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Trump floats 'cutting' retirement spending, drawing quick pushback from Biden 2024-03-11 15:19:00+00:00 - Presumptive Republican presidential nominee Donald Trump opened the door Monday to “cutting” spending under Social Security and Medicare, drawing swift pushback from President Joe Biden and elevating a key policy battle in the 2024 election. Phoning into CNBC's "Squawk Box," Trump was pressed on how he plans to resolve the long-term solvency problems of Social Security, Medicare and Medicaid. “So first of all, there is a lot you can do in terms of entitlements, in terms of cutting,” Trump responded. “And in terms of, also, the theft and the bad management of entitlements — tremendous bad management of entitlements — there’s tremendous amounts of things and numbers of things you can do.” The former president didn’t get specific about how he'd change the retirement programs. A Trump campaign spokesman said he was referring only to “cutting waste and fraud,” but did not provide additional policy details on how he’d go about that or how much can be saved. Biden’s campaign tweeted out the video and the president responded quickly: “Not on my watch.” “If anyone tries to cut Social Security or Medicare, or raise the retirement age again, I will stop them,” Biden said during a speech Monday in New Hampshire. “This morning, Donald Trump said cuts to Social Security and Medicare are on the table again.” Social Security is projected to be solvent through 2034. Medicare is solvent through 2028. After that, benefits under the programs will face automatic cuts unless policy changes are made to add revenue or reduce spending. “As the President just warned in his State of the Union address, Republican officials plan to cut Medicare and Social Security,” White House spokesman Andrew Bates said, adding that “today, in his budget, President Biden honors his ironclad commitment by firmly opposing benefit cuts to Medicare and Social Security.” Trump campaign spokeswoman Karoline Leavitt said in a statement: “President Trump delivered on his promise to protect Social Security and Medicare in his first term, and President Trump will continue to strongly protect Social Security and Medicare in his second term. The only candidate who poses a threat to Social Security and Medicare is Joe Biden — whose mass invasion of countless millions of illegal aliens will, if they are allowed to stay, cause Social Security and Medicare to buckle and collapse.” Opposition to retirement benefit cuts unifies Democrats, with progressives pushing to expand Social Security benefits as well as adding dental, vision and hearing benefits to Medicare. Biden’s annual budget proposal, released Monday, calls for shoring up Medicare by raising taxes on incomes above $400,000, raising a 3.8% surtax on net investment income to 5% above that income threshold and directing the revenues into the hospital insurance trust fund. It also calls for putting Medicare drug savings into the trust fund to extend its duration. The budget further calls for “protecting and strengthening” Social Security by “asking the highest-income Americans to pay their fair share,” a White House fact sheet said. Trump has not offered a policy plan for Social Security or Medicare. Republicans are more divided on how to address the programs, with many House GOP lawmakers supporting a budget that calls for lowering spending by raising the Social Security eligibility age and calling for partial privatization of Medicare. But Trump has sought to position himself in opposition to conservative orthodoxy on retirement spending, without getting specific on what he’d do. On CNBC, the former president spoke broadly. “I know that they’re going to end up weakening Social Security because the country is weak. I mean, take a look at outside of the stock market ... we’re going through hell. People are going through hell,” Trump said, adding that the middle class has “been treated very, very badly with policy.”
Frank Hester: computer programmer who made fortune from public sector contracts 2024-03-11 15:15:00+00:00 - Frank Hester has got rich running one of the companies most critical to the UK’s health infrastructure, but most people will never have heard of him or his firm. By Hester’s own estimation, the Phoenix Partnership (TPP) – the software company he built from scratch and solely owns – is worth £1bn after winning more than £400m of NHS and prison contracts in the last eight years. To celebrate reaching this milestone in 2019, he threw a “unicorn party” at his mansion near Leeds, complete with horses dressed up with horns, and his staff were invited to celebrate. A computer programmer from West Yorkshire’s biggest city, Hester is included on the Sunday Times rich list with an estimated wealth of £415m. Former employees tell of big perks and a partying lifestyle for staff, driven by Hester. He would provide a free bar at the local pub on Fridays, and staff would be invited to week-long sailing trips, paid for by the company. A larger-than-life personality, Hester would often socialise with staff and participate in company-wide WhatsApp groups and meetings, on occasion casually throwing around bad language. View image in fullscreen Frank Hester with David Cameron. Photograph: No credit Former staff describe him as a formidable and blunt presence in the office, with some saying they were at pains to address him in the right way on the phone and pick up to him within two rings, as well as following the firm’s “no bullshitting” ethos in their interactions with him at the time. The businessman got the idea for TPP along with a university friend and set about building the software for the company in about 2005. He has previously described being frustrated seeing his now ex-wife, a GP, struggling with patient software and wanting to create a better product. His software, SystmOne, was born, and gradually throughout the 2000s and 2010s it became one of the two incumbent players in the market, supplying about 2,700 GP surgeries in England with a way of accessing digital medical records on their computers. The medical records are held on a server at an unknown location, with TPP storing them securely and making them available across the NHS, according to its website. View image in fullscreen Hester was made an OBE in 2015 for services to healthcare. Photograph: X It has been a highly profitable service. Hester’s main operating company, the Phoenix Partnership (Leeds), recorded a turnover of £80m with profit before tax of £40m in the year to March 2023, Companies House documents show. It paid a salary of £510,000 to Hester, its sole director. Over a period of five years from 2019 to 2023, the ultimate parent company, TPP Group, paid out £33.5m in dividends, which appear to have gone to Hester as its only shareholder. As sole director and shareholder of TPP, Hester does not have a board or other shareholders to report to. View image in fullscreen Hester met Boris Johnson at the Commonwealth heads of government meeting in South Africa in 2020. Photograph: X In public life, Hester has had a relatively low profile for someone who runs a business of such critical importance. He said in an interview with the Telegraph this month that he spent much of his life voting for the Green party or spoiling his ballot, but under the current Conservative government he has been part of trade missions led by senior Tory figures. He was made an OBE in 2015 for services to healthcare, and joined David Cameron and Ken Clarke on trade trips. He met Boris Johnson at the Commonwealth heads of government meeting in South Africa in 2020. TPP has in an official capacity met government figures three times since July 2021, including Steve Barclay, the former health secretary, according to government filings. Hester has spoken in favour of AI – the company says it is developing an AI model designed to predict the likelihood of patients failing to attend appointments – and he has also publicly lobbied the NHS to stop spending money on expensive IT systems, writing an open letter saying: “We are here for our NHS. We are here to help. Not to drive profits for shareholders, or to grease revolving doors. Let’s do it for the frontline and choose to digitise in an entirely different way.” Last year, Hester made a surprise £5m gift to the Conservatives, putting him in the limelight. He set out his motivations at the time, saying he was donating to Rishi Sunak’s party because he believed it could deliver for the NHS. “As a businessman from Yorkshire I have been fortunate enough to have met the prime minister. He shares my passion for harnessing the data revolution to transform the way we as citizens access healthcare,” he wrote. To accompany the announcement this month of the second £5m donation, from his company, Hester rejected the idea that he was giving money in order to secure more government contracts, saying many came from hospitals and GPs. “GPs decide which software they’re using, not Rishi Sunak,” he said.
Oscar Glory for ‘Oppenheimer’ Rewards Studio Chief’s Vision 2024-03-11 15:02:55+00:00 - “Queen!” It was a Friday night in January, and Snoop Dogg had just rolled into a cocktail party hosted by Donna Langley, NBCUniversal’s chief content officer and studios chairwoman. His shouted greeting, paired with a jaunty deferential dance, seemed to leave her a bit embarrassed. “We’re here to celebrate filmmakers and films,” Langley told the room a few minutes later. “This is not about me.” For an executive who ardently prefers to stay in the background — she declined to be interviewed for this article and dispatched a lieutenant to try and kill it — the 2024 Oscar trail has been an awkward one. Like it or not, this moment in Hollywood history is very much about her. It was Langley who, in a wild bet on a three-hour period drama about a physicist, gave Christopher Nolan the money to make “Oppenheimer.” It won seven Oscars on Sunday, including the ones for director and best picture. Nolan started his acceptance speech for best director by saying, “Donna Langley — thank you for seeing the potential in this.”
