Former hedge fund star says this is what will trigger the next bear market.

Much of Wall Street expects easing inflation, but an overshoot could dash hopes of a May rate cut, curtailing the S&P 500’s
SPX
waltz with 5,000, warn some.

Read: Arm’s frenzied stock rally continues as AI chase trumps valuation.

What might take this market down eventually? Our call of the day from former hedge-fund manager Russell Clark points to Japan, an island nation whose central bank is one of the last holdouts of loose monetary policy.

Note, Clark bailed on his perma bear RC Global Fund back in 2021 after wrongly betting against stocks for much of a decade. But he’s got a whole theory on why Japan matters so much.

In his substack post, Clark argues that the real bear-market trigger will come when the Bank of Japan ends quantitative easing. For starters, he argues we’re in a “pro-labor world” where a few things should be playing out: higher wages and lower jobless levels and interest rates higher than expected. Lining up with his expectations, real assets started to surge in late 2023 when the Fed started to go dovish, and the yield curve began to steepen.

From that point, not everything has been matching up so easily. He thought higher short-term rates would siphon off money from speculative assets, but then money flowed into cryptos like Tether and the Nasdaq recovered completely from a 2022 rout.

“I have been toying with the idea that semiconductors are a the new oil – and hence have become a strategic asset. This explains the surge in the Nasdaq and the Nikkei to a degree, but does not really explain tether or bitcoin very well,” he said.

So back to Japan and his not so popular explanation for why financial/speculative assets continue to trade so well.

“The Fed had high interest rates all through the 1990s, and dot-com bubble developed anyway. But during that time, the Bank of Japan only finally raised interest rates in 1999 and then the bubble burst,” he said.

He notes that when Japan began to tighten rates in late 2006, “everything started to unwind,” adding that the BOJ’s brief attempts [to] raise rates in 1996 could be blamed for the Asian Financial Crisis.

In Clark’s view, markets seem to have moved more with the Japan’s bank balance sheet than the Fed’s. The BOJ “invented” quantitative easing in the early 2000s, and the subprime crisis started not long after it removed that liquidity from the market in 2006, he notes.

“For really old investors, loose Japanese monetary policy also explained the bubble economy of the 1980s. BOJ Balance Sheet and S&P 500 have decent correlation in my book,” he said, offering the below chart:


Capital Flows and Asset Markets, Russell Clark.

Clark says that also helps explains why higher bond yields haven’t really hurt assets. “As JGB 10 yields have risen, the BOJ has committed to unlimited purchases to keep it below 1%,” he notes.

The two big takeaways here? “BOJ is the only central bank that matters…and that we need to get bearish the U.S. when the BOJ raises interest rates. Given the moves in bond markets and food inflation, this is a matter of time,” said Clark who says in light of his plans for a new fund, “a bear market would be extremely useful for me.” He’s watching the BOJ closely.

The markets

Pre-data, stock futures
ES00,
-0.41%

NQ00,
-0.80%

are down, while Treasury yields
BX:TMUBMUSD10Y

BX:TMUBMUSD02Y
hold steady. Oil
CL.1,
+0.79%

and gold
GC00,
+0.46%

are both higher. The Nikkei 225 index
JP:NIK
tapped 38,000 for the first time since 1990.

Key asset performance

Last

5d

1m

YTD

1y

S&P 500

5,021.84

1.60%

4.98%

5.28%

21.38%

Nasdaq Composite

15,942.55

2.21%

6.48%

6.20%

34.06%

10 year Treasury

4.181

7.83

11.45

30.03

42.81

Gold

2,038.10

-0.17%

-0.75%

-1.63%

9.33%

Oil

77.14

5.96%

6.02%

8.15%

-2.55%

Data: MarketWatch. Treasury yields change expressed in basis points

The buzz

Due at 8:30 a.m., January headline consumer prices are expected to dip to 2.9% for January, down from 3.4% in December and the lowest since March 2021. Monthly inflation is seen at 0.3%.

Biogen
BIIB,
+1.56%

stock is down on disappointing results and a slow launch for its Alzheimer’s treatment. A miss is also hitting Krispy Kreme
DNUT,
+1.99%
,
Coca-Cola
KO,
+0.24%

is up on a revenue rise, with Hasbro
HAS,
+1.38%
,
Molson Coors
TAP,
+3.12%

and Marriott
MAR,
+0.74%

still to come, followed by Airbnb
ABNB,
+4.20%
,
Akamai
AKAM,
-0.13%

and MGM Resorts
MGM,
+0.60%

after the close. Hasbro stock is plunging on an earnings miss.

JetBlue
JBLU,
+2.19%

is surging after billionaire activist investor Carl Icahn disclosed a near 10% stake and said his firm is discussing possible board representation.

Tripadvisor stock
TRIP,
+3.04%

is up 10% after the travel-services platform said it was considering a possible sale.

In a first, Russia put Estonia’s prime minister on a “wanted” list. Meanwhile, the U.S. Senate approved aid for Ukraine, Israel and Taiwan.

Best of the web

Why chocolate lovers will pay more this Valentine’s Day than they have in years

A startup wants to harvest lithium from America’s biggest saltwater lake.

Online gambling transactions hit nearly 15,000 per second during the Super Bowl.

The chart

Deutsche Bank has taken a deep dive into the might of the Magnificent Seven, and why they will continue to matter for investors. One reason? Nearly 40% of the world still doesn’t have internet access as the bank’s chart shows:

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.

Ticker

Security name

TSLA,
-2.81%
Tesla

NVDA,
+0.16%
Nvidia

ARM,
+29.30%
Arm Holdings

PLTR,
+2.75%
Palantir Technologies

NIO,
+2.53%
Nio

AMC,
+4.11%
AMC Entertainment

AAPL,
-0.90%
Apple

AMZN,
-1.21%
Amazon.com

MARA,
+14.19%
Marathon Digital

TSM,
-1.99%
NIO

Random reads

Everyone wants this freak “It bag.”

Dumped over a text? Get your free dumplings.

Messi the dog steals Oscars’ limelight.

Love and millions of flowers stop in Miami.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

Check out On Watch by MarketWatch, a weekly podcast about the financial news we’re all watching – and how that’s affecting the economy and your wallet.

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#hedge #fund #star #trigger #bear #market

My Tinder match asked if I ‘rent or own’ my apartment. Is it gauche to ask financial questions before a first date?

I met a guy on Tinder
MTCH,
+0.75%

and had an introductory telephone conversation, which I always think is a good idea before making the effort to meet in person. During our 15-minute telephone conversation, he told me about his divorce, his job and his hobbies. He described himself as easygoing and outdoorsy, and someone who likes to socialize and play sports. 

He talked a lot about his children, for five minutes or longer. He said he owned a small house. He asked what I did for a living, when my last relationship was, what neighborhood I lived in and — this stuck in my craw — whether I rented or owned my apartment and if it was a studio, one- or two-bedroom apartment. I felt uncomfortable, but I answered.

I live in New York City, and I happen to own my apartment, but I felt like he was sizing me up and trying to get a picture of my finances before he decided to meet me. He also asked how long I’ve been in my apartment, probably to assess how much equity I had in it. I replied, “a while,” as I already felt like he was getting too into my finances for a first conversation.

Once he was satisfied with my answers to these questions, he suggested we meet. I am busy this weekend, so he suggested driving into the city during the week. Based on his job and profession, I can reasonably estimate that I earn about twice his salary, though this does not mean anything to me, and I could care less. But given his money-related questions, I find that ironic.

I asked some friends. Some did a spit take, while others felt such questions were fair game. What do you think?

Irritated Even Before Our First Date

Related: I want my father to quitclaim his home so I can refinance it — and take out a $200,000 annuity for my sister and me. Is this wise?

