Latest News
See the latest news and get GPT analysis of articles
How a Crypto Compliance Officer Ended Up in a Nigerian Prison 2024-04-18 16:10:35+00:00 - When he flew to Nigeria for a business trip in late February, Tigran Gambaryan, a top compliance officer at the cryptocurrency exchange Binance, packed a small suitcase with just enough clothes for two days. A former U.S. law enforcement agent, Mr. Gambaryan knew the trip was risky. Only a few weeks earlier, he and a group of colleagues had rushed out of Nigeria, concerned that the local authorities might detain them, five people familiar with that trip said. This time, he assured his wife, he would “get in and get out.” A month and a half later, Mr. Gambaryan is being held at Kuje prison in the Nigerian capital of Abuja, a complex that has housed Islamic State militants and Boko Haram fighters. After meeting with government officials in Abuja on Feb. 26, Mr. Gambaryan, 39, and a Binance colleague, Nadeem Anjarwalla, were abruptly escorted to a guesthouse controlled by Nigerian security officials, where they were held for nearly a month with no formal charges filed against them.
Comprehensive PepsiCo Stock Analysis 2024-04-18 16:05:00+00:00 - Key Points PepsiCo is the world's 2nd largest consumer staple company and is still growing. Cash flow is solid, and free cash flow is sufficient to sustain growth and pay dividends. Analysts' sentiment is warming, and the group sees the market rising by at least 10% by the end of the year. 5 stocks we like better than PepsiCo Upgrade Now This premium article is available to MarketBeat All Access subscribers only. Log in to your account or sign up below. Upgrade Now See Benefits Already have an account? Log in here. Before you consider PepsiCo, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and PepsiCo wasn't on the list. While PepsiCo currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Meta, in Its Biggest A.I. Push, Places Smart Assistants Across Its Apps 2024-04-18 16:00:14+00:00 - On a call with investors last spring, Mark Zuckerberg, the chief executive of Meta, said he believed that he had an opportunity to introduce artificially intelligent assistants “to billions of people in ways that will be useful and meaningful.” A year later, he is making good on his statement. On Thursday, Meta will begin incorporating new versions of its A.I.-powered smart assistant software across its apps, which include Instagram, WhatsApp, Messenger and Facebook. The latest technology will be rolled out in more than a dozen countries, including Australia, Canada, Singapore and the United States. The A.I. software will become practically omnipresent — inside the news feed, in search bars and in chats with friends. People will be able to ask the assistant, Meta A.I., for help in completing tasks and getting information, such as what concerts might be occurring in San Francisco on a Saturday night or the best options for vegan enchiladas in New York.
UK firms may be barred from funding emerging tech in hostile countries 2024-04-18 15:42:00+00:00 - Ministers are considering blocking British investors from funding emerging technologies in hostile countries if they believe the technology could pose a threat to UK security, the deputy prime minister has said. Oliver Dowden said on Thursday the government would consult on curbing British investment abroad, after becoming concerned that money from the UK could be used to finance projects that could undermine national security. His comments come eight months after the Biden administration gave regulators the power to stop US investment in Chinese institutions in three sectors: semiconductors, quantum computing and artificial intelligence. In a speech at the Chatham House thinktank, Dowden said: “A careful review of the evidence suggests that it’s possible that a very small proportion of outbound investments could present national security issues. Indeed, they might be fuelling technological advances that enhance military and intelligence capabilities of countries of concern.” He added: “We have a problem here that we should look at … in a very small number of very critical areas where we actually believe that outbound investment from the United Kingdom could facilitate significant enhancements in adversarial cutting-edge capability in a way that may be detrimental to the United Kingdom. “It is that sort of very precise area of intervention that we’re looking at.” Pushed to say which countries he would consider a risk, the deputy prime minister said: “We set out into the integrated review refresh that China was the number one state-based threat to our economic security. “So I’m not blind to the fact that a lot of this will relate to China but equally it will relate to hostile states such as Iran, Russia and North Korea.” Dowden’s speech comes at a sensitive time for UK-Chinese relations. The government has shifted its stance towards Chinese technology in recent years amid growing international concern that equipment supplied by companies such as Huawei could be used for espionage. The prime minister, Rishi Sunak, has attempted to reset fractious relations with Beijing in recent months, but that effort was dealt a blow last month when it emerged Chinese hackers were behind cyber-attacks on politicians and the Electoral Commission. Dowden said on Thursday: “Our open economy is being targeted by state-based actors and their proxies across our inbound and outbound investment flows, our imports and exports and academic collaborations.” But in contrast with the more hawkish US rhetoric on Chinese investment, he also insisted: “We are open for business and my priority and presumption will always be in favour of investment.” The deputy prime minister singled out universities as particularly at risk of being manipulated by foreign governments, both because their researchers were likely to be targets and because academic institutions were so open to international investment. Last month, the Financial Times revealed that academics at Imperial College London had worked with scientists at institutions linked to the Chinese military on research with potential military applications. Dowden said he was summoning university vice-chancellors for a briefing on the kinds of technological threat to guard against. “We should be proud that much of the cutting-edge development in sensitive technologies is happening at our universities,” he said but added this could be a security risk. “We must ensure that universities’ reliance on foreign funding does not become a dependency” through which they can be “influenced, exploited or even coerced”.
Chinese Exports Are Threatening Biden’s Industrial Agenda 2024-04-18 15:30:10+00:00 - President Biden’s trillion-dollar effort to invigorate American manufacturing and speed a transition to cleaner energy sources is colliding with a surge of cheap exports from China, threatening to wipe out the investment and jobs that are central to Mr. Biden’s economic agenda. Mr. Biden is weighing new measures to protect nascent industries like electric-vehicle production and solar-panel manufacturing from Chinese competition. On Wednesday in Pittsburgh, the president called for higher tariffs on Chinese steel and aluminum products and announced a new trade investigation into China’s heavily subsidized shipbuilding industry. “I’m not looking for a fight with China,” Mr. Biden said. “I’m looking for competition — and fair competition.” Unions, manufacturing groups and some economists say the administration may need to do much more to restrict Chinese imports if it hopes to ensure that Mr. Biden’s vast industrial initiatives are not swamped by lower-cost Chinese versions of the same emerging technologies.
Disneyland characters and cast members attempt to unionize 2024-04-18 14:59:00+00:00 - Unionization at Disneyland may no longer be a fairytale, as a majority of approximately 1,700 parades and characters cast members have filed with the NLRB for union representation. According to a statement from the Actors' Equity Association, those employees are receiving unionization cards from the group. "These performers, and the Hosts, Leads and Trainers who create magic alongside them, know that their lives — as well as the Guest experience at Disneyland — can be improved through collective bargaining," Equity President Kate Shindle said. "They deserve a voice in their workplace, and meaningful negotiations over wages, benefits and working conditions." Cast members dressed as Pluto and Goofy at Disneyland, in Anaheim, Calif., on Nov. 13, 2021. Mark Rightmire / MediaNews Group via Getty Images file Referring to themselves as "Magic United," the group of cast members announced their official unionization attempt on February 13, leading to volunteer organizers collecting already signed union authorization cards from coworkers. Spokespeople for Magic United have been vocal in expressing their desire for a range of quality-of-life improvements in the workplace, such as better pay, scheduling and safety upgrades, benefits and an opportunity to have their voices heard. "We love the work we do. We are proud to be a part of one of the greatest legacies in modern entertainment," a joint letter from Magic United read. "Magic United invites The Walt Disney Company to voluntarily recognize our union and work with us to enhance an essential aspect of Walt Disney’s vision for his theme park — the transcendent magic of live entertainment." Magic United has yet to get a response from Disney, but will proceed with efforts to arrange a union election with the NLRB.