Coinbase Stock Tempting but isn’t without its Risks 2024-03-11 14:25:00+00:00 - Key Points Shares have been rallying hard for more than a year now, and the outlook remains strong. As Bitcoin has come roaring back, stocks like Coinbase are incredibly well-positioned to do well. However there are some concerns about its current valuation, so manage risk appropriately. 5 stocks we like better than Coinbase Global A triple-digit percentage move upwards in little more than a month should tell you everything you need to know about how Wall Street is looking at Coinbase Inc NASDAQ: COIN these days. Having endured the worst that the crypto winter could throw at it, the crypto exchange has come roaring back with a vengeance. Since bottoming out at the start of last year, Coinbase shares have gained more than 700% and gone a long way to undoing the damage from the 90% sell-off they endured. If you’re one of the many investors who’ve missed out on the run to date, you’d be forgiven for thinking that most of the move has been missed, and it might be too late to get involved now. Get Coinbase Global alerts: Sign Up But fear not. Several stars are starting to align, supporting Coinbase’s rally in the months ahead. Let’s jump in and take a look. Broader Crypto Rally The first is the ongoing bull run seen across the crypto space right now. Having been written off by so many in recent years after an eye-watering crash, Bitcoin is currently at its highest-ever level against the USD right now. As Bitcoin performs well, so do all the crypto-related stocks, including Coinbase, more than most. The recent launch of Bitcoin-related ETFs has done a lot to improve both the general investor sentiment toward investing in crypto and normalizing it as an asset that’s here for the long run. The previous bull runs seen in Bitcoin and its many peers were too easily dismissable as fringe assets that were benefiting from cheap money and a heavy risk-on sentiment among investors. But the fact that crypto has come back now, stronger than ever, when interest rates are elevated, and potential industry-altering crises like the FTX explosion have been weathered speaks volumes to its longevity. For stocks like Coinbase, this can only be a good thing for their long-term growth outlook. Coinbase’s blossoming growth potential is one that’s been spoken to recently by the team over at Goldman Sachs, who upgraded their rating on the stock last week. It was a move that was echoed by the KBW team, which did the same thing last month. Now, it’s worth noting that both teams previously had Coinbase rated a bearish Sell or equivalent, and both stopped short of upgrading it to a full Buy or equivalent, but still, they were two important upgrades, and both were in the right direction. Valuation Concerns Coinbase remains a highly volatile stock, both in a good way and a wrong way. It’s easy to be tempted by the seemingly endless run of gains of recent months, but remember how quickly things have turned in the past. As the old saying goes, when Bitcoin sneezes, Coinbase catches a cold. And right now, there’s a case to be made that Coinbase is looking a little frothy. Indeed, a Relative Strength Index (RSI) reading of nearly 80 suggests the stock is heavily overbought right now and could be due for an imminent pullback. A price-to-earnings (PE) ratio of more than 700 doesn’t help things in this regard either. Still, investors thinking about getting into Coinbase know they’re not buying a well-established and mature organization, and many would say that’s what makes it so alluring. The risk is certainly higher here than in most other equities, but so, too, is the potential reward. If you’re a believer in crypto’s ability to continue becoming more and more mainstream, and if you’re interested in having some kind of non-crypto-specific exposure to this, then Coinbase is undoubtedly an interesting option. Watch for shares to consolidate their recent gains above $250, but don’t be surprised if there’s some volatility in the near future. Before you consider Coinbase Global, 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 Coinbase Global wasn't on the list. While Coinbase Global currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
This Industrial Products Stock is Goldman’s Favorite This Cycle 2024-03-11 13:55:00+00:00 - Key Points The industrial products sector is looking to make a breakout; all the fundamentals point to it being the case, with one special mention. Goldman has Mueller Water Products as a top pick in the sector, riding on more tailwinds than you imagine. The writing is on the wall for double-digit upside, and markets are okay buying the story, will you? 5 stocks we like better than NVIDIA The numbers are in, and the professional traders on Wall Street have begun to give Main Street investors like yourself a taste of where the big money is about to be made. Their many hours of analysis and rigorous search for the best place to put their capital to work have landed analysts at The Goldman Sachs Group Inc. NYSE: GS in one simple yet elegant play for this cycle. By catching a bit of the “top-down” analysis process employed at the big investment houses, you can see why stocks like Mueller Water Products NYSE: MWA will be shining in the coming months. With a double-digit upside ahead, Goldman has chosen it as one of the top picks in the sector. Markets left behind clear evidence suggesting that they love it as well. Get NVIDIA alerts: Sign Up Also part of a construction stock play, Mueller stock is riding on the same tailwinds Warren Buffett spotted when he decided to buy into homebuilders like D.R. Horton NYSE: DHI and others. Those stocks have been getting a lot of attention – and price action – lately, but you can still get in early for the next wave supporting the real estate boom that’s about to hit the market. The Big Picture You may already know the hype sending the broader stock market indices, like the S&P 500 and the NASDAQ, to all-time highs. The Federal Reserve (the Fed) proposed cutting interest rates later this year. However, there is still some uncertainty as inflation readings and employment keep sending mixed signals. Traders are pricing these cuts for May of this year, according to the FedWatch tool at the CME Group Inc. NASDAQ: CME. This means that big money will start its rotation now based on the expectation of what will come in the changing rate cycle. While some may chase the potential new ceilings made in technology stocks, specifically in names like NVIDIA Co. NASDAQ: NVDA, others follow the “top-down” drilling mentioned earlier. The ISM manufacturing PMI index can be a great place to find the next trend. Over the past quarter, the metals industry sent out expansionary readings for three consecutive months. Not only that, these readings have been accelerating. Over on the Services PMI, the construction industry is also sending similar readings. Contracting in December and expanding more aggressively over January and February, Buffett seems about to get a big payday in his homebuilding stocks. Potential interest rate cuts can increase construction activity as new homebuyers get a stab at cheaper mortgage rates. It is no wonder that the Vanguard Real Estate ETF NYSEARCA: VNQ pushed out a 5% performance over the past quarter, which is significant for a low-beta sector like real estate. More specifically, residential real estate is taking the spotlight today. A Helping Hand Over the past quarter, one real estate area is beating the ETF benchmark, and for good reason. Equity Residential NYSE: EQR outperformed the ETF by 3% during the period. It is clear that the market is accepting the growing tailwinds in residential construction, and that’s where Mueller Water comes in. Mueller is at the forefront of the residential construction boom by making the necessary materials and designs for water systems. You cannot build a house without providing the necessary pipe and water system, right? Well, that is why there is a double-digit upside in that stock today. Goldman Sachs analysts see a price target of $17 a share in the stock, directly calling for a 13% upside from where it trades today. Expecting the next set of quarterly results to look much better than the last one, markets are also preparing their bids for some upside in the name. While the rest of the steel and pipe industry trades at an average price-to-earnings (P/E) ratio of 10.5x, Mueller stock is valued at a significantly higher 22.8x multiple. A premium of 118% to the sector could make some turn away, thinking it is expensive. Remember the saying “It must be expensive for a reason” because it applies here. Knowing what you know now, it should be no surprise that the broader market expects a blowout quarter to be reported from this stock, especially now that the writing is on the wall for residential construction to take off. More than that, the industry is set to grow its earnings per share (EPS) at an average rate of 11% over the next twelve months. Analysts projected 17.4% growth for Mueller’s EPS during this period, further justifying how markets value the stock today. Before you consider NVIDIA, 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 