“Based on his questions, it’s important to him that you have the same level of financial security that he does. If it were not an issue for him, he would not have asked.”


MarketWatch illustration

Dear Irritated,

He is not your real-estate agent or financial adviser, so I agree that it’s strange for a virtual stranger to quiz you on your living arrangements.

Based on his questions, it’s important to him that you have the same level of financial security that he does. If it were not an issue for him, he would not have asked. It’s as simple as that. Similarly, if he were wealthy beyond his wildest dreams, he may care less than someone who has climbed partly up the property ladder. But do I think it’s a bit much to ask in a first conversation? Yes.

Don’t give the Greek chorus too much importance. Whether or not other people are comfortable with such questions in a first call is immaterial; if you are not comfortable, you have your answer. You, after all, are the person who will have to date him, and expect him to show a semblance of emotional intelligence and sensitivity. It’s imperative to be able to read the room.

Let there be no mistake: If he is asking a question about your real-estate holdings or finances, he’s interested in them as a way of assessing (or judging) your suitability as a partner. Maybe he romanticizes his relationship prospects based on first impressions, and wonders whether he could combine assets and live in splendor. But words and questions have meaning.

Social acceptability vs. social mobility 

In America, it may be seen as more acceptable than in some European countries to ask what you do for a living, and even whether you rent or own in a big city like New York. The U.S. is a country of immigrants, and has more immigrants than any other population in the world, according to the Pew Research Center

The idea is to strive, work hard, and do better than the previous generation, although a majority of Americans reportedly doubt the attainability of generation-to-generation upward mobility, and millions of people are reassessing their relationship to work-life balance in the wake of the pandemic.

Wealth and looks play a role in whether someone swipes left or right, but the former appears to become more important when a connection is made with a partner who is deemed attractive. “When long-term interest is considered, the physical attractiveness of the model appeared to serve as an initial hurdle that had to be cleared prior to any other factors being considered by the participants,” according to this 2020 study.

People do swipe right based on economic factors. It would be foolhardy or idealistic to suggest that they don’t. If, however, a man poses in sunglasses with two thumbs up next to a Lamborghini, listing bitcoin
BTCUSD,
+1.57%

trading as one of his pastimes, chances are he doesn’t own that Lamborghini and, in my estimation, may have “Tinder Swindler”-level intentions.

And if a potential partner is both attractive and wealthy? That seems to be an appealing combination. Female online daters are 10 times more likely to click on profiles with men who have higher incomes, at least according to this study published in the Journal of Economic Behavior and Organization, while male online daters are equally likely to click on women’s profiles, regardless of income. 

I don’t put too much stock in studies that say men are looking for attractive partners, while women are more interested in men who look wealthy. You could probably do an analysis of any online dating site and gather a sample that would give you conclusions that say pretty much anything you want them to say. It all depends on the individual: Someone who knows the exact size of their backyard and strives to keep up with the Joneses is more likely to ask whether you rent or own.

In other words, this fellow who grilled you over your own socioeconomic circumstances may still be a perfect match — for someone else.

You can email The Moneyist with any financial and ethical questions at [email protected], and follow Quentin Fottrell on X, the platform formerly known as Twitter.

Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

The Moneyist regrets he cannot reply to questions individually.

Previous columns by Quentin Fottrell:

I want my son to inherit my $1.2 million house. Should I leave it to my second husband in my will? He promised to pass it on.

My adult sons live rent-free in my house, while I pay for 50% of utilities in my second husband’s condo

My brother lives in our parents’ home, which we’ll inherit 50/50. I want to keep it in the family for my children. How do I protect my interests?



Source link

#Tinder #match #asked #rent #apartment #gauche #financial #questions #date

‘I can’t afford to keep paying for two households’: My adult sons live rent-free in my house, while I pay for 50% of utilities in my second husband’s condo

In 2007, my now ex-husband and I bought a home, where we lived as a family with our two boys for just a few years before we divorced in 2009. I refinanced the house in my name, and have paid the mortgage and utilities as a single parent ever since. 

In 2016, I met and started dating a man. We lived apart, only about 10 to 15 minutes from each other. In 2021, after I battled cancer, he proposed and I accepted. Since we only lived a few minutes apart, I stayed at my husband’s two-bedroom condo Thursday through Sunday, and spent Sunday through Thursday at my house, where I worked from home. I did this for years. 

My oldest son moved back in with me in 2021. He graduated high school in 2017 and I gave him a gap year living at my house to decide on his next move, after which he moved out and started his career. He lived on his own for a year, then lived with my parents for a year. He met a girl; they signed a lease and then the pandemic hit. After their lease was up, they broke up, and he decided to go back to college full time. I agreed that he could live in my home while he attended college. His tuition is covered by grants and a 529 fund his grandmother set up.

In 2022, my then boyfriend and I married. However, we still didn’t move in together full time, as I still had my house, and my youngest son had not yet graduated high school. I wanted to be home with him. 

Helping to support two households

My youngest son, 19, graduated high school in 2023. Later that summer, I moved out of my house to stay with my husband full time. I pay 50% of the expenses living with my husband and 100% of the expenses for my house, where the boys live. 

I kept both households going so my youngest could have a gap year of his own, and to cushion my oldest, whom I really didn’t think would go to college, while he attended to his studies. They are young and finding their way, and I wanted to give them the support I felt like they needed. But here we are in 2024, and I can’t afford to keep both households running without impacting my ability to save for retirement.

Here’s my dilemma: I don’t know how to get my boys out of my house so I can clean it up, stage it and list it for sale. We live in an area where the average two-bedroom apartment rents for $1,800 a month. My youngest works full time following his passion for BMWs and makes about $2,400 a month. My oldest, 25, works part time in retail and makes about $1,000 a month while he attends college. They both work within 3 miles of my home. They simply can’t afford to move out, and I can’t afford to keep paying for two households.

To complicate matters, I have about $100,000 in equity in the house, and I’d like to use it to pay off some small debts and buy a car, as well as put the rest in retirement.  But my mother, who has had a long and successful career in real estate, thinks I should wait it out and let my equity continue to build, giving the boys some cushion while they are still finding their way. 

Do I shop around and find them an apartment, help them set up utilities and help them with movers? Do we build a project plan with a deadline, or just keep looking for places in the hope that we eventually find one we like? Do I subsidize their monthly expenses and give them each $400 a month for utilities, if they cover their rent? 

I know this is probably easy for other people, but I am at a loss as to how and when to do this. We all feel stuck, scared and anxious. Any advice is appreciated.

Wife & Mother

Related: My cousin left his estate to 6 relatives, but only one cousin, worth $30 million, received the inheritance — due to an ‘unexpected surprise’

“On the subject of mothers, listen to your own. If you can rent out your home, pay the mortgage and wait for the value to increase, do that.”


MarketWatch illustration

Dear Wife & Mother,

The longer you support your two adult sons, the longer they will lean on you and need you as their personal ATM. You’ve brought them over the finish line, and then some. You raised them, educated them, and fed and clothed and housed them. Now you are paying for their electricity and other bills. It’s time for your sons to stand on their own two feet and, as my Irish mother would say, cut their cloth according to its measure.

On the subject of mothers, listen to your own. If you can rent out your home, pay the mortgage and wait for the value to increase, do that. Your mother works in real estate and knows what she’s talking about. Real estate, in an ideal world, is a long-term game. It’s time for your sons to downsize to a small apartment, and experience the joys of paying their own way and standing on their own two feet. You need to cut the cord.

Act with integrity and intention. The best way to make a big move — and this is probably as big a move emotionally as it is financially — is to prepare. Sit down with your sons and an independent financial adviser, and do a forensic accounting of their income and expenditure and where they spend their money. I can almost guarantee you that their subsidized lifestyle lends itself to spending money in areas where they could easily cut back.