CSX Co.: The Railroad Powering Ahead with an Earnings Beat 2024-04-18 14:20:00+00:00 - Key Points CSX beat analyst estimates for earnings per share (EPS) and revenue in Q1 2024. The company experienced volume growth in the intermodal and coal segments. CSX's positive earnings results and focus on efficiency have led to an increase in its stock price. 5 stocks we like better than CSX CSX Corporation NASDAQ: CSX is a leading North American freight railroad operator. The railroad and railway sub-sector operates within the broader transportation sector. CSX’s earnings report was recently released and exceeded market expectations in its first quarter of 2024. The company's earnings per share and revenue figures beat CSX analyst community expectations. This positive performance has led to an increase in CSX’s stock price, fueling optimism among investors. Get CSX alerts: Sign Up Unpacking the Earnings Report CSX’s financial reports provided insight into a company that experienced a mixed performance across its operating segments in Q1 2024. While operating income saw a year-over-year decline from $1.46 billion in Q1 2023 to $1.35 billion, specific areas demonstrated positive growth. The intermodal segment, which involves the transportation of shipping containers, exhibited a healthy 7% increase in volume. This reflects the growing demand for intermodal freight services, potentially driven by a shift towards more efficient and cost-effective transportation solutions. Similarly, coal volume experienced a 2% increase, highlighting continued demand for this commodity in specific markets. On the other hand, the merchandise volume segment, encompassing the transportation of various goods, saw a slight decline, potentially due to temporary fluctuations in economic activity within the specific markets CSX serves. CSX Today CSX CSX $34.39 +0.23 (+0.67%) 52-Week Range $29.03 ▼ $40.12 Dividend Yield 1.40% P/E Ratio 18.69 Price Target $37.28 Add to Watchlist These results translate into a positive earnings beat for the company. CSX reported earnings per share (EPS) of $0.46 for the first quarter, exceeding the analyst consensus estimate of $0.45. Revenue also beat expectations at $3.68 billion compared to the estimated $3.67 billion. Despite these mixed results, CSX President and CEO Joe Hinrichs affirmed the company's positive outlook. He underscored CSX's ongoing commitment to improving network reliability and fluidity as a crucial strategic priority. These efforts aim to streamline operations, reduce bottlenecks, and enhance overall efficiency. Such operational efficiency improvements directly impact profitability and can position the company for continued growth. Dividend Strength: Attracting Income-Seeking Investors CSX dividend boasts a notable track record of over twenty years. The company's current dividend yield stands at a healthy 1.41%, with a history of consistent increases. This track record makes CSX appealing to investors interested in stable income streams. The company's commitment to returning value to shareholders underscores its financial strength and confidence in future performance. CSX Dividend Payments Dividend Yield 1.39% Annual Dividend $0.48 Dividend Increase Track Record 20 Years Annualized 3-Year Dividend Growth 8.27% Dividend Payout Ratio 26.09% Recent Dividend Payment Mar. 15 See Full Details Analysts Weigh In The financial community's response to CSX's recent performance has been largely positive. Market analysts generally maintain a "Moderate Buy" rating on the company's stock. This rating, combined with price targets that suggest the potential for the stock price to increase, reflects a favorable outlook on CSX's future prospects. The optimism among analysts stems primarily from CSX's recent earnings report exceeding expectations. Additionally, the company's focus on continuously improving efficiency and demonstrated commitment to sustainable innovation further contribute to this positive sentiment. As a result, analysts project earnings growth for CSX in the coming year, making it an attractive investment opportunity for both growth-oriented and income-focused investors. Inside CSX's Success A closer look reveals several factors driving CSX's solid performance. The company has invested significant resources in improving network efficiency and fluidity. These initiatives streamline operations, reduce bottlenecks, and ultimately lead to cost savings and improved customer service. Furthermore, CSX has a strategic capital expenditure plan, allocating funds for infrastructure upgrades, technology advancements and other projects that enhance the company's long-term capacity and capabilities. Additionally, CSX might explore customer diversification strategies to expand its revenue base and mitigate risks associated with specific market segments. A Step Towards Cleaner Rail Freight CSX's commitment to innovation extends beyond operational improvements. The company recently made headlines by unveiling its first hydrogen-powered locomotive, developed in partnership with Canadian Pacific Kansas City Limited NYSE: CP. This groundbreaking initiative positions CSX as an industry leader in the pursuit of sustainable freight transportation. Hydrogen-powered locomotives offer a promising alternative to diesel, with the potential to significantly reduce emissions. The successful field testing of this locomotive could usher in a new era of clean energy adoption within the rail industry. Navigating the Evolving Rail Landscape The rail freight industry functions within a volatile and continuously evolving landscape. Shifts in demand patterns for various commodities, the relentless pace of technological innovation and ongoing regulatory changes shape the environment in which companies like CSX operate. Automation is a transformative trend with far-reaching implications for the rail industry. Automated technologies promise to enhance operational efficiency, streamline processes and improve safety standards. However, the automation integration may also lead to shifts in workforce requirements and necessitate the development of new skill sets. Furthermore, fluctuations in demand for specific commodities, such as coal, agricultural products, or other bulk materials, can significantly impact the revenues and profitability of freight rail companies. Understanding these cyclical demand patterns and their potential influence on CSX's performance is crucial for long-term investors. Finally, the regulatory environment plays a vital role in shaping the rail industry. Changes in legislation or regulations can significantly affect areas such as environmental standards, safety protocols and pricing structures for rail freight services. Staying up-to-date on potential regulatory shifts is essential for investors seeking to assess the long-term trajectory of CSX and its industry peers. CSX's solid first-quarter performance in 2024, combined with positive analyst sentiment, paints an encouraging picture for the company and the transportation sector. The company's strategic emphasis on efficiency, innovation and shareholder returns positions it well within a dynamic industry landscape. While challenges and uncertainties exist, as with any sector, CSX appears poised to maintain its position as a dominant player in North American freight rail. Before you consider CSX, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and CSX wasn't on the list. While CSX currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
3 Steel Stocks Could Soar on New China Tariffs 2024-04-18 13:15:00+00:00 - Key Points As China tariffs are proposed, the U.S. government is looking to onshore some steel and aluminum manufacturing stocks. Wall Street is well aware of a new manufacturing breakout in the economy. Three stocks stand out as top picks, with analysts and institutions behind them. 5 stocks we like better than Industrial Select Sector SPDR Fund A new business cycle is underway for the United States economy, and the manufacturing sector could be in play. This time, it isn't only Wall Street pushing the bets forward but also the current administration's attempt to onshore some global steel and aluminum manufacturing jobs. So far, markets have been accepting this new manufacturing trend. The ISM manufacturing PMI index saw its first expansionary month in February 2024, a sign of relief after contracting for more than a year. With the revival of U.S. manufacturing, the steel industry could be in play for many investors’ portfolios. Get XLI alerts: Sign Up While investors could randomly pick any steel and aluminum stock and likely earn a net positive return, the objective is to beat the market. For reasons that will soon become clear, names like Alcoa Co. NYSE: AA, ATI Inc. NYSE: ATI, and even Carpenter Technology Inc. NYSE: CRS could be top picks in these new industry trends today. Wall Street Got On Board Analysts at The Goldman Sachs Group Inc. NYSE: GS sent Main Street their opinions about the manufacturing sector for the U.S., expecting a breakout inside their 2024 macro outlook report. So far, they have been right, as the ISM showed a 6.4% increase in export orders. Because the Federal Reserve (the Fed) is looking to cut interest rates this year, as soon as September 2024, according to the CME’s FedWatch tool, prospects of a weaker dollar could make American exports more attractive to foreign nations. This connects the dots for rising export orders, and the money is going to be made in those industries that will begin undertaking manufacturing production to fulfill these new orders. This sudden pivot may be one of the reasons why industrial stocks have outperformed in the past quarter. During this period, the Industrial Select Sector SPDR Fund NYSEARCA: XLI outperformed the broader S&P 500 by 4%. This price action comes while technology stocks dominated investor sentiment for the better part of 2023 and the start of 2024. Evidence is found for these stocks potentially being in play, signaling bullish sentiment backed by fundamental industry developments. Only the Best Make the Cut This is why these stocks could be the top picks rather than any steel stock. Starting with the most aggressive story, Alcoa analysts think that the stock could grow its earnings per share (EPS) by as much as 472% in the next 12 months, significantly above the steel industry’s 10% average EPS growth. Markets are okay with these projections, however bold they may seem. To gauge this sentiment, investors can use the forward price-to-earnings (P/E) ratio, the market's way of placing a value today on tomorrow’s potential earnings. Alcoa Today AA Alcoa $35.47 -0.08 (-0.23%) 52-Week Range $23.07 ▼ $42.23 Dividend Yield 1.13% Price Target $32.71 Add to Watchlist Valued at 21.5x forward P/E, a premium of 105% above the industry’s average 10.5x valuation, Alcoa’s earnings are justified by markets as the top quality in the space. ATI Today ATI ATI $51.10 +0.37 (+0.73%) 52-Week Range $34.10 ▼ $52.98 P/E Ratio 20.36 Price Target $55.67 Add to Watchlist Expected to grow its EPS by 30% this year, ATI has a way to make it to the list. Markets slapped an 18.3x valuation on these future earnings, or a 74% premium to the sector. Knowing the tailwinds behind the company, analysts at Deutsche Bank boosted their price targets on the stock up to $70 a share, calling for a 37% upside from today’s prices. Being the ones to sponsor the manufacturing insight, those at Goldman saw it fit to boost their positioning in the stock by 31.8% in the past quarter, bringing the bank’s total investment in ATI stock up to $59.4 million. A 16% projected EPS growth for the year places Carpenter Technology at the last – but not least – place on the list. Still looking to grow above the industry and be valued at a 61% premium through its 16.9x forward P/E, this stock has merit. Carpenter Technology Today CRS Carpenter Technology $79.38 +1.62 (+2.08%) 52-Week Range $44.40 ▼ $82.16 Dividend Yield 1.01% P/E Ratio 27.47 Price Target $81.67 Add to Watchlist Benchmark boosted their price targets to $100 a share, a valuation that represents a 28.5% upside from today’s stock price. Considering this price target was set in September 2023, investors could be surprised with a new rating, which could be detrimental. However, that doesn’t seem to be a risk for institutional investors, as they own 92% of Carpenter stock. On this list is Goldman Sachs again, boosting its position by 82.3%, bringing the total exposure to $68.8 million. From massive growth at the highest premium to the less exciting EPS jump, though backed by Goldman Sachs, investors have a potential portfolio to play the onshoring of steel and aluminum manufacturing. Before you consider Industrial Select Sector SPDR Fund, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Industrial Select Sector SPDR Fund wasn't on the list. While Industrial Select Sector SPDR Fund currently has a "hold" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Bear Market Funds to Watch This Year 2024-04-18 13:15:00+00:00 - As investors search for safe havens in volatile markets, bear market funds are gaining popularity as a