NVIDIA wasn't on the list. While NVIDIA currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Another 20% Upside for Broadcom Stock: Analysts Say Buy the Dip 2024-03-11 13:26:00+00:00 - Key Points Broadcom shares are in a healthy correction and setting up for another rally that may start soon. AI and VMWare are driving growth, expected to accelerate as the year progresses. Analysts are raising their price targets and may catalyze a rebound that reaches new highs before mid-year. 5 stocks we like better than Broadcom The price action in Broadcom Inc. NASDAQ: AVGO began correcting after its FQ1 earnings release, and it may move lower, but this is a near-term phenomenon investors should embrace. Broadcom's market pulled back not because of weakness or guidance but because of market conditions for semiconductor stocks and bad news for its largest client, Apple NASDAQ: AAPL. Regarding market conditions, Broadcom and other chip leaders have rallied strongly for many quarters and are ready for a healthy correction. The market may move as low as $1155 to align with the analysts' consensus, but a sell-off is unlikely to get that deep. Get Broadcom alerts: Sign Up Broadcom has Sold a Quarter, Guides for Acceleration Broadcom had a solid quarter, with strength in both segments contributing to growth. The company’s $11.96 billion in revenue is up 34.1% YOY, beating consensus by 200 basis points on acquiring VMWare and a small 4% gain in the Semiconductor segment. Infrastructure Solutions, which includes VMWare, is up 153% YOY. Gains in the semiconductor segment are noteworthy because they include growth despite weakness in some end markets. More importantly, the acquisition of VMWare is helping to sustain solid margins and drive earnings. GAAP earnings are up 31% YOY, adjusted 6.4%, with FCF margin holding near 40%. FCF topped $6.9 billion and is being put to good use, paying down debt incurred during the VMWare acquisition, repurchasing shares, and paying dividends. The company’s cash balance fell YOY, but the cash burn included repurchasing 7.7 million shares and paying dividends. Cash flow and FCF are expected to improve as the year progresses, so balance sheet improvements and capital returns should continue. Guidance forecasts business acceleration in the following quarters. VMWare and AI are expected to lead the company to 40% FY growth, with strength expected in the 2nd half. Because the company is outperforming now and AI is gaining momentum, it will likely outperform. Analysts Raise Targets for Broadcom on AI Outlook and VMWare Analysts' activity following the Q1 release favors higher share prices, not lower. Marketbeat.com tracks more than a dozen reiterated price targets and upward revisions, with the consensus advancing and this stock trading at a new high. Bank of America issued the new high price target of $1680, about 30% above the current action, pointing to 2nd half strength led by the VMWare acquisition and AI. Other highlights from the analysts' chatter include a forecast for AI to drive business acceleration, normalizing of legacy markets in the 2nd half, free cash flow, and dividends. Apple has suffered recently, and its share prices have been decreasing. The bad news for it includes pulling out of the EV race, a hefty fine from the EU, and weak iPhone sales in China. Sales in China slumped nearly 25% due to weak market conditions and competition and are not expected to recover soon. Analysts believe Apple lags in AI but haven’t ruled out future success. They expect the company to weather the downturn as in the past, and some catalysts are on the horizon. Among them is its World Wide Developer Conference, where CEO Tim Cook is expected to reveal the company’s AI plans, which will likely include Broadcom technology. The Technical Outlook: Broadcom Hits a Peak, Correction in Progress The technical action in Broadcom shows the market at a peak. The candle formed is the most substantial bear candle formed in years, so the consolidation could take some time. The first best target for support is near the 30-day moving average, which may not be strong enough. The next target is slightly below, near $1200, and a better target for firm support. If the market can sustain support at or near these levels, it could set new highs before mid-year. If not, new highs may not be seen until the 2nd half. Critical resistance is near $1400. A move above that will open the door to another sustained rally. Before you consider Broadcom, 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 Broadcom wasn't on the list. While Broadcom currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Bitcoin hits record high above $72,000 as U.K. opens the door to crypto exchange-traded products 2024-03-11 13:21:00+00:00 - Bitcoin prices rallied on Monday to hit a fresh record high above $72,000, after the British financial watchdog said it would allow exchanges to list cryptocurrency-linked exchange-traded products for the first time. The Financial Conduct Authority said in a notice Monday that it would not object to requests from recognized investment exchanges to create a U.K.-listed market segment for crypto-backed exchange traded notes, or ETNs. Exchanges would need to ensure they have sufficient controls in place, so that trading is orderly and proper protection is afforded to professional investors. They must meet all the requirements of the U.K.’s listings regime, issuing prospectuses and ongoing disclosures. Bitcoin’s price surged over 3% to $72,211.51 at around 6:50 a.m. ET, hitting a fresh all-time high. It has since receded slightly and was back below $71,530.13 as of 7:15 a.m. ET. Ether climbed more than 2%, to $4,041.23. The London Stock Exchange acknowledged the FCA’s statement Monday, saying in a separate statement that it would accept applications for the admission of bitcoin and ether ETNs from the second quarter of this year. The FCA clarified that only professional investors would be able to buy ETNs. The U.K. currently doesn’t allow retail investors to buy crypto-linked ETNs or derivatives, as it says they are too risky for consumers. The FCA said it continues to believe cETNs — crypto ETNs —and crypto derivatives are “ill-suited for retail consumers due to the harm they pose.” It noted, “As a result, the ban on the sale of cETNs (and crypto derivatives) to retail consumers remains in place.” The FCA added it “continues to remind people that cryptoassets are high risk and largely unregulated. Those who invest should be prepared to lose all their money.” The move from U.K. regulators comes after their U.S. counterparts approved the first-ever spot bitcoin exchange-traded funds. The Securities and Exchange Commission gave the green light for ETFs from BlackRock, Fidelity, Grayscale, and other major firms, which are now live and being traded. Unlike an ETF, which is a fund that holds assets, an ETN is an unsecured debt security issued by a bank. It is typically linked to a market index or other benchmark. An ETN promises to pay out at maturity the full value of the index, minus management fees. Bitcoin bulls note this will lead to increased institutional investment into bitcoin and other cryptocurrencies. They say this will, in turn, impact the price positively as more serious money floods into the market. The FCA’s decision to allow for crypto-linked bitcoin ETNs follows pushback from the regulator. The FCA in 2020 banned the sale of crypto-linked ETNs and derivatives to consumers, saying they were ill-suited for everyday investors. At the time, the FCA noted extreme price volatility of cryptocurrencies and financial crime in the secondary market as factors, adding consumers “might suffer harm from sudden and unexpected losses.”
Target Nails the Bullseye on Outsized Earnings Beat 2024-03-11 13:12:00+00:00 - Key Points Target is one of the largest general merchandise retailers in the United States, operating 1,956 locations. Target owns over 45 private label brands for apparel, merchandise, toys, groceries, wine and spirits, generating nearly $30 billion in annual sales. Target beat Q4 2023 EPS consensus estimates by 56 cents, sending soaring by 15% to new 52-week highs. 