There is an underlying feeling of guilt in your letter. Have you done enough? Yes. Should you do more? No, you have done plenty, and you’re now putting your sons before your own financial peace of mind and retirement. Does it make you a bad person, or an unfeeling one, if you decide to cut them off? Of course not. Quite the contrary: You can lead by example by showing them what it means to make tough decisions and stick to them.

When you have accounted for your sons’ income and expenditure, look at rentals in your neighborhood or adjoining neighborhoods, if need be. The aim is for them to start taking responsibility for themselves. They don’t need a two-bedroom apartment. They can live in a one-bedroom condo and take turns sleeping on the sofa bed. This is a rite of passage, and it teaches young people the value of money and what it means to take accountability for oneself.

The share of adult children in the U.S. living with their parents has steadily risen since the 1960s. In 2020, during the pandemic, one-third of children ages 18 to 34 lived with their parents as non-caregivers. Men and 18- to 24-year-olds, respectively, were more likely to live at home than women and 25- to 34-year-olds, according to a study distributed by the National Bureau of Economic Research. Parents get support at home; kids get to experience a low-cost lifestyle.

But while the NBER found social benefits to living with adult children and that it does not necessarily delay, retirement, the benefits of providing your children with a head start by giving them somewhere to live start to decline when your ability to save for retirement is impeded, and you’re burning money supporting two households. This is also money you can put towards vacations and new cars, and building a future with your husband. You deserve to enjoy life and put yourself first for a change. Tell your sons, “You’re ready. I’m ready. I love you. Let’s do this.””

You can email The Moneyist with any financial and ethical questions at [email protected], and follow Quentin Fottrell on X, the platform formerly known as Twitter.

Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

The Moneyist regrets he cannot reply to questions individually.

Previous columns by Quentin Fottrell:

‘She’s obsessed’: My mom moved into my house and refuses to move out. She has paid for repairs and appliances. What should I do?

My parents want to pay off my $200,000 mortgage, and move into my rental. They say I’ll owe my sister $100,000. Is this fair?

‘I hate the 9-to-5 grind’: I want more time with my newborn son. Should I give up my job and dip into my six-figure trust fund?



Source link

#afford #paying #households #adult #sons #live #rentfree #house #pay #utilities #husbands #condo

Nvidia and AI changed landscape of the chip industry, as rivals play catch-up

This year’s artificial-intelligence boom turned the landscape of the semiconductor industry on its head, elevating Nvidia Corp. as the new king of U.S. chip companies — and putting more pressure on the newly crowned company for the year ahead.

Intel Corp.
INTC,
+2.12%
,
which had long been the No. 1 chip maker in the U.S., first lost its global crown as biggest chip manufacturer to TSMC
2330,

several years ago. Now, Wall Street analysts estimate that Nvidia’s
NVDA,
-0.94%

annual revenue for its current calendar year will outpace Intel’s for the first time, making it No. 1 in the U.S. Intel is projected to see 2023 revenue of $53.9 billion, while Nvidia’s projected revenue for calendar 2023 is $56.2 billion, according to FactSet.

Even more spectacular are the projections for Nvidia’s calendar 2024: Analysts forecast revenue of $89.2 billion, a surge of 59% from 2023, and about three times higher than 2022. In contrast, Intel’s 2024 revenue is forecast to grow 13.3% to $61.1 billion. (Nvidia’s fiscal year ends at the end of January. FactSet’s data includes pro-forma estimates for calendar years.)

“It has coalesced into primarily an Nvidia-controlled market,” said Karl Freund, principal analyst at Cambrian AI Research. “Because Nvidia is capturing market share that didn’t even exist two years ago, before ChatGPT and large language models….They doubled their share of the data-center market. In 40 years, I have never seen such a dynamic in the marketplace.”

Nvidia has become the king of a sector that is adjacent to the core-processor arena dominated by Intel. Nvidia’s graphics chips, used to accelerate AI applications, reignited the data-center market with a new dynamic for Wall Street to watch.

Intel has long dominated the overall server market with its Xeon central processor unit (CPU) family, which are the heart of computer servers, just as CPUs are also the brain chips of personal computers. Five years ago, Advanced Micro Devices Inc.
AMD,
+0.90%
,
Intel’s rival in PC chips, re-entered the lucrative server market after a multi-year absence, and AMD has since carved out a 23% share of the server market, according to Mercury Research, though Intel still dominates with a 76.7% share.

Graphics chips in the data center

Nowadays, however, the data-center story is all about graphics processing units (GPUs), and Nvidia’s have become favored for AI applications. GPU sales are growing at a far faster pace than the core server CPU chips.

Also read: Nvidia’s stock dubbed top pick for 2024 after monster 2023, ‘no need to overthink this.’

Nvidia was basically the entire data-center market in the third quarter, selling about $11.1 billion in chips, accompanying cards and other related hardware, according to Mercury Research, which has tracked the GPU market since 2019. The company had a stunning 99.7% share of GPU systems in the data center, excluding any devices for networking, according to Dean McCarron, Mercury’s president. The remaining 0.3% was split between Intel and AMD.

Put another way: “It’s Nvidia and everyone else,” said Stacy Rasgon, a Bernstein Research analyst.

Intel is fighting back now, seeking to reinvigorate growth in data centers and PCs, which have both been in decline after a huge boom in spending on information technology and PCs during the pandemic. This month, Intel unveiled new families of chips for both servers and PCs, designed to accelerate AI locally on the devices themselves, which could also take some of the AI compute load out of the data center.

“We are driving it into every aspect of the applications, but also every device, in the data center, the cloud, the edge of the PC as well,” Intel CEO Pat Gelsinger said at the company’s New York event earlier this month.

While AI and high-performance chips are coming together to create the next generation of computing, Gelsinger said it’s also important to consider the power consumption of these technologies. “When we think about this, we also have to do it in a sustainable way. Are we going to dedicate a third, a half of all the Earth’s energy to these computing technologies? No, they must be sustainable.”

Meanwhile, AMD is directly going after both the hot GPU market and the PC market. It, too, had a big product launch this month, unveiling a new family of GPUs that were well-received on Wall Street, along with new processors for the data center and PCs. It forecast it will sell at least $2 billion in AI GPUs in their first year on the market, in a big challenge to Nvidia.

Also see: AMD’s new products represent first real threat to Nvidia’s AI dominance.

That forecast “is fine for AMD,” according to Rasgon, but it would amount to “a rounding error for Nvidia.”

“If Nvidia does $50 billion, it will be disappointing,” he added.

But AMD CEO Lisa Su might have taken a conservative approach with her forecast for the new MI300X chip family, according to Daniel Newman, principal analyst and founding partner at Futurum Research.

“That is probably a fraction of what she has seen out there,” he said. “She is starting to see a robust market for GPUs that are not Nvidia…We need competition, we need supply.” He noted that it is early days and the window is still open for new developments in building AI ecosystems.

Cambrian’s Freund noted that it took AMD about four to five years to gain 20% of the data-center CPU market, making Nvidia’s stunning growth in GPUs for the data center even more remarkable.

“AI, and in particularly data-center GPU-based AI, has resulted in the largest and most rapid changes in the history of the GPU market,” said McCarron of Mercury, in an email. “[AI] is clearly impacting conventional server CPUs as well, though the long-term impacts on CPUs still remain to be seen, given how new the recent increase in AI activity is.”

The ARMs race

Another development that will further shape the computing hardware landscape is the rise of a competitive architecture to x86, known as reduced instruction set computing (RISC). In the past, RISC has mostly made inroads in the computing landscape in mobile phones, tablets and embedded systems dedicated to a single task, through the chip designs of ARM Holdings Plc
ARM,
+0.81%

and Qualcomm Inc.
QCOM,
+1.12%
.