diversified asset class designed to withstand exceptionally volatile markets. While bear market funds can be appealing during periods of economic downturn due to their potential to produce returns against market movements, these funds can also be exceptionally volatile and risky. Read on to learn more about bear market funds, how they are managed and how you can use these funds to complement a more complete overall portfolio. Get SQQQ alerts: Sign Up Key Takeaway Bear market funds are stock market funds designed to mitigate overall portfolio performance in poorer economic climates. These funds are most often created with the intention of seeing the best performance when the overall market is down by more than 20%. Understanding Bear Market Funds How exactly do bear market stock funds mitigate periods of economic downturns? These funds accomplish their goals by taking inverse positions on major assets that make up large, total market indexes. Many of the best bear market index funds track the S&P 500 stock market index, which is a list of the 500 most influential companies in the United States. The strategies that bear market funds use to achieve inverse returns of major indexes vary depending on the fund’s goals. One common strategy is short selling, in which the fund borrows shares of a stock or an ETF from a broker and sells them on the open market at the current price. The fund then waits for the price of the borrowed shares to decline, buys them back at a lower price and returns the shares to the broker, profiting from the price difference. This allows the fund to profit when the underlying index or market declines. Bear market funds may also use derivatives such as futures contracts, options or swaps to achieve inverse exposure to the market. For example, a fund may purchase options on an index or a stock, giving the fund the right to sell the underlying asset at a predetermined price within a specified period. If the index or stock price falls below the strike price, the put options gain value, offsetting losses in the fund's other holdings. These active management strategies are usually detailed in the fund’s prospectus, which you can review on the holding company’s website. Some bear market funds are structured as inverse leveraged ETFs, aiming to amplify the inverse index's standard returns. These bear market funds usually aim to produce multiples (such as 2x or 3x) of the inverse daily performance of the index they track. However, it's important to note that leveraged ETFs can be riskier due to the use of leverage, making them unsuitable assets for those with lower risk tolerance. Types of Bear Market Funds There are multiple types of stock market funds, and the best mutual funds for a bear market might vary depending on your desired returns and how you aim to hedge the market. The following are three examples of fund classifications you’ll encounter as you explore index funds in bear markets. ETFs Exchange-traded funds (ETFs) are investment funds that trade on stock exchanges, providing investors with diversified exposure to various assets like stocks, bonds, commodities and currencies. These funds combine the features of mutual funds and individual stocks, offering flexibility and lower costs compared to traditional mutual funds. ETFs can be bought and sold throughout the trading day at market prices, making them popular among investors seeking efficient and transparent investment vehicles. Bear market ETFs are popular options for investors, providing instant exposure to some of the best stocks to buy in a bear market without the need to evaluate individual items. Many bear market ETFs are leveraged, meaning that they’re constructed in a way that amplifies the losses and returns of the major index they track. Leveraged bear market ETFs can provide enhanced returns in periods of downturn but can also see sharp losses when the market improves. These assets are particularly risky in the event of a bear market rally, in which investors can see higher than average volatility. Mutual Funds Mutual funds are investment vehicles that pool money from multiple investors in a diversified portfolio of stocks and other assets, similar to an ETF. These funds are priced once a day after the market closes and are bought and sold directly through the fund company, while ETFs trade throughout the day like normal stocks. Mutual funds usually offer greater tax efficiency, but provide less flexibility to investors due to their limited purchase routes and available accounts. Examples of major bear market mutual funds include the Rydex Inverse Nasdaq-100 and the Grizzly Short. Index Funds Most bear market funds are structured as index funds. Index funds are mutual funds, ETFs or other collections of stocks that aim to replicate the performance of a market index, a benchmark of stocks used to measure a specific segment of the economy. Common stock indexes that an index fund may replicate include the S&P 500 and the Dow Jones Industrial Average. Reviewing the underlying index of each bear market fund you’re considering is an important step in research before investing. Pros and Cons of Bear Market Funds Before investing, Understanding the pros and cons of investing in the top bear market ETFs and mutual funds is essential. Anticipate and plan for the following potential for both upsides and downsides when investing in these often volatile assets. Pros Diversification: Bear market funds use unique assets not normally incorporated into ETFs and mutual funds in large portions, such as put options. This helps mitigate the overall effects of bear markets and their multiple stages with assets you might have trouble finding included in other funds. Bear market funds use unique assets not normally incorporated into ETFs and mutual funds in large portions, such as put options. This helps mitigate the overall effects of bear markets and their multiple stages with assets you might have trouble finding included in other funds. Hedging option: Hedging is a market strategy that involves strategically investing in assets that are likely to increase in value if the general market declines. Bear market fund ETFs and mutual funds provide an institutional, traditional hedging option with easier liquidation than alternative assets like real estate and precious metals. Hedging is a market strategy that involves strategically investing in assets that are likely to increase in value if the general market declines. Bear market fund ETFs and mutual funds provide an institutional, traditional hedging option with easier liquidation than alternative assets like real estate and precious metals. Liquidity and accessibility: Many bear market fund options are available as ETFs, providing investors with liquidity and ease of access to short or inverse strategies without the complexities of directly short-selling securities. They also provide easier buying and selling opportunities than the best mutual funds in the bear market, which do not trade throughout the day like stocks. Cons Higher volatility: Bear market funds can be highly volatile, especially leveraged funds that aim for amplified inverse returns. This volatility can lead to significant fluctuations in fund value and increased risk for investors. Bear market funds can be highly volatile, especially leveraged funds that aim for amplified inverse returns. This volatility can lead to significant fluctuations in fund value and increased risk for investors. Decreases when the market is thriving: Bear market funds use strategies like short selling to reverse the overall market's return or underlying market index. These funds should only be used strategically as a result, making them less viable long-term investments. Bear market funds use strategies like short selling to reverse the overall market's return or underlying market index. These funds should only be used strategically as a result, making them less viable long-term investments. Higher fees and expense ratios: The best index funds for a bear market in terms of performance usually use active buying and selling strategies to mitigate market changes. This usually results in higher expense ratios to compensate fund managers and professionals, which you’ll need to take into account when calculating overall return potential. Factors to Consider When Choosing Bear Market Funds Before investing in an index fund in a bear market, be sure to review the following due diligence items. Expense ratio: Before investing, review the expense ratio of each ETF or mutual fund and anticipate how these fees will influence returns. Expense ratios above 1% are considered high for these types of actively managed funds. Before investing, review the expense ratio of each ETF or mutual fund and anticipate how these fees will influence returns. Expense ratios above 1% are considered high for these types of actively managed funds. Historic performance: Review the fund's historical performance during different market conditions, especially bear markets. Look for consistency in performance and whether the fund has achieved its stated objectives over time, especially when compared to the inverse performance of the market index. While past performance does not guarantee future success, it can help investors select assets poised for long-term growth. Review the fund's historical performance during different market conditions, especially bear markets. Look for consistency in performance and whether the fund has achieved its stated objectives over time, especially when compared to the inverse performance of the market index. While past performance does not guarantee future success, it can help investors select assets poised for long-term growth. Fund objective and strategy: Each bear market fund maintains a website and prospectus that details its unique goals and strategy. Review historical performance in light of the fund’s strategy, and select funds with multiple investing strategies to further diversify your holdings. Strategies for Incorporating Bear Market Funds Incorporating bear market funds into your portfolio as a novice investor can be challenging since these assets tend to be more volatile. Most investors who use bear market funds to complement their portfolio do so as a hedge against loss. This means that they may invest in a small number of leveraged bear market ETFs to limit losses during periods of negative market trends. Another popular strategy for investing ahead of a bear market is to invest in government bonds and bond ETFs, which have historically performed well during periods of market downturn. Government bonds are considered relatively safe investments due to their backing by the government's credit, while bond ETFs offer diversification across a range of bonds, reducing individual credit risk. The interest payments from government bonds and bond ETFs can also provide a steady income stream comparable to dividend payments from individual stocks. If you decide to incorporate bear market funds into your portfolio, be sure to do so only as a small percentage of your overall holdings. We recommend consulting with a financial professional before making significant changes to your portfolio. Monitoring and Rebalancing Bear Market Positions Even the best funds in a bear market hinge on a strategy that bets against the market as a whole. The average bear market lasts about 14 months, with the average overall market decrease being about 32%, while the average bull market produces returns of about 165%. If you decide to invest in bear market funds, make sure that these assets make up only a small percentage of your overall portfolio. Monitor and rebalance your portfolio, especially after seeing desired returns or when the market direction improves. Are Bear Market Funds Worth It? Most bear market funds use complex financial instruments to hedge against loss, making them easier options than individually accessing short-selling tools as a retail trader. However, it’s important to remember that for most investors, attempting to time the market will not result in higher returns compared to dollar cost averaging. Avoid actively buying and selling assets in your retirement or long-term investment accounts during a bear market. FAQs The following are some answers to your final questions about buying index funds in a bear market and the best funds to weather the market downturn. What is the best fund for the bear market? The ProShares UltraPro Short QQQ ETF is one of the largest bear market funds, with a total of more than $3 billion in assets under management. However, the best fund for a bear market will vary depending on your objectives and goals as an investor. Bond market ETFs tend to display less volatility during bear markets compared to market index ETFs. Where should I put my money in a bear market? In a bear market, keeping your money in your current investments is best, “riding out” the market conditions until they improve. If you do prefer to take a defensive approach to upcoming bear markets, investing more heavily in bonds and more stable sectors like utilities and healthcare can help reduce volatility.