5 stocks we like better than Target Minneapolis, Minnesota-based Target Co. NYSE: TGT is a major general merchandise retailer operating 1,956 stores in the United States. Its typical locations are around 135,000 square feet, and its small-format City Target stores are around 80,000 square feet. The retail/wholesale sector giant offers a wide range of products, from apparel, electronics, household products, home décor, and beauty products to groceries, including fresh produce, meats, and frozen and packaged foods. Target’s earnings reaction stood out from its peers Walmart Inc. NYSE: WMT and Costco Wholesale Co. NASDAQ: COST, as shares soared nearly 15% on its fiscal Q4 2023 earnings report to new 52-week highs. Same-day services, including in-store pickup, drive-up, and Shipt, rose 13.6% YoY, generating 10% of total sales. Get Target alerts: Sign Up Cashing in on its Private Label Brands Like its retail competitors, Target is a large purveyor of private-label merchandising. These brands range from All in Motion activewear, Art Class children's apparel, Boots & Barkley pet supplies to Casaluna bedding products, Embark camping gear, the Gigglescape toy brand, Goodfellow & Co. men’s apparel, and Market Pantry food items. Target also owns private-label wine and spirits brands, including California Roots, Casa Cantina, Jingle and Mingle, SunPop, and Wine Cube. Billion-dollar store brands Together, Target owns more than 45 different store brands that generate nearly $30 billion in annual sales. Its Cat & Jack, Threshold, and Good & Gather are three of 11 private label brands that generate $1 billion or more in sales annually. Private label brands carry much heftier profit margins, costing consumers less money, as grocery giant The Kroger Co. NYSE: KR can attest. Target Hits the EPS Sweet Spot. Target reported its Q4 2023 EPS of $2.98, beating consensus analyst estimates of $2.42 by 56 cents. Revenues rose 1.6% YoY to $31.47 billion versus $31.83 billion consensus estimates. For full-year 2023, Target grew its EPS by 50% to $8.94. Operating margins rose 200 bps to 5.3%. Operating income rose $2 billion compared to 2022. Cost savings efficiency sales were over $500 million. Cash from operations grew more than 100% YoY to $8.6 billion from $4 billion in 2022. Get AI-powered insights on MarketBeat. In-line Guidance Target issued in-line guidance for Q1 2024 EPS of $1.70 to $2.10 versus $2.09 consensus analyst estimates. Comparable sales are expected to decline 3% to 5% in the quarter. Full-year 2024 EPS is expected between $8.60 and $9.60 versus $9.17 consensus estimates. Comparable sales are expected to grow between flat and 2%. Target paid out $508 million in dividends in Q4 2023 compared to $497 million in the year-ago quarter. Growing its Collaborations and Partnerships Target continues to grow its decade-long collaborations with major brands like Apple Inc. NASDAQ: AAPL, Starbucks Co. NASDAQ: SBUX and The Walt Disney Co. NYSE: DIS. New partnerships with Magnolia, CBS, Levi’s, Hearth & Hearth and Ulta Beauty Inc. NASDAQ: ULTA store-within-a-store have driven sales and loyalty. CEO Insights Target CEO Brian Cornell noted that customers responded to newness, value and inspiration from the ease of digital and in-store shopping experience. Cornell plans to continue investing in strengths and differentiators responsible for delivering strong performance, including its Target Circle membership program. This is the free loyalty program that provides 1% cash back purchase rewards that can be used towards personalized exclusives and discounts and voting for charitable causes that Target supports. It has replaced its previous rewards program called Cartwheel in 2019. Cornell plans to remodel its stores and open nearly 300 stores in the next decade. Cornell concluded, “Discovery and inspiration have always been a hallmark of our shopping experience. We started by providing inspiration and easy access at our stores with no barriers between impulse and purchase. But we see an opportunity to do even more, to think differently about the intersection of physical, digital, and social so consumers can discover Target products wherever they're spending their time.” Target analyst ratings and price targets are at MarketBeat. The MarketBeat stock screener can also help you find Target's peers and competitor stocks. Daily Ascending Triangle Breakout The daily candlestick chart on TGT illustrates an ascending triangle breakout pattern. The lower ascending trendline formed on the $123.96 gap from its Q3 2023 earnings release on November 15, 2023. The flat-top resistance format at $142.68 tested multiple times as the daily market structure low (MSL) buy triggered the $139.73 breakout. TGT was able to stage a rally up to $154.77 heading into its Q4 2023 earnings release, which resulted in a price gap to $165.21 on March 5, 2024, as shares rose to a high of $175.53 before peaking out. The daily relative strength index (RSI) bounced and peaked at the 80-band as it headed back down toward the overbought 70-band. Pullback support levels are at $165.21, $160.80, $154.77 and $150.09. Before you consider Target, 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 Target wasn't on the list. While Target currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
First Solar Heats Up Rebound In Solar Energy Demand 2024-03-11 12:55:00+00:00 - Key Points First Solar is a leading thin-film solar module manufacturer, which closed 2023 with a record backlog. First Solar reported a Q4 2023 EPS beat by 11 cents as revenues rose 15.5% YoY. The company expects to grow its capacity to 25 MW worldwide by 2026. 5 stocks we like better than First Solar First Solar Inc. NASDAQ: FSLR is a leading thin-film photovoltaic (PV) solar panel manufacturer. Solar energy stocks had a rocky 2023 but will heat up again in 2024. The Invesco Solar ETF NYSEARCA: TAN is down 41.5% in the past year. However, it has been curbing losses down 14.2% year-to-date (YTD). First Solar is starting to see demand rising as the federal grants from the Inflation Reduction Act payout. Federal solar tax credits under the Residential Clean Energy Credit are income tax credits that can cut the price of solar installation by 30%. This incentive can mean a $6,000 tax credit on a $20,000 solar installation at a primary or secondary residence. This oil/energy sector may see a reprieve from the selloff in 2024. Get First Solar alerts: Sign Up Thin Film Versus Crystalline Panels First Solar is the leader in thin-film solar panels. There are mainly three types of PV solar panels. Crystalline silicon panels are comprised of monocrystalline panels, which are the most expensive, with over 19% efficiency and are best suited for users with limited roof space. Polycrystalline is the mid-priced choice when space is not limited, with an average of 15% to 17% efficiency. Thin-film panels are made from Cadmium Telluride (CdTe) or Copper Indium Gallium Selenide (CIGS) is the lowest-priced option. It typically has less than 15% efficiency and is best for large commercial and industrial rooftops. Thin film tends to perform better under low-light conditions and is most cost-effective for enterprise customers. SunPower Corporation NASDAQ: SPWR manufactures its own monocrystalline panels called Maxeon, which it claims are the most efficient solar panels on the market. Get AI-powered insights on MarketBeat. Improving fundamentals at First Solar First Solar reported a Q4 2023 EPS beat of 11 cents, coming in at $3.25 versus $3.11 consensus analyst estimates. Revenues rose 15.5% YoY to $1.16 billion, falling short of the $1.31 billion consensus estimates. Full-year 2023 net income was $7.74 per share. Full-year net bookings were 28.3 GW. First Solar ended 2023 with $1.6 billion in cash, up from the previous forecast of $1.3 billion. Mixed Guidance for First Solar First Solar provided in-line guidance for the full year 2024. It sees EPS of $13.00 to $14.00 versus $13.25 consensus estimates. Volume sold is expected between 15.6 GW to 16.3 GW. Operating income is forecast between $1.5 billion to $1.6 billion including production startup costs of $85 million to $90 million. Underutilization costs associated with factory ramp are expected to be between $40 million to $60 million. Section 45X tax credits are expected to be between $1 billion to $1.05 billion. Year end 2024 cash balance is expected to be between $900 million to $1.2 billion. First Solar CEO Insights First Solar CEO Mark Widmar noted it was the Company's 25th anniversary, marking it as one of the world's oldest and most experienced solar module manufacturers. It has produced and shipped record module volumes, and its backlog has grown to historic levels at 80.1 GW. The company added 10 new customers, securing 28.3 GW of net bookings at a base ASP of more than 31.8 cents per watt. Capacity Expanding to 25 GW by 2026 The company has expanded its manufacturing capacity, investing $1.1 billion in a new facility in Louisiana, which is expected to add 3.5 GW to its nameplate capacity in 2026. Combined with its Alabama and Ohio manufacturing plants, it expects 2026 year-end nameplate capacity to grow to 14 GW domestically and an additional 11 GW internationally, for a total of 25 GW. Widmar commented, “Over the past year, we scaled manufacturing capacity, mobilized at our latest announced facility in Louisiana, produced and shipped a record volume of modules, expanded our contracted backlog to historic levels, increased R&D investment, and continued to evolve our technology and product roadmap.” First Solar analyst ratings and price targets are at MarketBeat. The MarketBeat stock screener can help you find First Solar’s peers and competitor stocks. First Solar Daily Symmetrical Triangle Breakout The daily candlestick chart on FSLR indicates a symmetrical triangle breakout pattern. The upper descending trendline commenced at $177.89 on January 2, 2024. The ascending lower trendline formed at the $135.88 swing low on February 5, 2024. The breakout occurred a week after its Q4 2023 earning release as shares staged a rally through the upper trendline on March 6, 2024. The daily relative strength index (RSI) has been rising through the 60-band. Pullback support levels are at $156.88, $151.32, $141.76 and $135.88. Before you consider First Solar, 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 First Solar wasn't on the list. While First Solar currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