Nvidia tried to buy ARM for $40 billion last year, but the deal did not win regulatory approval. Instead, ARM went public earlier this year, and it has been promoting its architecture as a low-power-consuming option for AI applications. Nvidia has worked for years with ARM. Its ARM-based CPU called Grace, which is paired with its Hopper GPU in the “Grace-Hopper” AI accelerator, is used in high-performance servers and supercomputers. But these chips are still often paired with x86 CPUs from Intel or AMD in systems, noted Kevin Krewell, an analyst at Tirias Research.

“The ARM architecture has power-efficiency advantages over x86 due to a more modern instruction set, simpler CPU core designs and less legacy overhead,” Krewell said in an email. “The x86 processors can close the gap between ARM in power and core counts. That said, there’s no limit to running applications on the ARM architecture other than x86 legacy software.”

Until recently, ARM RISC-based systems have only had a fractional share of the server market. But now an open-source version of RISC, albeit about 10 years old, called RISC-V, is capturing the attention of both big internet and social-media companies, as well as startups. Power consumption has become a major issue in data centers, and AI accelerators use incredible amounts of energy, so companies are looking for alternatives to save on power usage.

Estimates for ARM’s share of the data center vary slightly, ranging from about 8%, according to Mercury Research, to about 10% according to IDC. ARM’s growing presence “is not necessarily trivial anymore,” Rasgon said.

“ARM CPUs are gaining share rapidly, but most of these are in-house CPUs (e.g. Amazon’s Graviton) rather than products sold on the open market,” McCarron said. Amazon’s
AMZN,
-0.18%

 Graviton processor family, first offered in 2018, is optimized to run cloud workloads at Amazon’s Web Services business. Alphabet Inc.
GOOG,
+0.66%

GOOGL,
+0.63%

also is developing its own custom ARM-based CPUs, codenamed Maple and Cypress, for use in its Google Cloud business according to a report earlier this year by the Information.

“Google has an ARM CPU, Microsoft has an ARM CPU, everyone has an ARM CPU,” said Freund. “In three years, I think everyone will also have a RISC-V CPU….It it is much more flexible than an ARM.”

In addition, some AI chip and system startups are designing around RISC-V, such as Tenstorrent Inc., a startup co-founded by well-regarded chip designer Jim Keller, who has also worked at AMD, Apple Inc.
AAPL,
+0.54%
,
Tesla Inc.
TSLA,
+2.04%

and Intel.

See: These chip startups hope to challenge Nvidia but it will take some time.

Opportunity for the AI PC

Like Intel, Qualcomm has also launched an entire product line around the personal computer, a brand-new endeavor for the company best known for its mobile processors. It cited the opportunity and need to bring AI processing to local devices, or the so-called edge.

In October, it said it is entering the PC business, dominated by Intel’s x86 architecture, with its own version of the ARM architecture called Snapdragon X Elite platform. It has designed its new processors specifically for the PC market, where it said its lower power consumption and far faster processing are going to be a huge hit with business users and consumers, especially those doing AI applications.

“We have had a legacy of coming in from a point where power is super important,” said Kedar Kondap, Qualcomm’s senior vice president and general manager of compute and gaming, in a recent interview. “We feel like we can leverage that legacy and bring it into PCs. PCs haven’t seen innovation for a while.”

Software could be an issue, but Qualcomm has also partnered with Microsoft for emulation software, and it trotted out many PC vendors, with plans for its PCs to be ready to tackle computing and AI challenges in the second half of 2024.

“When you run stuff on a device, it is secure, faster, cheaper, because every search today is faster. Where the future of AI is headed, it will be on the device,” Kondap said. Indeed, at its chip launch earlier in this month, Intel quoted Boston Consulting Group, which forecast that by 2028, AI-capable PCs will comprise 80% of the PC market..

All these different changes in products will bring new challenges to leaders like Nvidia and Intel in their respective arenas. Investors are also slightly nervous about Nvidia’s ability to keep up its current growth pace, but last quarter Nvidia talked about new and expanding markets, including countries and governments with complex regulatory requirements.

“It’s a fun market,” Freund said.

And investors should be prepared for more technology shifts in the year ahead, with more competition and new entrants poised to take some share — even if it starts out small — away from the leaders.

Source link

#Nvidia #changed #landscape #chip #industry #rivals #play #catchup

‘The high for equities is not in,’ says technical strategist who unpacks the stocks to buy now.

Siegel argues that bonds, which have been giving stocks the shove, have proven to be a terrible inflation hedge, but investors have forgotten that given it’s 40 years since the last big price shock. “Stocks are excellent long-term hedges, stocks do beautifully against inflation, bonds do not,” he told CNBC on Tuesday.

Don’t miss: ‘Bond math’ shows traders bold enough to bet on Treasurys could reap dazzling returns with little risk

Other stock cheerleaders out there are counting on a fourth-quarter rally, which, according to LPL Financial, delivers on average a 4.2% gain as portfolio managers snap up stock winners to spiff up performances.

Our call of the day from Evercore ISI’s head of technical strategy, Rich Ross, is in the bull camp as he declares the “high for equities is not in,” and suggests some stocks that will set investors up nicely for that.

Ross notes November is the best month for the S&P 500
SPX,
Russell 2000
RUT
and semiconductors
SOX,
while the November to January period has seen a 6% gain on average for the Nasdaq Composite
COMP.
He says if the S&P can break out above 4,430, the next stop will be 4,630 within 2023, putting him at the bullish end of Wall Street forecasts.

In addition, even with 10-year Treasury yields back at their highs, the S&P 500 is still ahead this week and that’s a “great start” to any rally, he adds.

Evercore/Bloomberg

What else? He says “panic bottoms” seen in bond proxies, such as utilities via the Utilities Select Sector SPD exchange-traded fund ETF
XLU,
real-estate investment trusts and staples, are “consistent with a bottom in bond prices,” which is closer than it appears if those proxies have indeed bottomed.


Evercore/Bloomberg

Among the other green shoots, Ross sees banks bottoming following Bank of America
BAC,
+1.14%

earnings “just as they did in March of ’20 after a similar 52% decline which culminated in a year-end rally which commenced in Q4.”

He sees expanding breadth for stocks — more stocks rising than falling — adding that that’s a buy signal for the Russell 2000, retail via the SPDR S&P Retail ETF
XRT
and regional banks via the SPDR S&P Regional Banking
KRE.

The technical strategist also says it’s time to buy transports
DJT,
with airlines “at bear market lows and deeply oversold,” while railroads are also bottoming and truckers continue to rise.

As for tech, he’s a buyer of semiconductors noting they tend to gain 7% on average in November, and Nvidia
NVDA,
-2.88%

has been under pressure as of late. He also likes software such as Microsoft
MSFT,
+0.82%
,
Zscaler
ZS,
+0.66%
,
MongoDB
MDB,
+0.90%
,
Intuit
INTU,
-1.43%
,
Oracle
ORCL,
-0.05%
,
Adobe
ADBE,
+0.93%
,
CrowdStrike
CRWD,
+0.55%

and Palo Alto Networks
PANW,
+1.38%
.


Evercore/Bloomberg

“The strong tech will stay strong and the weak will get strong,” says Ross.

The markets

Stocks
SPX

COMP
are dropping, with bond yields
BX:TMUBMUSD10Y

BX:TMUBMUSD02Y
mixed. Oil prices
CL.1,
+1.82%

BRN00,
+1.69%

have pared a stronger rally after a deadly hospital explosion in Gaza City, with Iran reportedly calling for an oil embargo against Israel. Gold
GC00,
+1.84%

has shot up $35.