What's Driving Tesla Lower Ahead of its Earnings? 2024-04-18 12:45:00+00:00 - Key Points Faced with several challenges and negative sentiment, Tesla has experienced a turbulent 2024 so far, with its stock down close to 40%. Analysts currently hold a consensus "Reduce" rating for Tesla, reflecting a shift from previous "Hold" ratings. Tesla is scheduled to report its first-quarter earnings on April 23, in the after-hours. 5 stocks we like better than Tesla In 2024, Tesla NASDAQ: TSLA finds itself navigating through a year filled with turbulence, starkly contrasting its historical performance as a leader in the electric vehicle and technology sectors. With shares plummeting, Tesla now holds the unfortunate title of being the worst-performing S&P 500 stock, down nearly 40% for the year. This week alone, the company has experienced close to a 10% decline amidst more negative headlines. However, the broader market has seen a steady ascent, with gains of almost 6% year-to-date. Similarly, the tech sector has shown resilience, boasting an uptick of nearly 4.5% during the same period. Get Tesla alerts: Sign Up So, let's delve deeper into the recent catalysts behind Tesla's downward spiral and examine the insights from analysts and insiders. By understanding these factors, we can better understand the stock's current position and potential future trends. Recent Catalysts and Challenges Driving the Stock Lower Ahead of Tesla's upcoming earnings report on April 23 after the market closes, the company has faced several challenges. Recently, CEO Elon Musk announced plans to lay off more than 10% of Tesla's global workforce to streamline operations and boost productivity. This decision followed a memo in which Musk emphasized the need for cost reductions and efficiency improvements. The news caused Tesla's shares to drop by over 5% on Monday. Furthermore, earlier this month, Tesla reported its first annual decline in vehicle deliveries since 2020, with first-quarter deliveries down by 8.5% year-on-year to 386,810 vehicles. Despite offering discounts and incentives to customers, production fell by 1.7% compared to the previous year and by 12.5% sequentially. Additionally, on April 17, Tesla proposed a controversial $56 billion pay package for CEO Elon Musk, seeking shareholder approval. This plan, previously rejected by a Delaware Chancery Court judge in January, has prompted Tesla to consider moving its incorporation from Delaware to Texas. These developments underscore Tesla's challenges and strategic shifts as it navigates a critical phase of its growth trajectory. Tesla Today TSLA Tesla $149.93 -5.52 (-3.55%) 52-Week Range $148.70 ▼ $299.29 P/E Ratio 34.79 Price Target $197.15 Add to Watchlist Sentiment for TSLA is Negative Despite enjoying a huge fan base and consistently being one of the most searched-for stocks, Tesla's current sentiment is predominantly bearish. Recent data reveals analysts' shift from a Hold to a Reduce rating, a downgrade from its previous rating. This rating places Tesla below the consensus rating for other auto companies, which remains at Hold, and the S&P 500 consensus rating. Over the past several weeks, there has been a notable trend of analysts revising their price targets for Tesla. Notably, analysts at JPMorgan slashed its target from $130 to $115, Wells Fargo reduced theirs from $125 to $120, and on April 10, analysts from Jefferies Financial Group adjusted their target from $185 to $165. Despite the recent downgrades and prevailing bearish sentiment, it's noteworthy that the consensus price target for Tesla still stands significantly above its current stock levels. With a consensus price target of $197.15, analysts foresee an impressive 27% upside potential. While insider transactional activity has been quiet for Tesla over the previous twelve months, it's worth noting that there have been five recorded sales of the stock and no purchases. Over the last twelve months, five insider sales have been recorded for $71 million, with no insider buying occurring during the same period. A Technical Overview From a technical analysis perspective, it's not a pretty picture either. The stock is trading below its key Simple Moving Averages (SMA), including its declining 200-day SMA. This action solidifies the severity of the downtrend in the stock. In the near term, as the stock approaches a significant catalyst, upcoming earnings, it is trading near a potential level of support near $150, which acted as a turning point in the first half of 2023 for the stock. Before you consider Tesla, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Tesla wasn't on the list. While Tesla currently has a "Reduce" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
D.R. Horton Stock Has Tailwinds To Drive it Higher 2024-04-18 12:30:00+00:00 - Key Points D.R. Horton had another solid quarter and guided the market higher for 2024. The backlog is growing sequentially and supports accelerating growth: all they have to do is build the houses. Dividends, share repurchases, rising equity, and increasing book value will help drive this stock to new highs. 5 stocks we like better than D.R. Horton As many reasons as there are to be skeptical of the rally in homebuilder stocks, names like D.R. Horton NYSE: DHI are trending higher and will continue to rise. They rise because the industry normalized and the business provides value for shareholders. That’s a blunt way of putting it, but supply/demand metrics support growth in the industry, and they are happy to oblige customers and share profits with shareholders. The takeaway from the Q2 report is that growth is sustainable, and the tailwinds are gaining strength. Get D.R. Horton alerts: Sign Up D.R. Horton has a Strong Quarter, Guides Higher D.R. Horton had a strong quarter despite the impact of inflation and high interest rates. The company closed 22,548 homes, which is good for a gain of 15% compared to last year. The average selling price fell slightly compared to last year but rose sequentially and came in better than expected, leaving the top line at $9.11 billion or up 14.3%. The rise in prices is supported by demand and is expected to remain steady this year, adding upward bias to the outlook. D.R. Horton Today DHI D.R. Horton $145.88 +0.14 (+0.10%) 52-Week Range $100.08 ▼ $165.75 Dividend Yield 0.82% P/E Ratio 10.49 Price Target $154.00 Add to Watchlist Margin news is also good. The company increased its pretax profit margin by 170 bps to 16% on higher prices and cost control. Net income rose 24% to $1.2 billion, and GAAP earnings rose by 29%, aided by share repurchases. Guidance is why the stock is rebounding in early premarket trading. The company raised its guidance for revenue to a range with the mid-point well above the analysts' consensus. Because the company shows momentum now, the guidance is likely cautious. The backlog is down 7% YOY but up 27% sequentially on a 17% rise in new orders that outpaced deliveries. The backlog has risen sequentially for several quarters, providing a pathway to growth above forecast. All they have to do is build the houses. Regardless, the $36.7 to $37.7 billion in forecasted revenue is a 3.5% increase at the range’s low end on top of last year’s 6% gain. Revenue growth will accelerate in 2025 as FOMC interest rate cuts (expected) unlock pent-up demand. D.R. Horton Improves Shareholder Value: Returns Capital The only negative in the statement is that the cash balance is down. That fact is offset by higher inventory, increased assets, and a 5% rise in shareholder equity. The cash flow also supports a dividend yielding about 0.75% with shares near $150 and share repurchases. Share repurchases amounted to 2.7 million shares or about $400 million in Q2 to bring the average YOY count down by 3.3%. There is $901 million left on the authorization. The company is expected to increase the amount later