100% Upside in This Real Estate Stock, Institutions Buying In 2024-03-11 12:40:00+00:00 - Key Points There is an opportunity to hop along the contagion effect created by the U.S. real estate bull run, the same one Buffett is on. By spreading into China, investors' willingness to meet the government stimulus to bring KE Holdings stock to double. Analysts have been upgrading the stock, while other institutions have also been buying it in the past month. 5 stocks we like better than Alibaba Group You now have a chance to profit from one of the biggest trends in the United States economy today. Warren Buffett spotted an opportunity in construction stocks, buying names like D.R. Horton NYSE: DHI and others, foreseeing a boom in residential construction to hit the market shortly. While there is still time to get into the homebuilders, there are plenty of other places to make money. However, not all real estate stocks are made equal. Across the world, the real estate market in China is causing concerns for international investors, but that’s a thing of the past. As the CSI 300 index (China’s version of an S&P 500) bounced off five-year low prices, some U.S. investors and institutions believe stocks like KE Holdings NYSE: BEKE could soon see triple-digit upside on a swift comeback. Get Alibaba Group alerts: Sign Up Mega investors like Michael Burry (the guy who called the 2008 financial crisis) and even Ray Dalio have come trickling into Chinese markets. By buying into the iShares MSCI China ETF NASDAQ: MCHI, Ray Dalio admitted to Wall Street that he sees a new bull run up ahead. In actual value investing fashion, Burry has directly invested in the nation’s blue-chip stocks like Alibaba Group NYSE: BABA. Contagion Effect Investors looking to gain exposure to the real estate sector may have exhausted their options in the U.S. stock market. After all, D.R. Horton and others are making all-time highs and providing very few—if any—discounts today. Despite all the explosive growth they can have, future earnings are already priced into the stock price. Outside the direct real estate construction or investment trust (REIT) industries, there is minimal upside left. Even transaction and operation names like the Zillow Group NASDAQ: Z propose only a 2% upside in its $58.8 price target after making a new 52-week high price. At the risk of a contagion effect in profit-taking across the U.S. names, more investors may join Burry and Dalio in their hunt for real estate value in other nations like China. You see, stocks in Asia’s powerhouse are driven by fear today, so the average dividend yield (3.6% for the ETF) is much higher than the 2.5% Chinese government bond yield today. Taking fear out of the equation, any other stock market would have attracted a massive inflow of investors, considering the upside opportunity in stocks compared to the nation’s bonds. Here’s why Chinese real estate stocks could give you additional alpha in the turnaround. As of 2023, roughly 23% of Chinese citizens chose to invest their capital into stocks. Most of the Chinese investor base prefers more traditional investments like real estate. Betting on an economic revival, Burry and Dalio could point you toward KE Holdings. About to Boom Realizing how low the market had gotten, the Chinese government decided to increase its stimulus efforts. By injecting up to $278 billion into the economy and lowering interest rates, the Chinese consumer and investor could soon return to the field and move some money around. Inflation readings in China came in hotter than expected last week, with a 0.7% reading versus a consensus of 0.4% set by economists; it can be said that the latest stimuli are making their way to the Chinese consumer. This doesn’t mean you can blindly bet on Chinese stocks; here’s who is buying KE today. Investment house and bank Barclays NYSE: BCS has upped its stake in KE stock by 82% in February alone, catching onto the latest tailwinds pushing the stock’s drivers. The Vanguard Group followed suit by increasing its exposure in the stock by 0.2%, which comes out to be around $830,000. There is another institution pointing to the potential upside in this play; HSBC Holdings NYSE: HSBC boosted its price target on the stock up to $24 a share, calling for a rally of roughly 100% from today’s prices. Barclays has left its price target of $28 a share unchanged through the year, calling for a 122% upside in the stock they have been quietly accumulating. Considering that KE stock trades at only 11.8x price-to-earnings (P/E) ratio, compared to Zillow’s significantly higher 33.2x, you can rest assured that you can find a deep discount in China’s version of online real estate transactions platform. If investing in China is still too risky for you, there is a way to diversify yourself in real estate. The Vanguard Real Estate ETF NYSEARCA: VNQ gives you broader exposure to the sector with no added risks. However, if you too believe that China is on a comeback, with stimulus about to spark more real estate activity, then KE could be worth the bumpy ride for excess returns. Before you consider Alibaba Group, 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 Alibaba Group wasn't on the list. While Alibaba Group currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Biden’s Budget Underscores Divide With Republicans and Trump 2024-03-11 09:03:46+00:00 - President Biden proposed a $7.3 trillion budget on Monday packed with tax increases on corporations and high earners, new spending on social programs and a wide range of efforts to combat high consumer costs like housing and college tuition. The proposal includes only relatively small changes from the budget plan Mr. Biden submitted last year, which went nowhere in Congress, though it reiterates his call for lawmakers to spend about $100 billion to strengthen border security and deliver aid to Israel and Ukraine. Most of the new spending and tax increases included in the fiscal year 2025 budget again stand almost no chance of becoming law this year, given that Republicans control the House and roundly oppose Mr. Biden’s economic agenda. Last week, House Republicans passed a budget proposal outlining their priorities, which are far afield from what Democrats have called for. Instead, the document will serve as a draft of Mr. Biden’s policy platform as he seeks re-election in November, along with a series of contrasts intended to draw a distinction with his presumptive Republican opponent, former President Donald J. Trump.
Federal judge blocks NLRB rule that would make it easier for big companies' workers to unionize 2024-03-11 08:58:00+00:00 - A federal judge in Texas has blocked a new rule by the National Labor Relations Board that would have made it easier for millions of workers to form unions at big companies. The rule, which was due to go into effect Monday, would have set new standards for determining when two companies should be considered "joint employers" in labor negotiations. Under the current NLRB rule, which was passed by a Republican-dominated board in 2020, a company like McDonald's isn't considered a joint employer of most of its workers since they are directly employed by franchisees. The new rule would have expanded that definition to say companies may be considered joint employers if they have the ability to control - directly or indirectly - at least one condition of employment. Conditions include wages and benefits, hours and scheduling, the assignment of duties, work rules and hiring. The NLRB argued a change is necessary because the current rule makes it too easy for companies to avoid their legal responsibility to bargain with workers. The U.S. Chamber of Commerce and other business groups - including the American Hotel and Lodging Association, the International Franchise Association and the National Retail Federation - sued the NLRB in federal court in the Eastern District of Texas in November to block the rule. They argued the new rule would upend years of precedent and could make companies liable for workers they don't employ at workplaces they don't own. In his decision Friday granting the plaintiffs' motion for a summary judgement, U.S. District Court Judge J. Campbell Barker concluded that the NLRB's new rule would be "contrary to law" and that it was "arbitrary and capricious" in regard to how it would change the existing rule. Barker found that by establishing an array of new conditions to be used to determine whether a company meets the standard of a joint employer, the NRLB's new rule exceeds "the bounds of the common law." The NRLB is reviewing the court's decision and considering its next steps in the case, the agency said in a statement Saturday. "The District Court's decision to vacate the Board's rule is a disappointing setback, but is not the last word on our efforts to return our joint-employer standard to the common law principles that have been endorsed by other courts," said Lauren McFerran, the NLRB's chairman.