For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

The buzz

Morgan Stanley
MS,
-6.02%

posted a 10% earnings fall, but beat forecasts, with shares down. Abbott Labs
ABT,
+3.12%

is up after upbeat results and aguidance hike and Procter & Gamble
PG,
+2.91%

is up after an earnings beat. Tesla
TSLA,
-0.89%

(preview here) and Netflix
NFLX,
-1.20%

(preview here) will report after the close.

Read: Ford CEO says Tesla, rival automakers loving the strike. He may be wrong

United Airlines shares
UAL,
-7.83%

are down 5% after the airline lowered guidance due to the Israel/Gaza war. Spirit AeroSystems
SPR,
+22.60%

surged 75% after the aircraft components maker announced a production support deal with Boeing
BA,
+0.88%
.

Housing starts came short of expectations, with the Fed’s Beige Book of economic conditions coming at 2 p.m. Also, Fed Gov. Chris Waller will speak at noon, followed by New York Fed Pres. John Williams at 12:30 p.m. and Fed Gov. Lisa Cook at 6:55 p.m.

China’s third-quarter GDP rose 4.9%, slowing from 6.3% in the previous quarter, but beating expectations.

Middle East tensions are ratcheting up with protests spreading across the region after a massive deadly blast at a Gaza City hospital, and airports evacuated across France over terror threats. President Biden told Israeli Prime Minister Benjamin Netanyahu that “it appears as though it was done by the other team.”

Read: Treasury says Hamas leaders ‘live in luxury’ as it unveils new sanctions

Best of the web

Bridgewater says the market has entered the second stage of tightening

Why the FDA needs to halt Cassava Sciences’ Alzheimer’s clinical trials

Hail, heat, rot in Italy push France to top global winemaking spot

Attacks across Europe put Islamist extremism back in spotlight

The tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:

Ticker

Security name

TSLA,
-0.89%
Tesla

AMC,
-0.73%
AMC Entertainment

AAPL,
-0.39%
Apple

GME,
-1.20%
GameStop

NIO,
-2.99%
Nio

AMZN,
-1.10%
Amazon

PLTR,
-0.59%
Palantir

MULN,
-0.06%
Mullen Automotive

TPST,
-11.20%
Tempest Therapeutics

TTOO,
-8.20%
T2 Biosystems

Random reads

Loudest purr in the world. Congrats Bella the cat.

Asteroid sample offers window to ancient solar system

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

Listen to the Best New Ideas in Money podcast with MarketWatch financial columnist James Rogers and economist Stephanie Kelton.

Source link

#high #equities #technical #strategist #unpacks #stocks #buy

Here’s what Wall Street’s most bullish analyst heading into the year thinks of the stock market now

It’s back to business on Monday, but there’s a bit of nervousness after the near coup/rebellion/cage fight in one of the world’s biggest nuclear powers over the weekend.

Questions remain over a possible power struggle in Russia, as it continues to wage war on Ukraine. But barring bigger developments, investors are returning their focus on whether aggressive central banks will spark a recession and market fallout.

Read: What’s next for markets after aborted Wagner mutiny leaves Russia’s Putin weakened

Wall Street has been growing more bullish after entering 2023 in a fearful state, following the S&P 500’s
SPX,
-0.77%

worst year since 2008. One analyst who led bullish views headed into 2023 was Deutsche Bank’s chief U.S. equity and global strategist, Binky Chadha, who sees a 4,500 finish, and others have been playing catch up to him.

In our call of the day, Chadha spoke to MarketWatch about why he’s not budging from that bullish call and what, if anything, could derail his optimistic view.

He said the year has been playing out as the bank had forecasted — strong rallies led by a squeeze on markets due to underweight positioning, with tech in the driver’s seat — the Nasdaq
COMP,
-1.01%

is up 16% so far this year. The path higher will be more of a grind as some of that positioning has caught up, he says.

Investors underweight in equities from late last year have largely caught up with their exposure, while others stay wary, says Deutsche Bank’s Binky Chadha.


Deutsche Bank

Read: Why the ‘easy money’ has been made in the stock-market rally — and what comes next

Chadha said he’d rethink his more bullish outlook on “signs of corporate risk aversion. Companies pulling back and going back into the bunker.” That is corporates becoming risk averse, cutting working capital, hoarding cash, and paring capital expenditure, he said. For now, he doesn’t see that.

The strategist also weighed in on narrow market leadership, where S&P 500 gains are led by just a handful of names. “Keep in mind that the selloff of last year was also narrow,” he said, when energy stocks soared on higher prices.

But this year the reversal has seen techs rally and now he sees indeed the gains spreading to more names. He said the bank recently removed its overweight on mega-tech stocks because earnings are rebounding, but markets have priced in a lot more than they expect.

As for where to put money now? “I wouldn’t be long financials here. The events of March have painted financials with a very broad brush. Most of the large -cap financials are really beneficiaries of what happened in March, but the market has put a risk premium on them,” said Chadha

As for cyclical consumer stocks, the risk/reward is asymmetrical because so much is priced in for the downside. “Everybody in the market has been waiting so long for the recession and some things are priced for even more than an average recession,” he said.

“And so I think you want to be long the cyclical parts of the consumer, and I think you want to be underweight defensives, because rates stay here and that’s where everybody has been hiding,” he said.

And what would make Chadha lift that 4,500 S&P 500 target? “Better prospects for the economy, better prospects for gorwth. In the event of a soft landing, and to be clear that is not our house view, but that would not be a terrible thing.” And that would eventually lead to upside for markets, he said.

The markets

Stock futures
ES00,

YM00,
+0.01%

are marginally lower, with Treasury yields
TMUBMUSD10Y,
3.691%

and oil prices
CL.1,
+0.48%

dipping, and silver
SI00,
+1.97%

making some strides. Lots of weakness across Asia, led by the Shanghai Composite
SHCOMP,
-1.48%
,
while Europe stocks
SXXP,
-0.07%

are lower after a newsy Russia weekend, and natural gas futures
NG00,
+1.17%

are higher both in the U.S. and Europe. The ruble
USDRUB,
+0.91%

is down 1.7% against the dollar
DXY,
-0.27%
,
which is a little softer overall.

For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

The buzz

Goldman Sachs became the third Wall Street bank in a week to downgrade Tesla shares
TSLA,
-3.03%

to neutral, saying the stock has had a strong runup and competition grows for the EV maker. The stock is down 2% in premarket.

PacWest shares
PACW,
+0.56%

are up 8% after the regional bank said it sold its loan portfolio to Ares Management
ARES,
-2.37%

in deal that will generates $2 billion ‘to improve liquidity.’

Lucid
LCID,
-4.54%

stock is up 7% after the EV and battery pack maker agreed a deal to provide Aston Martin with powertrain and battery system technology for luxury EVs.

IBM
IBM,
-1.33%

has confirmed a $4.6 billion all-cash deal for privately held software group Appio. IBM shares are down slightly.

The Fed’s preferred inflation gauge — the personal consumption expenditures price index — is a big economic highlight, due Friday. Durable goods and some housing market data is coming Tuesday, with appearances by Fed Chairman Jerome Powell on Wednesday and Thursday.

German business sentiment fell in June Fell in June as the country’s manufacturing outlook worsened.

Russia’s defense minister Sergei Shoigu was spotted visiting troops in Ukraine on Monday — his first public appearance since the weekend rebellion pushing for his ouster. Not heard from — President Vladimir Putin or Belarus-bound Wagner chief Yevgeny Prigozhin.

Best of the web

We asked a language model to write career advice based on caterer-turned-coup leader Yevgeny Prigozhin. Here’s what it generated.

Second-quarter corporate profits are set for their biggest drop since the start of the pandemic. But then the worst could be over.