in the year. Leverage remains low, with debt to total capital at 0.2X, and the company is well capitalized with ample lots and properties in its real estate pipeline. Book value, another measure of company strength, rose by 3.5% sequentially and is up double-digits compared to last year. Analysts Point to a New All-Time High for DHI Stock The analysts are bullish on DHI stock, rating it at Moderate Buy and giving it a consensus price target of $155. That target assumes a 3.5% upside for the market and is led higher by revisions. The revisions for the past twelve months have lifted the consensus by more than 55%, with the freshest targets well above it. The freshest targets were set in April, about two weeks before the Q2 earnings release, assuming a range of $169 to $191 or a mid-point roughly 20% above the current action. Marketbeat has not tracked any revisions in the first hour since the release. The technical action is favorable. The market for DHI stock fell in the weeks leading into the report, giving the market a 12% discount. The market now rebounds from levels above critical support at the 150-day EMA to align with the trend. Assuming the market follows through on this signal, the stock price should soon move up to the $160 to $165 range. $165 is the critical resistance level. It is an all-time high and may provide significant resistance. If the market can get above that level, the rally will continue, and a move toward the high end of the analysts' range is likely. Before you consider D.R. Horton, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and D.R. Horton wasn't on the list. While D.R. Horton currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Here are the Pros and Cons of Using Options Put Credit Spreads 2024-04-18 12:20:00+00:00 - In last week’s stock options article, we reviewed the pros and cons of debit spreads. When you believe a stock is going higher but want to limit your downside risk and are willing to cap upside gains to spend less on the trade, then a call debit spread can be a viable choice. In the same vein, you could also consider a credit spread. This is similar to a debit spread but also very different in the mechanics. In this article, we’ll review the pros and cons of a put credit spread strategy. What is a Put Credit Spread? A put credit spread is also called a bull put spread or a put spread. A put credit spread strategy can be used when you believe a stock will rise. Just like a debit spread, it limits your downside risk while capping your upside gains. A major difference is that it pays you the maximum gain in the form of credit upfront and utilizes the put option instead of call options. Get Intel alerts: Sign Up A put credit spread is a multi-leg trade in which you sell/short 1 higher strike in-the-money (ITM) put and buy a lower strike out-of-the-money (OTM) put. For example, Sell 1 ABC Put at a $50 strike price and Buy 1 ABC Put at a $45 strike price. This should net you a credit, which is paid to you upfront. A credit spread takes advantage of time decay (Theta), which is your friend. This is opposite to a debit spread, where the Theta is the value you lose every day holding the position. Example of a Put Credit Spread with INTC Using a familiar example with computer and technology sector behemoth Intel Co. NASDAQ: INTC. INTC's daily candlestick chart isn't very pretty. It has been falling from the $41.48 level to $35.91 in the past 11 days. The daily relative strength index (RSI) is oversold at the 30-band. Executing the Trade Let’s assume we are semi-bullish and expect INTC to bounce back up, especially after such an extreme sell-off. INTC stock is currently trading at $35.91. Let's assume INTC will rally back up through $36, which is only 9 cents away by May 17, 2024. The expiration, which is 30 days away, provides a beefy time premium. To put on the trade, we select the INTC $36/$35 put credit spread for 48 cents. This is comprised of selling/shorting the $36 OTM put at $1.84 and buying the $35 put at $1.36. We receive a credit from the short put and use it to pay for the long put. This leaves a remaining credit of 48 cents, which is paid to us. This is the maximum gain on the trade paid upfront. The Potential Outcome Upon expiration, there are 3 potential outcomes. The breakeven price on the trade is $36.50 for INTC. The maximum loss is the $53, which is the credit and fees paid to you when you executed the trade if INTC closes below the $35 strike price. The maximum gain is the $48 credit you received upon executing the trade if INTC closes above the $36.00 strike price. Of course, you aren’t obligated to hold the position through expiration, but remember that theta is on your side. This means you make more money for holding longer versus a debit spread where every day you hold suffers from time decay. The Pros and Cons of Credit Spreads Here are the potential benefits and pitfalls of trading credit spreads. The pros are: Get paid upfront with a credit. Selling an ITM put option provides you with a credit that is used to pay for the OTM put option, leaving you with a maximum profit premium paid upfront. Selling an ITM put option provides you with a credit that is used to pay for the OTM put option, leaving you with a maximum profit premium paid upfront. Benefit from high implied volatility (IV). When IV is high, then you can benefit from it by being a net seller of premium to receive a credit. When IV is high, then you can benefit from it by being a net seller of premium to receive a credit. Quantifies and minimizes your downside risk. Both your upside and downside risk are measured and limited in this strategy. The cons are: The maximum profit potential is capped and is less than the maximum profit. In exchange for receiving a credit paid upfront, you will be making a little less than your maximum loss. In exchange for receiving a credit paid upfront, you will be making a little less than your maximum loss. The maximum loss is still 100% of the investment. If the stock falls under the lower put strike price, then you lose the whole credit and fees, which is slightly more than your max profit. Scratch the Itch Put credit spreads are ideal during periods of high volatility, driving up IV. Options tend to be "expensive" during these periods. This allows net sellers to take advantage of lofty premiums and receive credits. If IV is still high, you can also roll forward the trade to continue collecting premiums. Keep in mind that Theta erodes faster a week out from expiration.
How an Obscure Chinese Real Estate Start-Up Paved the Way to TikTok 2024-04-18 09:05:38+00:00 - In 2009, long before Jeff Yass became a Republican megadonor, his firm, Susquehanna International Group, invested in a Chinese real estate start-up that boasted a sophisticated search algorithm. The company, 99Fang, promised to help buyers find their perfect homes. Behind the scenes, employees of a Chinese subsidiary of Mr. Yass’s firm were so deeply involved, records show, that they conceived the idea for the company and handpicked its chief executive. They said in one email that he was not the company’s “real founder.” As a real estate venture, 99Fang ultimately fizzled. But it was significant, according to a lawsuit by former Susquehanna contractors, because of what it spawned. They say that 99Fang’s chief executive — and the search technology — resurfaced at another Susquehanna venture: ByteDance. ByteDance, the owner of TikTok, is now one of the world’s most highly valued start-ups, worth $225 billion, according to CB Insights, a firm that tracks venture capital. ByteDance is also at the center of a tempest on Capitol Hill, where some lawmakers see the company as a threat to American security. They are considering a bill that could break up the company. The man picked by Susquehanna to run the housing site, Zhang Yiming, became ByteDance’s founder.