Better AI Stock: Nvidia vs. Super Micro Computer 2024-03-11 05:30:00+00:00 - You're a very happy investor if you've owned Nvidia (NASDAQ: NVDA) or Super Micro Computer (NASDAQ: SMCI) over the past year. Since the start of 2023, Nvidia's stock is up 530%, while Supermicro's has risen an astounding 1,300%. In other words, if you invested $10,000 in each company on Jan. 1, 2023, you'd have nearly $205,000. But after that kind of performance, many investors may wonder if they can still invest in these two AI leaders without the risk of losing serious capital in just a few months. So, are either of these two stocks a buy right now? And if so, which is the better purchase? Nvidia and Super Micro Computer are not competitors Nvidia makes best-in-class graphics processing units (GPUs) that are perfect for training AI models. GPUs can process intense calculations efficiently, making them the best tool for the job. When a client wants to build a supercomputer capable of training AI models, it doesn't order a handful of GPUs; it orders thousands. With Nvidia's flagship GPU, the H100, costing an estimated $30,000 a piece, that's a massive growth driver for Nvidia. However, you can't just connect these GPUs together with a few cables and call it a day. You need a specialized server that properly networks these devices and combines them in clusters to maximize efficiency. That's where Super Micro Computer comes in. While some tech giants may have this expertise in-house, many do not, so they contract Supermicro to build their servers. Supermicro has many different server designs based on the application and expected workload size, so customers of all varieties can find what they need. This highlights the first difference between these two investments: Nvidia is a company that nearly all AI-focused businesses work with, while only some work with Supermicro. This doesn't mean Supermicro is doomed to fail, but it is a risk factor investors should consider. Supermicro could be dethroned by a competitor undercutting pricing, while Nvidia might only be knocked off its pedestal by someone creating a more powerful GPU -- something competitors have been struggling to do for a long time. Story continues When examining each company's financials, Nvidia also starts to pull away. Nvidia's stock is cheaper than Supermicro's Both companies are growing rapidly, and their projections for the next quarter are also quite strong. In Q4 of FY 2024 (ending Jan. 28), Nvidia's revenue rose 265% year over year to $22.1 billion. It also gave guidance for Q1 revenue of $24 billion, indicating 234% growth. Supermicro also delivered strong results, with its Q2 FY 2024 (ending Dec. 31) revenue rising 103% to $3.67 billion. For its next quarter, Supermicro projects growth of 188% to 219%, placing it in the same realm as Nvidia. While Nvidia experienced the first wave of GPU demand, Supermicro's growth is just starting. However, the stock already responded with strong price appreciation because investors know what kind of growth to expect based on Nvidia's performance over the past year. As a result, Supermicro's stock is much more expensive than Nvidia's on a forward price-to-earnings (P/E) basis. NVDA PE Ratio (Forward) Chart Using a forward P/E ratio when a company is undergoing a massive change is wise, as it uses analyst projections to value it. There is still room for error (as no one has a crystal ball), but it gives investors an idea of what they're paying for. Because Nvidia is cheaper from this metric and has stronger growth and vital product positioning, I think it's a much better buy than Super Micro Computer. Should the strong AI demand persist for a few years, both stocks could be excellent picks, but Nvidia remains the king of AI investment opportunities right now. Should you invest $1,000 in Nvidia right now? Before you buy stock in Nvidia, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*. See the 10 stocks *Stock Advisor returns as of March 8, 2024 Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Super Micro Computer. The Motley Fool has a disclosure policy. Better AI Stock: Nvidia vs. Super Micro Computer was originally published by The Motley Fool
One of the most infamous trades on Wall Street is roaring back 2024-03-11 04:00:00+00:00 - (Bloomberg) — Forget the artificial-intelligence frenzy — the most-exciting trade on Wall Street right now might just be betting on boring. Most Read from Bloomberg As winners of the AI boom like Nvidia Corp. power benchmark stock gauges to record after record, a less remarked-upon phenomenon has been unfolding at the heart of the US market: Investors are sinking vast sums into strategies whose performance hinges on enduring equity calm. Known as short-volatility bets, they were a key factor in the stock plunge of early 2018 when they wiped out in epic fashion. Now they’re back in a different guise — and at a much, much bigger scale. Their new form largely takes the shape of ETFs that sell options on stocks or indexes in order to juice returns. Assets in such products have almost quadrupled in two years to a record $64 billion, data compiled by Global X ETFs show. Their 2018 short-vol counterparts — a small group of funds making direct bets on expected volatility — had only about $2.1 billion before they imploded. Shorting volatility is an investing approach that can mint reliable profits, provided the market stays tranquil. But with the trade sucking up assets and major event risks like the US presidential election on the horizon, some investors are starting to get nervous. “The short-vol trade and its impact is the most consistent question we have gotten this year,” said Chris Murphy, co-head of derivatives strategy at Susquehanna International Group. “Clients want to know how much of an impact it’s having on markets so they can structure their trades better. But we have seen cycles in the past like 2018 and 2020 where the short volatility trade grows until a big shock blows it up.” Story continues The good news for worrywarts is that the structural difference of the new funds changes the calculus — the income ETFs are generally using options on top of a long stock position, meaning that $64 billion isn’t all wagering against equity swings. There’s also likely a higher bar for broad contagion than in 2018, since the US market has doubled from six years ago. The bad news is that the positions — alongside a stack of less visible short-vol trades by institutional players — are suspected of suppressing stock swings, which invites yet more bets for calm in a feedback loop that could one day reverse. The strategies are also part of an explosive wider growth in derivatives that is introducing new unpredictability to the market. ‘Somebody Has to Sell’ The trading volume of US equity options surged to a record last year, propelled by a boom in transactions involving contracts that have zero days until expiration, known as 0DTE. That has enlarged the volatility market, because each derivative amounts to a bet on future price activity. “There basically is a natural increased demand for options because retail is speculating using the short-dated lottery-ticket type of options,” said Vineer Bhansali, founder of volatility hedge fund LongTail Alpha LLC. “Somebody has to sell those options.” That’s where many income ETFs come in. Rather than deliberately betting on market serenity like their short-vol predecessors, the strategies take advantage of the derivative demand, selling calls or puts to earn extra cash on an underlying equity portfolio. It usually means capping a fund’s potential upside, but assuming stocks stay calm the contracts expire worthless and the ETF walks away with a profit. Industry growth in recent years has been remarkable, and it has mostly been driven by ETFs. At the end of 2019, there was about $7 billion in the category of derivative income funds, according to data compiled by Morningstar Direct, three-quarters of which was in mutual funds. By the end of last year there was $75 billion, almost 83% of it in ETFs. But while the money involved looks bigger, derivatives specialists and volatility fund managers are so far brushing off the risk of another “Volmageddon,” as the 2018 selloff came to be known. John Marshall, Goldman Sachs Group Inc.’s head of derivatives research, said the strategy tends to come under pressure only when the market rises sharply. Most of the cash is in so-called buy-write ETFs, which take a long stock position and sell call options for income. A big rally increases the chances those contracts will be in the money, obliging the seller to deliver the underlying security below the current trading price. “It’s generally a strategy that is not under pressure when the market sells off,” Marshall said. “It’s less of a worry for a volatility spike.” Before the 2018 blowup, Bhansali at LongTail correctly foresaw the threat from the growing short-vol trade. He reckons there’s little danger of a repeat because this boom is powered by canny traders simply meeting retail-investor demand for options, rather than making leveraged bets on volatility falling. In other words, the short-vol exposure itself is not a destabilizing force, even if such bets are vulnerable to turmoil themselves. “Yes, there’s potential of instability if there’s a big market move for sure,” Bhansali said. But “somebody selling those options doesn’t necessarily mean that there’s a massive unhedged short base,” he said. Nonetheless, quantifying any potential risk is difficult because even knowing the exact size of the short-vol trade is a challenge. Strategies can take on various shapes beyond the relatively simple income funds, and many transactions occur on Wall Street trading desks where information is not available to the public. To many, the income ETF boom is a tell-tale sign of something bigger taking place below the surface. “When you’re seeing something going on publicly, there’s probably five to 10 times that going on privately that you don’t see directly,” said Steve Richey, a portfolio manager at QVR Advisors, a volatility hedge fund. Dispersion Doubts Those unseen bets include a significant chunk of quantitative investment strategies — structured products sold by banks that mimic quant trades. According to PremiaLab, which tracks QIS offerings across 18 banks, equity short-vol trades returned 8.9% in the US last year and wound up accounting for roughly 28% of new strategies added to the platform over the past 12 months. Their notional value is unknown, but consultancy Albourne Partners estimated last year that QIS trades overall command about $370 billion. Hedge funds gaming relative volatility are also feeding the boom. One of the most notorious short-vol bets is an exotic options strategy known as the dispersion trade. Employing various complex options overlays, it amounts to being long volatility in a basket of stocks while wagering against the swings of an index like the S&P 500. To work, it needs