Here’s to not traveling, which turns us into the worst version of ourselves as it convinces us we’re at our best.

Octupus farming — a symbol of what humans should not be doing

The chart

“If this is still a bear market rally it will end up being the longest bear market rally in history (which probably means it isn’t a bear market rally!),” says the Weekly S&P 500 Chartstorm blog by Callum Thomas, head of research and founder @topdowncharts, referring to the below chart:


@joosteninvestor

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:

Ticker

Security name

TSLA,
-3.03%
Tesla

GME,
-2.55%
GameStop

AMC,
-3.84%
AMC Entertainment

NVDA,
-1.90%
Nvidia

LCID,
-4.54%
Lucid

NIO,
-5.49%
Nio

AAPL,
-0.17%
Apple

SPCE,
-18.42%
Virgin Galactic

MULN,
-4.83%
Mullen Automotive

AMZN,
-0.63%
Amazon.com

Random reads

Man bought lifetime United Airlines pass three decades ago, has “lived like a sultan” ever since.

Kylie Minogue’s “Padam Padam’ single is fast-tracking its way to gay classic status.

Naples tells billionaires to park their superyachts somewhere else.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

Listen to the Best New Ideas in Money podcast with MarketWatch reporter Charles Passy and economist Stephanie Kelton.



Source link

#Heres #Wall #Streets #bullish #analyst #heading #year #thinks #stock #market

Bank of America execs blew $93.6 billion. Here’s how they did it.

In several notes to clients this month, Odeon Capital Group analyst Dick Bove has pointed out that Bank of America’s big spending on stock buybacks over the past five years has been a waste for its shareholders, with the bank’s stock price declining slightly during that period.

The idea behind repurchasing shares on the open market is that they reduce a company’s share count and therefore boost earnings per share and support higher share prices over time. This doesn’t seem to be a bad idea, especially for a company such as Apple Inc.
AAPL,
+1.01%
,
which has generated excess capital and has appeared to be firing on all cylinders for a long time. For a company that is continuing to expand its product and service offerings while maintaining high profitability, buybacks can be a blessing to shareholders.

But for banks, for which capital is the main ingredient of earnings power, a more careful approach might be in order. The data below show how buybacks haven’t helped the largest banks outperform the broad stock market over the past five years. And now, banks face the prospect of regulators raising their capital requirements by 20%, according to a Wall Street Journal report.

Before showing data for the 20 companies among the S&P 500 that have spent the most money on buybacks over the past five years, let’s take a look at how share repurchases are described in a misleading way by corporate executives — and by many analysts, for that matter. During Bank of America’s
BAC,
-0.79%

first-quarter earnings call on April 18, Chief Financial Officer Alastair Borthwick said the bank had “returned $12 billion in capital to shareholders” over the previous 12 months, according to a transcript provided by FactSet.

Borthwick was referring to buybacks and dividends combined. Neither item was a return of capital. In fact, Bove summed up the buybacks elegantly in a client note on June 9: “The money that the company uses to buy back the stock is simply given away to people who do not want to own the bank’s stock.”

It is also worth pointing out that the term “return of capital” actually means the return of investors’ own capital to them, which is commonly done by closed-end mutual funds, business-development companies and some real-estate investment trusts, for various reasons. Those distributions aren’t taxed and they lower an investor’s cost basis.

Dividends aren’t a return of capital, either, if they are sourced from a company’s earnings, as they have been for Bank of America.

One more thing for investors to think about is that large companies typically award newly issued shares to executives as part of their compensation. This dilutes the ownership stakes of nonexecutive shareholders. So some of the buybacks merely mitigate this dilution. An investor hopes to see the buybacks lower the share count, but there are some instances in which the count still increases.

How buybacks can hurt banks

Banks’ management teams and boards of directors have engaged in buybacks because they wish to boost earnings per share and returns on equity by shedding excess capital. But Bove made another industry-specific point in his June 9 note: “If the bank buys back stock it must sell assets that offer a return to do so; it lowers current earnings.” Buybacks can also hurt future earnings. Less capital can slow expansion, loan growth and profits.

According to Bove, Bank of America CEO Brian Moynihan, who took the top slot in 2010 and saw the bank through the difficult aftermath of its acquisition of Countrywide and Merrill Lynch in 2008, “is one of the brightest, most capable executives for operating a banking enterprise.”

But he questions Moynihan’s ability to manage the bank’s balance sheet. Bove expects that Bank of America will need to issue new common shares, in part because rising interest rates have reduced the value of its bond investments.

In a June 5 note, Bove wrote: “Mr. Moynihan indicated twice [during a recent presentation] that the bank has excess cash that apparently could not be invested profitably. Possibly he is unaware that the cost of deposits at the bank in [the first quarter of] 2023 was 1.38% while the yield in the Fed Funds market can be as high as 5.25%.” In other words, the bank could earn a high spread at little risk with overnight deposits with the Federal Reserve.

That is a very simple example, but if Bank of America had grown its loan book more quickly over recent years while focusing less on buybacks, it might not face the prospect of a near-term capital raise, which would dilute current shareholders’ stakes in the company and reduce earnings per share.

Top 20 companies by dollars spent on buybacks

To look beyond banking, we sorted companies in the S&P 500
SPX,
+0.51%

by total dollars spent on buybacks over the past five years (the past 40 reported fiscal quarters) through June 9, using data suppled by FactSet. It turns out 11 have seen prices increase more quickly than the index. With reinvested dividends, 12 have outperformed the index.

Company

Ticker

Dollars spent on buybacks over the past 5 years ($Bil)

5-year price change

5-year total return with dividends reinvested

Apple Inc.

AAPL,
+1.01%
$393.6

279%

297%

Alphabet Inc. Class A

GOOGL,
+0.84%
$180.6

116%

116%

Microsoft Corporation

MSFT,
+0.87%
$121.5

221%

239%

Meta Platforms Inc.

META,
+1.58%
$103.4

42%

42%

Oracle Corp.

ORCL,
+6.11%
$102.6

140%

161%

Bank of America Corp.

BAC,
-0.79%
$93.6

-2%

10%

JPMorgan Chase & Co.

JPM,
-0.18%
$87.3

27%

47%

Wells Fargo & Co.

WFC,
-1.01%
$84.0

-24%

-13%

Berkshire Hathaway Inc. Class B

BRK.B,
-0.80%
$70.3

70%

70%

Citigroup Inc.

C,
+0.09%
$51.4

-29%

-16%

Charter Communications Inc. Class A

CHTR,
+1.09%
$48.5

20%

20%

Cisco Systems Inc.

CSCO,
+1.00%
$46.5

15%

34%

Visa Inc. Class A

V,
+0.75%
$45.6

66%

72%

Procter & Gamble Co.

PG,
-1.26%
$42.1

89%

116%

Home Depot Inc.

HD,
+1.01%
$41.0

51%

71%

Lowe’s Cos. Inc.

LOW,
+1.92%
$40.8

111%

131%

Intel Corp.

INTC,
+4.67%
$39.0

-40%

-31%

Morgan Stanley

MS,
+1.04%
$36.7

67%

93%

Walmart Inc.

WMT,
+0.33%
$35.6

82%

99%

Qualcomm Inc.

QCOM,
+2.12%
$35.1

101%

130%

S&P 500

SPX,
+0.51%
55%

69%

Source: FactSet

Click on the tickers for more about each company or index.

Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

The four listed companies with negative five-year returns are three banks — Citigroup Inc.
C,
+0.09%
,
Wells Fargo & Co.
WFC,
-1.01%

and Bank of America — and Intel Inc.
INTC,
+4.67%
.

Don’t miss: As tech companies take over the market again, don’t forget these bargain dividend stocks

Source link

#Bank #America #execs #blew #billion #Heres

AI news is driving tech ‘building blocks’ stocks like Nvidia. But another ‘power’ area will also benefit, say these veteran investors

Kneel to your king Wall Street.

