21,293, +19% y/y, estimate 21,093. New home deliveries +9%. Gross Margin on Home Sales 22.6% vs. 22.5% y/y, estimate 22.6%. Backlog 17,873, -12% y/y, estimate 18,015. THIRD QUARTER FORECAST: Sees new orders 20,500 to 21,000, estimate 21,095. Sees deliveries 20,500 to 21,000, estimate 21,004. Sees Gross Margin on Home Sales about 23%, estimate 24%. Jefferies (hold): Analyst Collin Verron notes lower-than-expected new orders and gross margin guidance for 3Q; this may imply 4Q margin expectations will also need to move lower. Barclays (overweight): The guidance implies a large 4Q ramp in gross margin, analyst Matthew Bouley says, adding that while the company is advancing the narrative beyond the metric, it is still a focal point for investors. “We sense 2Q order results and 3Q order guidance were effectively in-line with investor expectations; however, margin guidance implies a ramp from ~23.0% in 3Q to approximately ~24.9% in 4Q, which could leave investors skeptical on the achievability”.
- Teradyne shares climbed 4.8% as UBS analyst Timothy Arcuri raised the price target on the semiconductor test products maker to $170, a fresh Street high, from $130, calling it one of the best ways to play edge AI investments.
“Even after a strong rally, we continue to see more headroom” for the stock to gain. AI should “increase transistor intensity for edge devices”. The company “has finally rationalized its sales channels” and industrial activity should pick up driving “more growth”. Maintains buy rating.