the broader market to stay subdued, or at least experience less turbulence than the individual shares. With the S&P 500 steadily going up while stock returns diverged widely in recent years, the strategy has flourished. Once again it’s difficult to measure the size of the trade, but it’s popular enough that Cboe Global Markets plans to list a futures product tied to the Cboe S&P 500 Dispersion Index this year. That rising popularity, combined with leverage and a lack of transparency, has prompted Kevin Muir of the MacroTourist blog to warn that a market selloff could upset the trade, forcing an unwinding of positions that could further exacerbate the rout. “It worries me because the dispersion trade has all the hallmarks of a crisis-in-the-making,” Muir wrote. It’s “exactly the sort of sophisticated, highly levered trade where everyone assumes ‘those guys are math whizzes - we don’t need to worry about them blowing up because they are hedged,’” he said. To get an idea of how much short-vol exposure is out there, market players can often be found adding up what’s known as vega. That’s a measure of how sensitive an option is to changes in volatility. At Ambrus Group, another volatility hedge fund, an internal measure of vega aggregates options activity for the S&P 500 Index, the Cboe Volatility Index — a gauge of implied price swings in the US equity benchmark also known as the VIX — and the SPDR S&P 500 ETF Trust (SPY). Kris Sidial, co-chief investment officer, said in January the net short vega exposure was two times larger than in the run-up to the 2018 rout. That means a 1-point increase in volatility could incur notional losses double those experienced six years ago. The big worry: Panicked investors unwinding positions as their losses mount could fuel more volatility, which causes more losses and more selling. Such a scenario raises the risk of introducing another downside accelerant in the shape of the dealers and market makers who are usually on the other side of derivatives transactions. They don’t have their own directional view, so aim to maintain a neutral stance by buying and selling stocks, futures or options that offset each other. In a big market decline — when dealers suddenly find themselves selling high quantities of options that protect or benefit from the rout — it tends to put them in what’s called “short gamma.” The dynamics are complex, but the upshot is that to neutralize their exposure dealers would have to sell into the downdraft, compounding the drop. For now, the short-vol trade’s proliferation has been proposed as one reason why the VIX has stayed eerily low in the past year despite two ongoing major geopolitical conflicts and the Federal Reserve’s most aggressive monetary tightening in decades. That’s because in current conditions, dealers are in a “long gamma” position that generally sees them buying when stocks go down and selling when they go up — dampening swings. In its latest quarterly review published last week, the Bank for International Settlements said that dynamic was the likely reason behind the compression of volatility given the boom in strategies that eke out income from selling options. “The meteoric rise of yield-enhancing structured products linked to the S&P 500 over the last two years has gone hand in hand with the drop of VIX over the same period,” researchers wrote. There are good alternative reasons for the calm. The stock market has steadily ground higher as neither the Fed nor the US economy delivered any major shocks over the past year. It’s also possible that, with so many bets now placed using short-dated options, the VIX no longer captures all the action since it is calculated using contracts about one month out. Yet QVR Advisors also sees the footprints of the boom in vol-selling. The degree of swings priced into S&P 500 options — so-called implied volatility — has drifted lower over the years versus how much the index actually moves around, its data show. The theory is that money managers flooding the market with contracts to generate income are putting a lid on implied volatility — which after all is effectively a gauge of the cost of options. The hedge fund has recently launched a strategy seeking to take advantage of cheap derivatives that benefit from large swings in the S&P 500, whether up or down. “Post pandemic, we have seen fundamental and technical reasons for volatility suppression,” said Amy Wu Silverman, head of derivatives strategy at RBC Capital Markets. “While I think that continues, it becomes more and more difficult to be short volatility from here.” Plenty of macro factors exist with the potential to disrupt the stock market’s steady march higher, including the ongoing wars in Ukraine and Gaza, lingering inflation and the American elections. And while vol-selling strategies have provided investors with gains historically, they have a reputation for their role in compounding routs. The most famous episode took place in February 2018, when a downturn in the S&P 500 sparked a surge in the VIX, wiping out billions of dollars in trades betting against volatility that had built up during years of relative calm. Among the biggest casualties was the VelocityShares Daily Inverse VIX Short-Term note (XIV), whose assets shrank from $1.9 billion to $63 million in a single session. A catalyst has yet to emerge to trigger a repeat. Even when the Israel-Hamas war broke out in October or the US reported hotter-than-expected inflation for January, the market remained serene. The VIX has stayed below its historic average of 20 for almost five months, a stretch of dormancy that was exceeded only two times since 2018. To Tobias Hekster, co-chief investment officer at volatility hedge fund True Partner Capital, that enduring period of calm offers little reassurance. “You are assuming a risk — the fact that that risk hasn't materialized over the past one and a half years doesn't mean it doesn't exist,” Hekster said. “If something trips up the market, the longer the volatility has been suppressed, the more violent the reaction.” Most Read from Bloomberg Businessweek ©2024 Bloomberg L.P.
Nvidia is sued by authors over AI use of copyrighted works 2024-03-11 03:31:00+00:00 - By Jonathan Stempel (Reuters) - Nvidia, whose chips power artificial intelligence, has been sued by three authors who said it used their copyrighted books without permission to train its NeMo AI platform. Brian Keene, Abdi Nazemian and Stewart O'Nan said their works were part of a dataset of about 196,640 books that helped train NeMo to simulate ordinary written language, before being taken down in October "due to reported copyright infringement." In a proposed class action filed on Friday night in San Francisco federal court, the authors said the takedown reflects Nvidia's having "admitted" it trained NeMo on the dataset, and thereby infringed their copyrights. They are seeking unspecified damages for people in the United States whose copyrighted works helped train NeMo's so-called large language models in the last three years. Among the works covered by the lawsuit are Keene's 2008 novel "Ghost Walk," Nazemian's 2019 novel "Like a Love Story," and O'Nan's 2007 novella "Last Night at the Lobster." Nvidia declined to comment on Sunday. Lawyers for the authors did not immediately respond to requests on Sunday for additional comment. The lawsuit drags Nvidia into a growing body of litigation by writers, as well as the New York Times, over generative AI, which creates new content based on inputs such as text, images and sounds. Nvidia touts NeMo as a fast and affordable way to adopt generative AI. Other companies sued over the technology have included OpenAI, which created the AI platform ChatGPT, and its partner Microsoft. AI's rise has made Nvidia a favorite of investors. The Santa Clara, California-based chipmaker's stock price has risen almost 600% since the end of 2022, giving Nvidia a market value of nearly $2.2 trillion. The case is Nazemian et al v Nvidia Corp, U.S. District Court, Northern District of California, No. 24-01454. (Reporting by Jonathan Stempel in New York; Editing by Josie Kao)
Billionaire Bill Gates Has Over Half of His $42 Billion Portfolio Invested in These 3 Dividend Stocks 2024-03-11 02:50:00+00:00 - Do billionaires like dividend stocks? Absolutely. Just take a look at the holdings of famous billionaire investors such as Warren Buffett and Ken Griffin. They're loaded with dividend stocks. Bill Gates stands out as another great example. Although he doesn't manage a public company or hedge fund like Buffett and Griffin do, he's donated a boatload of money to the Bill & Melinda Gates Foundation Trust. And over half of this charitable foundation's $42 billion portfolio is invested in these three dividend stocks. 1. Microsoft It should come as no surprise that Microsoft (NASDAQ: MSFT) remains Gates' favorite stock. After all, he co-founded the technology company along with Paul Allen and led it for years. Microsoft ranks as the top holding for the Gates Foundation Trust by far, making up 33.98% of its total portfolio at the end of 2023. Many tech companies don't pay dividends, but Microsoft is an exception. The company initiated a dividend program in 2003. Over the last 10 years, Microsoft has increased its dividend payout by nearly 168%. Its dividend yield, though, is still only 0.74%. One key reason why the yield is so low is that Microsoft's share price has soared. The stock has been a 10-bagger over the last 10 years and is up almost 60% over the last 12 months. 2. Canadian National Railway The Gates Foundation isn't just betting on tech stocks such as Microsoft. Canadian National Railway (NYSE: CNI) ranks as its third-largest holding, making up nearly 16.3% of the total portfolio. Canadian National Railway isn't limited to just Canada. It has 20,000 or so miles of rail that transport products in the middle part of the U.S. as well. The company also offers transportation and logistics services in addition to rail operations. The transportation company has increased its dividend for 28 consecutive years, most recently boosting its dividend payout by 7% in the first quarter of 2024. Its dividend yield currently stands at 1.94%. Story continues 3. Caterpillar Caterpillar (NYSE: CAT) is the fifth-largest position for the Gates Foundation. It makes up 5.14% of the total portfolio. That brings the combined weight of these three dividend stocks to 55.41%. The Gates Foundation has owned Caterpillar since the fourth quarter of 2005. However, the last time it added shares of the equipment manufacturer was back in the fourth quarter of 2013. The most recent transaction involving Caterpillar came in 2022 Q1, with the sale of roughly 24% of the foundation's stake in the company. Caterpillar has generated nice dividend income for the Gates Foundation through the years. The company has paid a dividend every quarter since 1933 and has increased its payout for 29 consecutive years. Its dividend now yields 1.55%. Are Bill Gates' top dividend stocks smart picks for other investors? It isn't a good idea to buy any stock just because a billionaire investor owns it. For one thing, the factors at play when the billionaire first bought the stock could have changed over time. My view is that income investors can find plenty of other stocks that offer more attractive dividends than Microsoft, Canadian National Railways, and Caterpillar. Value investors can find better choices as well. Are any of these stocks good picks for growth-oriented investors? We can cross Canadian National Railways and Caterpillar off the list. Microsoft, however, should have tremendous growth prospects thanks largely to the rising adoption of generative AI. Its shares have a lot of growth baked in, though, with a forward earnings multiple of over 31x. Still, I think Microsoft is still worthy of consideration for long-term growth investors. Should you invest $1,000 in Caterpillar right now? Before you buy stock in Caterpillar, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Caterpillar wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*. See the 10 stocks *Stock Advisor returns as of March 8, 2024 Keith Speights has positions in Microsoft. The Motley Fool has positions in and recommends Microsoft. The Motley Fool recommends Canadian National Railway and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. Billionaire Bill Gates Has Over Half of His $42 Billion Portfolio Invested in These 3 Dividend Stocks was originally published by The Motley Fool