After forecasting record revenue backed by a “killer AI app,” Nvidia has teed up the Nasdaq
COMP,
-0.61%

for a powerful Thursday open. Indeed, thanks to that chip maker and a few other generals — Microsoft, Apple, Alphabet, etc.— tech is seemingly unstoppable:

Elsewhere, the Dow
DJIA,
-0.77%

is looking rattled by a Fitch warning over debt wranglings ahead of a long weekend.

But our call of the day is accentuating the positive with some valuable insight on tech investing amid AI mania from a pair of seasoned investors.

Inge Heydorn, partner on the GP Bullhound Global Technology Fund and portfolio manager Jenny Hardy, advise choosing companies carefully given high valuations in some parts of tech that could make earnings vulnerable.

“But looking slightly beyond the volatility, tech has the advantage of being driven by many long-term secular themes which will continue to play out despite a weaker macro,” Hardy told MarketWatch in follow-up comments to an interview with the pair last week. GP Bullhound invests in leading global tech companies, with more than $1 billion in assets under management. 

“We try to make sure we’re exposed to these areas that will be more resilient. AI is the perfect example of that –- none of Microsoft, Amazon or Google will risk falling behind in the AI race -– they will all keep spending, and that will continue to drive earnings for the semiconductor companies that go into these servers higher,” said Hardy, who has worked in the investment industry since 2011.

“The way that we think about investing around [AI] is in the building blocks, the picks and shovels infrastructure, which for us is really the semiconductor companies that go into the training servers and the inference servers,” she said.

Nvidia
NVDA,
-0.49%
,
Advanced Micro Devices
AMD,
+0.14%
,
Taiwan Semiconductor
TSM,
-0.34%

2330,
+3.43%
,
Infineon
IFX,
-0.33%
,
Cisco
CSCO,
-1.02%
,
NXP
NXPI,
-4.88%
,
Microsoft
MSFT,
-0.45%
,
ServiceNow
NOW,
+0.48%

and Palo Alto
PANW,
+7.68%

are all in their portfolio. They also like the semiconductor capital equipment industry — AI beneficiaries and tailwinds from increasingly localized supply chains — with companies including KLA
KLAC,
-1.40%
,
Lam Research
LRCX,
-1.33%
,
ASML
ASML,
-2.15%

and Applied Materials
AMAT,
-1.96%
.

As Hardy points out, “lots of big tech has given us lots of certainty as it relates to AI, lots of certainty as it relates to the amount they are going to spend on AI.”

Enter Nvidia’s results, which Hardy said are proof the “AI spend race has begun…Nvidia’s call featured an impressive roster of companies deploying AI with Nvidia – AT&T, Amgen, ServiceNow – the message was that this technology adoption is widespread and really a new normal.” She said they see benefits spreading across the AI value chain — CPU providers, networking infrastructure players, memory and semicap equipment makers.

Heydorn, who traded technology stocks since 1994 and also runs a hedge fund with Hardy, says there are two big tech trends currently — “AI across the board and power semiconductors driven by EV cars and green energy projects.”

But GP Bullhound steers clear of EV makers like Tesla
TSLA,
-1.54%
,
where they see a lot of competition, notably from China. “Ultimately, they will need semiconductors and the semiconductors crucially are able to keep that pricing power in a way that the vehicle companies are not able to do because of the differences in competition,” she said.

Are the tech duo nervous about anything? “The macro economy is clearly the largest risk and further bank or real-estate problems,” said Heydorn, as Hardy adds that they are watching for second-order impacts on tech.

“One example would be enterprise software businesses with high exposure to financial services, which given those latest problems in that sector, might see a re-prioritization of spend away from new software implementations,” she said.

In the near term, Heydorn says investors should watch out for May sales numbers and any AI mentions from Taiwan via TSMC, mobile chip group MediaTek
2454,
-0.42%

and Apple
AAPL,
+0.16%

supplier Foxxconn
2354,
-0.74%

that may help with guidance for the second half of the year. “The main numbers in Taiwan will tell us where we are in inventories. They’re going to tell us if the 3-nanonmeters, that’s a new processor that’s going into Apple iPhones, are ready for production,” he said.

Read: JPMorgan says this is how much revenue other companies will get from AI this year

The markets

Nasdaq-100 futures
NQ00,
+1.90%

are up 1.8% , S&P 500
ES00,
+0.55%

futures are up 0.6%, but those for the Dow
YM00,
-0.34%

are slipping on debt-ceiling jitters. The yield on the 10-year Treasury note
TMUBMUSD10Y,
3.756%

is up 4 basis points to 3.75%.

For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily. Follow all the stock market action with MarketWatch’s Live Blog.

The buzz

Fitch put U.S. credit ratings on ‘ratings watch negative’ due to DC “brinkmanship” as the debt-ceiling deadline nears. House Speaker Kevin McCarthy told investors not to worry as an agreement will be reached.

Best Buy
BBY,
-0.49%

stock is up 6% after an earnings beat, while Burlington Stores
BURL,
+3.19%

is slipping after a profit and revenue miss. Dollar Tree
DLTR,
-0.50%

and Ralph Lauren
RL,
+0.24%

are still to come, followed by Ulta
ULTA,
+0.17%
,
Costco
COST,
-0.44%

and Autodesk
ADSK,
+0.06%

after the close.

Nvidia is up 25% in premarket and headed toward a rare $1 trillion valuation after saying revenue would bust a previous record by 30% late Wednesday.

Opinion: Nvidia CFO says ‘The inflection point of AI is here’

But AI upstart UiPath
PATH,
-1.74%

is down 8% after soft second-quarter revenue guidance, while software group Snowflake
SNOW,
+1.13%

is off 14% on an outlook cut, while cloud-platform group Nutanix
NTNX,
-0.55%

is rallying on a better outlook.

Elf Beauty
ELF,
+1.69%

is up 12% on upbeat results from the cosmetic group, with Guess
GES,
-0.80%

up 5% as losses slimmed, sales rose. American Eagle
AEO,
+4.50%

slid on a sales decline forecast. Red Robin Gourmet Burgers
RRGB,
+3.51%

is up 5% on the restaurant chain’s upbeat forecast.

Revised first-quarter GDP is due at 8:30 a.m., alongside weekly jobless claims, with pending-home sales at 10 a.m. Richmond Fed President Tom Barkin will speak at 9:50 a.m., followed by Boston Fed President Susan Collins.

A Twitter Spaces discussion between presidential candidate Florida Gov. Ron DeSantis and Elon Musk was plagued by glitches.

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The tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:

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NVDA,
-0.49%
Nvidia

TSLA,
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Tesla

GME,
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GameStop

BUD,
-1.94%
Anheuser-Busch InBev

AMD,
+0.14%
Advanced Micro Devices

PLTR,
-3.24%
Palantir Technologies

AAPL,
+0.16%
Apple

AMZN,
+1.53%
Amazon.com

NIO,
-9.49%
Nio

AI,
+2.54%
C3.ai

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Tindered out? How to avoid creeps, time wasters and liars this Valentine’s Day

Michelle has had her fair share of bad dates.

A divorced mother of four children, Michelle, 52, resolved to maintain her sense of humor when she returned to the dating market, and signed up for Hinge, an online dating service that includes voice memos, in addition to audio and video functions that enable two interested parties to talk to each other without sharing their phone numbers. 

Given that she had not dated since she was in her 20s, Michelle, who asked for her surname to be withheld, was thrown into the world of online dating, right swipes, ghosting, men who were actually living overseas, married men, men who lied about their age and men who posted photos that were 10 years old. She split from her husband of nearly two decades in 2014. 