Kinder Morgan meets profit estimates on strength in natural gas pipeline segment 2024-04-18 04:08:00+00:00 - (Reuters) -Pipeline and terminal operator Kinder Morgan on Wednesday reaffirmed its annual profit outlook and said it expects demand for natural gas to grow substantially between now and 2030. The Houston, Texas-based company had said in January it continues to have a bullish outlook for natural gas demand due to demand from LNG export facilities and increased exports from Mexico. This comes at a time when natural gas prices declined 20.4% in the first quarter of 2024 compared to a year earlier. "Although natural gas prices are expected to be significantly below budget for the full year, given that we have modest direct commodity price exposure and have seen strong execution across our businesses, there's no change to our full-year budget guidance," said Chief Executive Officer Kim Dang. Dang also said the company is expecting new natural gas demand for electric generation associated with artificial intelligence operations, cryptocurrency mining and data centers. The company reaffirmed its 2024 profit forecast at $1.22 per share, which it had raised in January to reflect the acquisition of NextEra Energy Partners' STX Midstream assets. Kinder Morgan also met the first-quarter profit estimates, helped by higher volumes in its natural gas pipelines segment. The natural gas pipeline segment saw a boost from higher margins realized on the company's storage assets and higher volumes on its gathering systems, with additional boost from the STX Midstream acquisition, it said. Adjusted core profit from the company's natural gas pipeline segment was $1.52 billion, versus $1.43 billion a year ago. Its adjusted profit was 34 cents per share for the three months ended March 31, in line with the LSEG estimates. The company also approved a 2% increase to its quarterly dividend. (Reporting by Saikeerthi and Roshia Sabu in Bengaluru; Editing by Shilpi Majumdar)
What Went Wrong With US Inflation 2024-04-18 03:25:00+00:00 - (Bloomberg) -- This was supposed to be the year that US inflation rode the last mile down to 2%, letting the Federal Reserve steadily reduce interest rates from a two-decade high. Now those expectations have been dashed. Most Read from Bloomberg Price gains have proven much stickier than anticipated a few months into 2024 amid a resilient economy and labor market. On Tuesday, Fed Chair Jerome Powell said persistent inflation means borrowing costs will stay elevated for longer than previously thought, a shift in tone with ramifications for policy around the world. A persistent shortage of housing is partly to blame, as are rising commodity prices and car insurance premiums. But some also point to Powell himself for prematurely telegraphing interest-rate cuts, which ignited optimism in financial markets and fueled economic activity. “They just got the inflation picture wrong,” said Stephen Stanley, chief US economist at Santander US Capital Markets LLC. “The mistake they made was they got really enamored with the combination of really strong growth and benign inflation that we saw in the second half of last year.” Traders now see just one to two rate cuts this year from the current level of 5.25% to 5.5%. That’s a far cry from the roughly six they expected at the start of 2024, and the three that Fed officials penciled in just a month ago. Investors and economists are flagging the chance of no cuts at all this year. Fed officials maintain that inflation is still broadly on a downward trend, but they’ve also stressed that borrowing costs won’t be moving lower until they’re more confident in that trajectory. While much of the inflation damage has been most evident in the consumer price index — which accelerated to 3.5% in March from a year earlier — the Fed’s preferred metric is the personal consumption expenditures price index. The PCE has been running closer to the central bank’s 2% target — registering 2.5% in February — but progress on that gauge has also stalled. Here are some reasons for the latest wave of US inflation: Shelter, Insurance Shelter, which accounts for about a third of the CPI, has proved the most stubborn. Despite some timelier measures from the Bureau of Labor Statistics, Zillow Group Inc. and Apartment List that show rent growth for new leases coming down, the corresponding components in the CPI have yet to reflect that. Story continues Part of the delay is because most tenants don’t move in a given year. That’s especially true now for homeowners as well, many of whom locked in cheap mortgage rates during the pandemic and don’t want to take on a new one above 7%. Also, the construction of the index plays a role: Units are sampled only every six months, which means changes in rents take time to work through the monthly data. The PCE, meanwhile, assigns shelter a much lower weight, which helps explain why it’s trended lower than the CPI. Another driver of inflation is insurance costs. Tenants’ and household insurance is rising at the fastest rate in nine years, while auto insurance skyrocketed 22.2% in the year through March, the most since 1976. A key reason: Cars are more technologically complicated now and therefore cost more to repair. Commodities After falling for much of last year, energy prices — specifically oil — climbed in the first quarter, and an escalation in the war in the Middle East threatens to push them even higher. The rally has translated to more expensive gasoline. Electricity prices have also climbed. Central bankers prefer to look at so-called core measures of inflation, which strip out food and energy prices that can be volatile. They’ve also eyed an even narrower gauge known as “supercore,” referring to services costs excluding energy and housing — and even that’s been too strong due to a robust labor market. But the surge in the price of oil and other raw materials is impossible to ignore, as it can filter through to costlier shipping and merchandise. Gasoline and shelter combined accounted for over half of the monthly advance in the March CPI. Powell Pivot In December, Powell spurred big market bets on rate cuts by saying such moves were “clearly” a topic of discussion. The comments’ effect was equal to lowering interest rates by 0.14 percentage point — and also will add about a half percentage point to the CPI this year, according to Anna Wong, chief US economist at Bloomberg Economics. Now Powell “is entertaining the possibility that disinflation has indeed stalled, and that the bar for cutting rates may have increased,” Wong said. “That raises the risk that there won’t be a rate cut this year, if the unemployment rate is little changed from today.” Market Euphoria In addition to the economic impact since Powell’s December remarks, stocks and bonds have added $7.5 trillion to their combined values through the market’s peak in March — equivalent to roughly 30% of US gross domestic product. The prospect of lower rates has encouraged investors to bid up risky assets of all stripes. The S&P 500 has scored 22 record highs in 2024, while corporate bond risk premiums — the extra yield investors demand over Treasuries — narrowed this month to a more than two-year low. All of this is contributing to a material easing in financial conditions, with a Bloomberg index tracking the investment backdrop now more accommodative than before the Fed embarked on its aggressive tightening two years ago. Claudia Sahm, a former senior Fed economist, blames markets, not Powell. “The degree of motivated listening is mind blowing,” said Sahm, chief economist at New Century Advisors LLC. --With assistance from Matthew Boesler, Lu Wang and Sid Verma. Most Read from Bloomberg Businessweek ©2024 Bloomberg L.P.
Tech earnings season is coming, and AI is top of mind 2024-04-18 03:11:00+00:00 - Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA), and the rest of their Big Tech cohorts are gearing up for what is expected to be one of the more eventful earnings seasons in some time. Generative AI will no doubt be top of mind as the push to monetize the technology continues and investors look for any indication that those billions of dollars in investments are starting to pay off. “We're forecasting it to be about an 8% growth as a kind of collective growth number for the large-cap technology companies,” said Alex Smith, head of Canalys' channels research department. “In terms of overall growth, Nvidia is going to far outstrip the rest of the market.” But generative AI isn’t the only thing on investors’ minds. Apple’s earnings should prove eventful after the company’s rough start to the year, with the iPhone maker facing everything from antitrust lawsuits to slowing sales in China, one of its most important markets. Meta (META) and Google parent Alphabet (GOOG, GOOGL), meanwhile, will give Wall Street a sense of how the digital advertising market is performing. Both companies saw sales increase in the prior quarter, but Alphabet fell shy of analysts’ expectations. The search giant will need to flip the script this quarter. Strap in because it’s going to be a wild few weeks. Generative AI takes center stage again The generative AI explosion is still reverberating across Wall Street as shares of heavy hitters like Nvidia and Microsoft continue to soar. But after a year of hype, companies will need to start showing that the excitement is paying off. Microsoft will report earnings on April 25 as investors wait to learn more about how the company is monetizing its AI strategy. (Photo by Michael M. Santiago/Getty Images) (Michael M. Santiago via Getty Images) “We can be absolutely sure that the first and most important thing that investors are going to be eyeballing is companies kind of taking their AI washing [saying something uses AI even if it doesn’t] and turning it into meaningful contributions to the top and bottom line,” Daniel Newman, CEO of the technology advisory and research firm The Futurum Group, told Yahoo Finance. Shares of Nvidia are up roughly 75% year-to-date and 225% over the past 12 months, as hyperscalers like Google, Microsoft, Amazon, and Meta grab as many of the company’s AI chips as possible. That’s sent Nvidia’s revenue through the roof. In Q4, Nvidia reported revenue of $22.1 billion, up from $6.1 billion in the prior year. But the company is going to begin lapping its explosive growth numbers this year, which could put a damper on investor enthusiasm even if it continues to outperform. “You've had these massive blowouts but as soon as you start to lap that first year of massive blowouts, then it's going to be more average growth numbers,” said TECHnalysis Research president Bob O’Donnell. Story continues That’s not to say Nvidia will relinquish its lead in the market anytime soon. It’s still miles ahead of rivals AMD and Intel in terms of market share, and it just debuted its Blackwell architecture during its GTC developer conference in March, which should put it even further ahead. Nvidia CEO Jensen Huang talks about processing units during the keynote address of Nvidia GTC in San Jose, Calif., on March 18. (AP Photo/Eric Risberg) (ASSOCIATED PRESS) “They still have a commanding lead and share, and their influence is huge, and they are not slowing down, to their credit,” O’Donnell said. “But the law of big numbers starts to kick in at a certain point.” Then there are the hyperscalers like Microsoft, Amazon (AMZN), and Google. While they’ve been riding the AI hype train, many of their generative AI software offerings are still in the works, meaning it’s a bit early to get a full read on overall uptake among enterprise and consumer customers. Still, Wall Street will likely be looking for at least some revenue growth from the companies’ AI investments. “How much is AI driving [Microsoft’s] Azure? How much is AI driving Google Cloud growth? How much is it continuing to help AWS which has sort of seen its numbers slow,” said Newman. In its last quarter, Microsoft announced that AI services