Wall Street Today | Memory Chip Makers Struggle With Declines in Demand, Price
MACRO
Investors on Guard as Stocks Rally Sputters Ahead of Data Deluge
"It's a very bewildering time right now for investors, even more so than this whole year," said Thomas Martin, senior portfolio manager at Globalt Investments. "Sentiment is the worst it's ever been, so we were ripe for a pop. But we still have a very tight labor market and strong wage growth that's complicating investors' hopes for a Fed pivot. It's a huge week with earnings season kicking off and the inflation data will be crucial once again."
Allianz Chief Economic Adviser El-Erian Believes Core Inflation ‘Is Still Going Up’
El-Erian predicts headline inflation "will probably come down to about 8%," but that core inflation "is still going up." Core inflation is what measures the drivers of inflation and how broad they are, so El-Erian said an increase in core inflation means "we still have an inflation issue."
Even if core inflation is still on the rise, however, El-Erian said it will eventually come down. "The question is, does it come down with a slowdown in the economy or a major recession?" he said on CBS "Face the Nation.”
SECTORS
Oil Steadies After Weekly Jump on Concern Fed Will Quash Demand
West Texas Intermediate failed to hold an early gain at the week’s open to trade little changed above $92 a barrel. Last week, the US benchmark soared 17% after the Organization of Petroleum Exporting Countries and its allies including Russia agreed on a 2 million barrel-a-day oil output cut.
Strong Dollar Pressures U.S. Manufacturing Rebound
Industry analysts said that unfavorable exchange rates are likely to dent industrial manufacturers' revenue when they start to report quarterly results later this month. RBC Capital Markets forecasts a currency-related sales drop of 5.1% for conglomerate $3M (MMM.US)$, a 3.4% decrease for heating and air-conditioning-equipment maker $Carrier Global (CARR.US)$ and a 2% reduction for $GE Aerospace (GE.US)$. Foreign companies, meanwhile, are gaining a price advantage on exports to the U.S. at a time when U.S. companies have been adding production.
Memory Chip Makers Struggle With Declines in Demand, Price
A decline in prices in recent months has led the biggest memory players -- including $SAMSUNG EL 144 (SSNGY.US)$ and $Micron Technology (MU.US)$ -- to issue grim forecasts and undershoot already-lowered profit estimates. Others have pledged to trim production capacity plans fearing a worsening supply glut. Chip executives and industry analysts don't see price declines bottoming out, or even moderating, until the middle of next year.
New Cars Are Finally Back in Stock — But Americans Might Not Be Able to Afford Them
"The irony for the auto market is that just as the industry is poised to start seeing volumes increase from supply-constrained recession-like low levels, the rapid movement in interest rates is reducing demand,” Cox Automotive Chief Economist Jonathan Smoke wrote in a blog post Wednesday.
At the end of third quarter, Cox Automotive found the new vehicle loan rate was 7%, up 2 percentage points for the year. The loan rate in the used market was up by the same amount, to 11%, according to Cox Automotive.
COMPANY
Apple's Move to USB-C Is Just a Stopgap Before Its Wireless Future
$Apple (AAPL.US)$ is set to shift from the Lightning charging port on the iPhone and other devices to USB-C to abide by a new European law, but the company is still planning on a wireless-first future. Also: $Alphabet-C (GOOG.US)$ rolls out its new Pixel phones and smartwatch, and developers continue to bemoan the state of iPadOS 16.
Rivian Recalls Nearly All of Its Vehicles Due to Loose Fasteners
$Rivian Automotive (RIVN.US)$ said the recall was made after it discovered a fastener connecting the upper control arm and steering knuckle may have been improperly installed. The problem could lead to excess wheel camber or tilt, and in some rare cases, separation of the wheel, impacting the driver's ability to steer the vehicle, the auto maker said in a regulatory notice posted over the weekend.
Source: Bloomberg, Dow Jones, CNBC
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