Is Fisker Stock Going to Zero? 2024-03-11 02:41:00+00:00 - It wasn't long ago that electric vehicle (EV) sales were gaining traction and appeared on the cusp of breaking into mainstream territory. Oh, how quickly things can change. Start-up EV maker Fisker (NYSE: FSR) is now struggling to survive amid high interest rates, charging infrastructure challenges, intensifying competition, and a dwindling cash pile. But is Fisker stock doomed to drop to zero, or is there still hope for long-term investors? The ugly numbers In late February, Fisker reported a rough fourth-quarter net loss of $463 million while announcing plans to slash 15% of its workforce. While the company managed to generate $200 million in revenue, Fisker's cash and cash equivalents dwindled to $396 million. Those ugly numbers were driven by a full year of challenges, including delays with suppliers and troubles delivering vehicles to customers. In fact, Fisker only managed to produce 10,000 vehicles in 2023, which was less than a quarter of its initial guidance, and it couldn't even deliver half of those vehicles. In the middle of February, Fisker received a non-compliance notice from the New York Stock Exchange (NYSE) due to its stock closing below $1 per share on average for 30 consecutive trading days, which could lead to an eventual delisting from the exchange. If you want to pile on the bad news, you can throw on the U.S. National Highway Traffic Safety Administration (NHTSA) opening a preliminary evaluation after receiving four claims of unintended vehicle movement in 2023 Fisker ocean vehicles. The complaints allege people were unable to shift into park and/or the vehicle did not shift into the intended gear. One complaint involves an alleged injury. In its Feb. 29 report, Fisked noted challenges and said it "expects to conclude there is substantial doubt about its ability to continue as a going concern when its annual financial statements for the year ended December 31, 2023, are filed with the SEC." Story continues Overall, things are looking pretty dire for the EV start-up company, but there is a glimmer of hope for investors in the form of a potential partnership. Enter Nissan 2024 is sure to bring some unexpected developments in the EV industry, but Nissan (OTC: NSANY) potentially coming to Fisker's rescue is unexpected, to put it mildly. That could be the case, however, as Nissan and Fisker are in advanced talks for a deal that would provide the Japanese automaker with a platform for an electric pickup truck and throw a lifeline to the struggling EV company. The potential financial lifeline would send more than $400 million in investment to Fisker, enabling Nissan to build its own electric pickup on Fisker's truck platform while also producing Fisker's planned Alaska pickup in 2026 at one of Nissan's U.S. assembly plants. Is it enough? While Nissan's potential lifeline would be welcomed by investors, the truth is that Fisker is likely to need much more help, as the threat of bankruptcy is a real one. Fisker previously mentioned that it was in talks with a debt holder about potential investment, which is desperately needed. Even if Nissan and Fisker close the deal, the latter's Alaska truck -- anticipated to debut with a price tag around $45,000 -- might be far from the saving grace it needs. The truck would be competing in a segment with Ford's F-150 Lightning, General Motors' Chevrolet Silverado EV, Rivian's R1T and its upcoming R2 platform of vehicles, and Tesla's Cybertruck. There are many avenues for Fisker stock to avoid hitting zero and without significant help, Fisker's story could realistically end in the next 12 months. Should you invest $1,000 in Fisker right now? Before you buy stock in Fisker, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Fisker wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*. See the 10 stocks *Stock Advisor returns as of March 8, 2024 Daniel Miller has positions in Ford Motor Company and General Motors. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends General Motors and recommends the following options: long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy. Is Fisker Stock Going to Zero? was originally published by The Motley Fool
Oscars 2024 live updates: Red carpet looks, how to watch, what time it starts and who’s hosting 2024-03-10 21:59:00+00:00 - “The Color Purple” made a splash at the Christmas box office, comes from a powerful literary and cinematic lineage, and scored better with critics than best picture nominee “Maestro,” according to Rotten Tomatoes. And yet it only nabbed one Oscar nomination: Danielle Brooks in the best supporting actress category. While the lack of other nominations for the movie left many fans scratching their heads, Brooks’ nod is nonetheless interesting for Oscar watchers. In the movie, a musical adaptation of Alice Walker’s classic Pulitzer Prize-winning novel, she plays Sofia. That happens to be the same role Oprah Winfrey played in the 1985 film adaptation -- resulting in a best supporting actress nomination for the talk show legend. Winfrey served as a producer for the new film, as did the prior movie’s director, Steven Spielberg, who was famously snubbed from a best director nomination in 1986 despite his film racking up 11 nods, including best picture. This is also not the first time two different actors have been nominated for the same role. Some examples: Marlon Brando and Robert DeNiro both won in different years for playing Vito Corleone in the first two “Godfather” movies, Kate Winslet and Judi Dench were both nominated for playing Iris Murdoch in “Iris,” Jeff Bridges was nominated for playing Rooster Cogburn in the “True Grit” remake decades after John Wayne won for the same part, and Rita Moreno and Ariana DeBose both won best supporting actress for playing Anita in “West Side Story” — 60 years apart.
Almost every single US state has considered laws to abolish daylight-saving time 2024-03-10 21:43:13+00:00 - Almost every state has considering ending daylight-saving time. States cannot switch to a permanent daylight-saving time until federal law changes. A federal law to end daylight-savings has already passed in the Senate, but is waiting on a House vote. NEW LOOK Sign up to get the inside scoop on today’s biggest stories in markets, tech, and business — delivered daily. Read preview Thanks for signing up! Access your favorite topics in a personalized feed while you're on the go. download the app Email address Sign up By clicking “Sign Up”, you accept our Terms of Service and Privacy Policy . You can opt-out at any time. Advertisement Americans are tired of losing an hour of sleep every year to daylight-saving time. Lawmakers in nearly every state have considered laws that would do away with daylight-saving time since 2019, according to a National Conference of State Legislatures report. In 2022, the American Medical Association called for the end of daylight-saving time, saying that it can take months for the human body to adjust to a new sleep cycle after losing an hour in the morning. This story is available exclusively to Business Insider subscribers. Become an Insider and start reading now. Have an account? Log in .
From Red Carpet To Gift Bags: Breaking Down The Oscars' Lavish $56.9 Million Cost 2024-03-10 21:36:00+00:00 - Loading... Loading... The Oscars, Hollywood's most glamorous event, is not just a showcase of cinematic excellence but also a lavish affair with a staggering cost. This year's Academy Awards ceremony is set to cost $56.9 million.The expenses range from extravagant outfits worn by A-list celebrities to the iconic red carpet. Noteworthy is the cost of fashion on this star-studded night, with A-listers' outfits reaching astronomical figures. For instance, in 2019, Lady Gaga dazzled in a Tiffany & Co. necklace valued at over $30 million, while Cate Blanchett and Charlize Theron also graced the Oscars in outfits worth millions. The red carpet, a 50,000-square-foot expanse, on the other hand, costs $24,700 to lay down, reported Fortune. While the golden statuette awarded to winners is valued at only about $400, the real prize may come in the form of a 20% salary increase for future projects for those who win "Best Actor" or "Best Actress." Also Read: Taylor Swift's 'Era's Tour' Rakes In $26 Million In Pre-sales, Shattering AMC Records Additionally, nominees and the host, Jimmy Kimmel, receive "Everybody Wins" gift bags, filled with luxury items and experiences worth over $180,000. These bags include stays at exclusive resorts and a range of high-end products and services, from spa treatments to live entertainment. Hosting the Oscars is a prestigious yet modestly compensated role, with Kimmel revealing a $15,000 paycheck for his hosting gig in 2017. Despite the workload and the event's visibility, the pay remains below industry standards, highlighting the honor and prestige associated with the role over monetary rewards. The Oscars generate significant revenue, with advertisers paying $1.85 million for a 30-second ad slot, contributing to the $120 million ad revenue for ABC. Loading... Loading... The event also boosts Los Angeles' economy by an estimated $170 million annually, proving its substantial economic impact beyond the glitz and glamour. Now Read: Actor Anthony Hopkins' First NFT Collection Sells Out In Minutes This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo: Shutterstock