contributed 6 percentage points of growth to its Azure revenue, up from 3 percentage points in the prior quarter. And you can bet analysts will be looking to see if the company can keep that kind of growth up in the current quarter. Amazon also pointed to AI as a growth catalyst during its last earnings call, saying revenue was "accelerating rapidly" as customers showed interest in the technology. It will be interesting to see if the company provides any more context around that acceleration in its upcoming earnings call. Alphabet CEO Sundar Pichai speaks at the Google I/O annual developer conference at the Shoreline Amphitheater in Mountain View, Calif., on May 10, 2023. (Melina Mara/The Washington Post via Getty Images) (The Washington Post via Getty Images) Google, like Microsoft, will also likely face questions about sales of its AI-enhanced productivity suite and how customers are responding. The company, which will host its I/O developer conference in May, has also faced controversy over its AI rollout, pulling back its Gemini AI generator after it generated historically inaccurate images. Apple on deck Apple’s earnings will also be a hot ticket but don’t expect the company to reveal anything about its future generative AI plans. “Apple needs to disclose something, but the company has never really been in a hurry to pacify industry investors,” said Patrick Moorhead, CEO of Moor Insights & Strategy. “I think they're going to wait until WWDC in a couple of months to bring that out.” Outside of AI, investors are eagerly anticipating Apple’s iPhone revenue numbers and commentary on its lawsuits. On Monday, market intelligence firm IDC reported that global iPhone shipments fell nearly 10% in the current quarter. That could have a significant impact on Apple’s overall revenue. Sales in China are also a problem for the company. Apple reported revenue in its third-largest market declined 13% in the prior quarter. That, coupled with falling iPhone shipments, could spell trouble for the company’s earnings. Despite those headwinds, however, there could be a bright spot. According to BofA Global Research’s Wamsi Mohan, Apple should report double-digit growth in its Services segment, which could help buoy overall sales. Subscribe to the Yahoo Finance Tech newsletter. (Yahoo Finance) The company’s upcoming earrings will also give investors their first glimpse into Vision Pro sales, which should offer some insight into early consumer and enterprise interest in the AR/VR headset. Digital advertising sales on the rise Meta and Google will also be on deck to show whether they can keep up the momentum in the digital advertising market. In the prior quarter, Meta’s ad sales jumped 24%, while Google’s ad sales, including YouTube ads, increased 11%. Amazon, which has built its own impressive advertising business, could also see continued ad sales growth. In the prior quarter, the company reported advertising revenue of $14.7 billion, up 27% year over year. Another performance like that could provide a nice boost to the company’s bottom line. Analysts will also be on the lookout to see if AI is impacting advertising sales. “Theoretically, targeting should be better by using AI even with the deprecation of the cookie, but we haven't seen that yet,” Moorhead said. “To me, the evidence that I would have to see is a higher cost per click or a better CPM.” We’ll find out all of that and more when Big Tech earnings kick off next week. Get ready. Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley. For the latest earnings reports and analysis, earnings whispers and expectations, and company earnings news, click here Read the latest financial and business news from Yahoo Finance
What’s inside the $95 billion House package focused on aiding Ukraine and Israel 2024-04-17 22:50:05+00:00 - WASHINGTON (AP) — Speaker Mike Johnson has unveiled a long-awaited package of bills that will provide military aid to Ukraine and Israel, replenish U.S. weapons systems and give humanitarian assistance to civilians in Gaza. The package totals $95.3 billion in spending, which matches the total that the Senate passed in mid-February. But there are also a few differences with the Senate bill designed to win over some House conservatives. Here’s a look at what is in the bills that Johnson hopes to pass by this weekend. UKRAINE The aid to support Ukraine totals about $61 billion. Republicans on the House Appropriations Committee said that more than a third of that amount would be dedicated to replenishing weapons and ammunition systems for the U.S. military. The overall amount of money provided to Ukraine for the purchase of weapons from the U.S. is roughly the same in the House and Senate bills — $13.8 billion. The main difference between the two packages is that the House bill provides more than $9 billion in economic assistance to Ukraine in the form of “forgivable loans.” The Senate bill included no such provision seeking repayment. The president would be authorized to set the terms of the loan to Ukraine and also be given the power to cancel it. Congress could override the cancellation but would have to generate enough votes to override a veto, a high bar considering how the two chambers are so evenly divided. Johnson, as he seeks GOP support for the package, noted that former President Donald Trump has endorsed a “loan concept.” He also noted that the House package includes a requirement for the Biden administration to provide a plan and a strategy to Congress for what it seeks to achieve in Ukraine. The plan would be required within 45 days of the bill being signed into law. House Republicans frequently complain that they have yet to see a strategy from Biden for winning the war. The bill said the report from the administration must be a multiyear plan that spells out “specific and achievable objectives.” It also asked for an estimate of the resources required to achieve the U.S. objectives and a description of the national security implications if the objectives are not met. ISRAEL Aid in the legislation to support Israel and provide humanitarian relief to citizens of Gaza comes to more than $26 billion. The amount of money dedicated to replenishing Israel’s missile defense systems totals about $4 billion in the House and Senate bills. An additional $2.4 billion for current U.S. military operations in the regions is also the same in both bills. Some conservatives have been critical of the aid for Gaza. At the end of the day, though, Johnson risked losing critical Democratic support for the package if Republicans had excluded it. The humanitarian assistance comes to more than $9 billion for Gaza, where millions of Palestinians face starvation, lack of clean water and disease outbreaks. INDO-PACIFIC The investments to counter China and ensure a strong deterrence in the region come to about $8 billion. The overall amount of money and the investments in the two bills is about the same with a quarter of funds used to replenish weapons and ammunition systems that had been provided to Taiwan. OTHER FOREIGN POLICY PRIORITIES Under the plan, the House would also vote on a bill that combines a raft of foreign policy proposals. It includes legislation to allow the U.S. to seize and transfer an estimated $5 billion in Russian assets to a “Ukraine Support Fund.” It also includes legislation that would ban the video app TikTok if it’s China-based owner, ByteDance, does not sell it. The House had already voted earlier this year to force the sale of TikTok, but the measure before the House this week provides ByteDance more time to complete a sale before a ban would kick in, extending the deadline from six months in the prior legislation to as long as nearly one year. If the company chooses not to sell, TikTok would be prohibited from app stores in the U.S. — such as those offered by Apple and Google — as well as web-hosting services. TikTok has denied assertions that it could be used as a tool of the Chinese government. The company has said it has never shared U.S. user data with Chinese authorities and won’t do so if its asked.
Boeing ignores safety concerns and production problems, whistleblower claims 2024-04-17 22:48:00+00:00 - Boeing whistleblowers testified on Capitol Hill Wednesday, alleging that the aviation giant prioritized profits over safety and accusing it of discouraging employees from raising concerns about the company's manufacturing practices. Sam Salehpour, a quality engineer at Boeing, said in a prepared statement that Boeing's emphasis on rapid production undermined its commitment to safety, claiming that managers are encouraged to overlook "significant defects" in the company's aircraft. "Despite what Boeing officials state publicly, there is no safety culture at Boeing, and employees like me who speak up about defects with its production activities and lack of quality control are ignored, marginalized, threatened, sidelined and worse," he told members of an investigative panel of the Senate Homeland Security and Governmental Affairs Committee. Salehpour had previously said he had observed Boeing workers taking shortcuts in assembling its 787 Dreamliner. "Boeing adopted these shortcuts in its production processes based on faulty engineering and faulty evaluation of available data, which has allowed potentially defective parts and defective installations in 787 fleets," he said in the hearing. The Federal Aviation Administration is investigating his allegations. Salehpour also claimed Boeing managers pressured him to stop airing his concerns internally. "I was ignored, I was told not to create delays. I was told frankly to shut up," he said Wednesday. Salehpour said he was subsequently reassigned to the work on the Boeing's 777 program, where he alleged he "literally saw people jumping on pieces of airplane to get them to align." Another whistleblower, former Boeing engineer Ed Pierson, executive director of The Foundation for Aviation Safety, also appeared at the Senate hearing and alleged that Boeing is ignoring safety issues. "[T]he dangerous manufacturing conditions that led to the two 737 MAX disasters and the Alaska Airlines accident continue to exist, putting the public at risk," Pierson said, referring to crashes involving Boeing planes in 2018 and 2019, as well as a January incident in which a door plug fell off an Alaska Airlines jet in mid-flight. Sen. Richard Blumenthal, the Connecticut Democrat who chairs the Senate subcommittee, and its senior Republican, Sen. Ron Johnson of Wisconsin, have asked Boeing for documents going back six years. Blumenthal said at the start of the hearing that his panel planned to hold further hearings on the safety of Boeing's planes and expected Boeing CEO David Calhoun to appear for questioning. Neither Calhoun nor any Boeing representatives attended Wednesday's hearings. A Boeing spokesperson said the company is cooperating with the lawmakers' inquiry and offered to provide documents and briefings. Boeing denies Salehpour's allegations and defends the safety of its planes, including the Dreamliner. Two Boeing engineering executives said this week years of design testing and inspections of aircraft revealed no signs of fatigue or cracking in composite panels used in the 787. "A 787 can safely operate for at least 30 years before needing expanded airframe maintenance routines," Boeing said in a statement. "Extensive and rigorous testing of the fuselage and heavy maintenance checks of nearly 700 in-service airplanes to date have found zero evidence of airframe fatigue." "Under FAA oversight, we have painstakingly inspected and reworked airplanes and improved production quality to meet exacting standards that are measured in the one hundredths of an inch," the company added. Boeing officials have also dismissed Salehpour's claim that he saw factory workers jumping on sections of fuselage on another one of Boeing's largest passenger planes, the 777, to make them align. —The Associated Press contributed to this report.
Bank of England governor shrugs off smaller-than-expected fall in inflation 2024-04-17 22:27:00+00:00 - The governor of the Bank of England, Andrew Bailey, has shrugged off a smaller-than-expected drop in inflation last month, saying he expected a sharp fall towards the government’s 2% target next month. Speaking in Washington after news that the government’s preferred measure of the cost of living had eased to 3.2% in March, Bailey said the path of inflation was broadly in line with what Threadneedle Street had predicted in its quarterly health check on the economy. Financial markets had predicted a bigger drop in the annual rate to 3.1% and saw the latest data on price pressures as putting back the timing of interest rate cuts. But Bailey said: “We are pretty much on track with where we thought we would be – a bit under in February and a bit over in the latest figures. Next month will see quite a strong drop.” While the UK was experiencing strong disinflation, the governor said the fall was unbalanced. He said that in April household energy bills were likely to be 25% lower than a year earlier, but service sector inflation is running at 6%. Decisions on interest rates would be influenced by service sector inflation, earnings growth and the state of the labour market, he said. “It looks like we are getting a loosening of the labour market,” Bailey said after this week’s news of a rise in the unemployment rate to 4.2%. “But we are disinflating at full employment.” Bailey’s comments followed the release of data showing the annual inflation rate at its lowest level since September 2021 – helped by food prices rising more slowly than a year earlier. Jeremy Hunt said: “The plan is working: inflation is … down from over 11% to 3.2%, the lowest level in nearly two and a half years, helping people’s money go further.” Speaking in Washington on Wednesday night, the chancellor said the economy had achieved a “soft landing” and been transformed since Rishi Sunak became prime minister. Asked whether he was disappointed that there had been no improvement in the Conservative party’s poll ratings despite falling inflation, Hunt said: “How people feel is subjective and beyond my control. All I can do is take the right decisions about the fundamentals of the British economy. I think those have been transformed in the period since Rishi Sunak became prime minister.” Hunt said that when he arrived at the Treasury in late 2022, the Bank of England was predicting the longest recession in 100 years and the Office for Budget Responsibility was expecting a record drop in living standards. “It looks like we have achieved a soft landing,” Hunt said. “Living standards have risen, not fallen.” Investors reacted to the March figure by trimming bets for an imminent reduction in borrowing costs, pricing in the first quarter-point rate cut in September or November. A matter of weeks ago, investors had been expecting a first cut in June. skip past newsletter promotion Sign up to Business Today Free daily newsletter Get set for the working day – we'll point you to all the business news and analysis you need every morning Enter your email address Sign up Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy . We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply. after newsletter promotion The Bank has raised interest rates to 5.25% as it tries to bring CPI inflation back down to its target of 2%. However, on Wednesday, Megan Greene, an independent economist on the Bank’s nine-strong rate-setting committee, told an event in Washington that recent tensions in the Middle East could pose a risk to achieving that aim, including by heightening inflation expectations. “I do think that what’s going on in the Middle East does pose a risk,” Greene told the Institute of International Finance. “I’m worried about the sort of an energy price shock and other supply-side shock, which obviously follow a number of supply-side shocks we’ve seen over the past couple of years, and what that might do to inflation expectations.” The ONS said cooling inflation in food and drink prices contributed most to the decline, after a fall in the prices of bakery products including chocolate biscuits and crumpets. However, this was offset by rising fuel prices and stubbornly high inflation in services prices. A reduction in the rate of inflation does not mean that prices are falling, just that they are rising more slowly. The latest snapshot showed consumer prices continuing to rise across a broad range of categories, including car insurance, which soared by almost 30% compared with a year earlier. The cost of mobile phone and broadband packages also shot up and prices for hotels, beer and other alcoholic drinks rose as well. Rachel Reeves, the shadow chancellor, said the figures showed households remained worse off. “Prices are still high in the shops, monthly mortgage bills are going up and inflation is still higher than the Bank of England’s target,” she said. The latest snapshot from the ONS showed that core inflation – which excludes energy, food and tobacco prices and is closely monitored by the Bank – slowed to 4.2% from 4.5% in February, but remained higher than forecast by City economists and the Bank. Services inflation, which the Bank also watches closely, eased slightly to 6% from 6.1% a month earlier, but was also marginally higher than predicted.
Here's how much Caitlin Clark will make in the WNBA 2024-04-17 22:22:00+00:00 - College basketball sensation Caitlin Clark will earn less than six figures in her rookie season with the Indiana Fever, reigniting debate over whether professional women athletes in the U.S. are fairly paid. Clark, this year's No. 1 draft pick in the WNBA, will have a starting salary of $76,535 and earn roughly $338,000 over the four-year contract she signed with the Fever. The second, third and fourth picks in this year's draft will also earn $76,535 their first year, according to the league's collective bargaining agreement. The base annual pay for all four athletes will see only a modest rise over the next few years — $78,066 in 2025, $85,873 in 2026 and $97,582 in 2027. Lower-ranked WNBA draft picks earn less, according to a wage scale outlined in the players' agreement with the league. Players are also eligible for bonuses at the end of the season, based on performance. For example, the "Rookie of the Year" award comes with a $5,150 bonus. The WNBA did not immediately respond to CBS MoneyWatch's request for comment on how it sets athlete salaries. Clark's earnings are not limited to her WNBA salary. She's expected to sign sponsorship deals that will likely lead to her earning far more than than the five figures she'll get for playing basketball. Already, her name image and likeness is valued at $3 million, a figure that's expected to grow, while she has already done TV commercials for advertisers including Gatorade, State Farm and Nike. Still, Clark's base pay pales in comparison to her counterparts in the NBA. Rookie Victor Wembanyama, the first pick in last year's NBA draft, made more than $12 million for the 2023-24 season, his first year in the NBA, according to Spotrac, a site tracking sports statistics.Her salary is roughly equivalent to that of a first-year or junior New York-based attorney at a national law firm, according to a posting on job site Indeed. With some online commentators expressing surprise at Clark's pay, President Biden weighed in Tuesday on the issue of pay disparity in sports. "Women in sports continue to push new boundaries and inspire us all. But right now we're seeing that even if you're the best, women are not paid their fair share," he said in a post on X (formerly known as Twitter). "It's time that we give our daughters the same opportunities as our sons and ensure women are paid what they deserve." To be sure, what female athletes "deserve" is up for debate. The NBA was founded decades ago and generates billions of dollars annually. The WNBA, by contrast, was launched in 1996 and is far smaller, generating an estimated $200 million in revenue annually, according to a report from Just Women's Sports. On the issue of compensation for individual players, "There isn't an endless reservoir of money they get to deal with," Greg Bouris, a professor sports management at Adelphi University, told CBS MoneyWatch, adding that the WNBA needs to meaningfully grow its revenue in order for player salaries to increase. "It comes down to economics.". And as big of a star as Clark has been for college basketball, she remains untested in the professional arena, he noted. That's part of the reason why both the NBA and WNBA issue caps on rookie salaries. "They are coming in to play against the best basketball players in the world and they have yet to prove themselves," Bouris said. "Sucess at one level doesn't guarantee success at the other." By the same token, Clark is expected to add considerable sizzle to the league, as she did in helping the women's NCAA tournament draw a larger TV audience than the men. "She's going to raise all boats" "She's coming in with all of this momentum in earned media coverage for the WNBA, so the league has an opportunity to capitalize on that. She's having a tremendous economic impact," Bouris said. "She's going to raise all boats." The Women's Sports Foundation, an advocacy group for women in sports founded by tennis legend Billie Jean King, has pointed to the relatively low pay in the WNBA as a reason why top players often compete overseas during the U.S. league's off season to supplement their salaries. That includes WNBA star Brittney Griner, who was jailed in Russia while playing there and who previously noted in an interview that "the whole reason a lot of us go over is the pay gap." The WNBA has made strides in promoting pay equity in recent years. While NBA players collectively receive roughly 50% of the league's revenue, WNBA players previously took home less than 23%. But that figure jumped to 50% under the latest labor deal with the league. Yet the pay gap in professional basketball and most other sports remains, with only female tennis players achieving a measure of equity. In the NBA, the minimum rookie salary for the 2022-23 season was $953,000, according to Spotrac. Ketra Armstrong, a professor of sports management at Michigan University said that while she views Clark as underpaid relative to their skills, so are many WNBA athletes. "It's a structural issue, and you can't look at salaries in isolation or compare them to how much the men make because there are stark differences there," Armstrong told CBS MoneyWatch in noting the enormous revenues the NBA generates, compared with the WNBA. The upshot: For WNBA players' salaries to increase, the league will have to land bigger broadcast deals, secure more lucrative corporate sponsorships, and sell more tickets and merchandise. But Armstrong the current moment as a potential turning point for the league. "The Caitlin Clark impact is real. There is an energy and vibrance touching the WNBA in ways it never has before," she said. "If we can get a groundswell increase in ticket sales for all WNBA teams, more merchandise sales, more media exposure, and more people investing, we'll start to see movement in revenue."