Hinge is part of Match.com’s
MTCH,
+1.22%

group of apps along with OKCupid, Tinder, Bumble, and Christian Mingle, among others. The company promotes itself as the app that is designed to be deleted by its users. It’s a bold statement in the era of online dating, when people scroll through profiles — swiping right for yes and left for no — in search of their perfect mate.

But Hinge, like many other dating apps, introduced a video function in 2020 to help push people to “meet” during the worst days of the coronavirus pandemic. Dating experts advise applying the same rules you would to a Zoom
ZM,
+3.06%

call: dress smartly, use an overhead light rather than a backlight that casts you in shadow, and don’t sit in front of yesterday’s pile of dirty laundry.

‘It’s amazing how many guys use a picture from 10 years ago. You can barely recognize them when you meet them.’


— Michelle, 52, a divorced mother of four who searched for love online

A video date will reveal a lot more than a profile picture. “It’s amazing how many guys use a picture from 10 years ago,” Michelle said. “You can barely recognize them when you meet them. I discovered that someone who is very quick to ask for your email address or your number is more likely to be a scammer. Unfortunately, there’s a lot of scamming on dating apps.”

She’s not wrong. Nearly 70,000 Americans lost $1.3 billion to romance scams through social media and dating apps last year, up from 56,000 the year before, according to the Federal Trade Commission. That’s broadly in line with the amount of money lost the previous year, but up significantly from the $730 million lost in 2020. 

Through her work as a social worker, Michelle has learned to evaluate people and look for red flags. She has used those skills when online dating. She watches out for “goofy stuff” like a man who is writing like a character from a romance novel. “The Lifetime Channel Christmas Love Story is not happening on Hinge,” she said. “Those are the things that I kind of find funny.” 

Other red flags: Someone who lies about their age, is unwilling to meet, won’t turn on the video chat function — what have they got to hide? — and a man who is cheap. “Why did I drive 45 minutes to meet you and you can’t even buy me a cup of coffee? I don’t want someone who is stingy. Either they’re really miserly, have poor judgment, or poor people skills.”

The perilous side of handheld love machines

Dating apps are the ultimate love machine, churning out potential partners every two seconds, someone who is taller, younger, hotter, richer, broader, slimmer, sexier, kookier, weirder — and the list goes on. All of life’s parade is a swipe away. Millions of people use dating apps — from Grindr for gay men to Facebook Dating for pretty much everyone.

There is a balance between keeping people swiping and helping them find love. It’s a numbers game, and can be as addictive as playing the slots. EHarmony promotes its Compatibility Score, while OKCupid asks users to answer an almost limitless number of questions in order to match with more appropriate people. But critics say it leads to the gamification of people’s love lives.

Jenny Taitz, author of “How to Be Single and Happy: Science-Based Strategies for Keeping Your Sanity While Looking for a Soul Mate,” said one of the most common complaints about dating apps is the constant game of cat and mouse. Each user is probably talking to several people at the same time, and it’s tough to get people off the apps and into the real world.

If you like someone, she says, move to a video chat to test the chemistry. “It’s time-consuming, but you need to move from a pen pal to an in-person meetup,” she said. “It could be something that you do all the time, so you really have to have limits. If you’re having four dates a week, does that mean you’re not making time for friendships where you have an investment?”

‘The same person who volunteers at a soup kitchen might easily ghost someone. There is so much detachment.’


— Jenny Taitz, author of ‘How to Be Single and Happy’

Anonymity can often lead to ghosting, when people just disappear or stop answering messages. “We need to treat people like they would treat their future child or best friend,” Taitz said. “Bad behavior is so pervasive, and people are not held accountable for their actions. The same person who volunteers at a soup kitchen might easily ghost someone. There is so much detachment.”

Some studies have linked dating apps with depression, while other studies have found that online dating has led to a string of robberies through hook-ups on Grindr, and can also make it easier for sexual predators to find victims. These problems obviously exist in the real world, but social media and dating apps can provide an easier path for bad actors. 

Julie Valentine, a researcher, sexual-assault nurse examiner, and associate dean of Brigham Young University’s College of Nursing, analyzed 1,968 “acquaintance” sexual assaults that occurred between 2017 and 2020. She and her fellow researchers concluded that 14% of these sexual assaults resulted from a dating-app’s first in-person meeting. 

“One-third of the victims were strangled and had more injuries than other sexual-assault victims,” the study found. “Through dating apps, personas are created without being subjected to any criminal background checks or security screening. This means that potential victims have the burden of self-protection.” 

All those coffees take time and money

A spokeswoman for Match.com said it does not release data on how many people have actually used the video chat function. If people did use the function more often without sharing their phone number, it would in theory provide a layer of protection, help weed out bad actors, and help people decide whether a prospective date is compatible early in the process.

Cherlyn Chong, the Las Vegas-based founder of Get Over Him, a program to help women get over toxic relationships, does not believe the video chat function is as widely used as it should be. Chong, who describes herself as a dating coach and a trauma specialist, encourages her clients to use every method available to screen dates, in addition to meeting in a public place.

So what if a man did not want to video chat? “If they didn’t want to video, that’s fine,” Chong said. “But their reaction to the request would be a litmus test. We would know he is probably not someone to date, as he is not flexible. It’s also very telling if a woman explains that it’s a safety issue. The response of the guy in that situation would also be another litmus test.”

“Once you give someone their phone number, you don’t know what they are going to do with it,” Chong said. She said one of her clients encountered a man who shared her phone number with others, and sent it to a spam site on the internet. “You want to believe in the best of people,” she said, “but there are people who misuse your number because they can’t handle rejection.”

‘A couple of cocktails in New York City? You’re looking at $60 to $100, or a few hundred dollars for a pricier meal.’


— Connell Barrett, author of ‘Dating Sucks, But You Don’t’

Connell Barrett, author of “Dating Sucks, But You Don’t,” said video dates are a good first step. “You can see your date, and read their body language,” he said. “Because physical contact is off the table for a video date, it can free both singles to let go and not worry about the pressure about moving in for the first kiss. Good chemistry happens when there’s less pressure.”

Video dating also saves you time and money, especially if you’re the one who picks up the tab. “A couple of cocktails in New York City? You’re looking at $60 to $100, or a few hundred dollars for a pricier meal,” he said. Regular daters could end up spending up to $1,500 a month in bigger cities, if they’re dating a lot and eating out, Barrett added.

How much you spend will clearly depend on your lifestyle. Members of The League, a dating app that’s geared towards professionals, spend up to $260 a month on dates, followed by $215 a month for singletons using Christian Mingle, $198 for people signed up to Match.com, and $174 for Meta’s
META,
+3.03%

Facebook Dating subscribers, according to a recent survey. 

A video call allows people to get a sense of the person’s circumstances and personality, and can avoid wasting an hour having coffee with someone you will never see again. Be fun, be playful, don’t ask about exes or grill the other person “60 Minutes”-style, Barrett said. “A big mistake people make in dating is trying to impress the other person,” he said.

Video dating goes back to the 1970s

Jeff Ullman created the first successful video-dating service in Los Angeles in 1975 called Great Expectations. People recorded messages direct-to-camera. “We started with Betamax, moved to VHS, and upgraded to CD-ROMs,” he said. “As long as there are adults, there will be the hunt for love, and there will be the longing for ‘I’m missing someone, I’m missing something,’” he told MarketWatch.

“The best and the brightest did not go into dating services in the 1970s and 1980s,” he said. “I only went into it because I wanted to change the world. What I wanted to do was turn pity to envy. Our videos were 5 or 6 minutes long. There were no stock questions. They had to be ad-libbed. The only similar question was the last one: ‘What are the qualities that are most important in a relationship?’” 

He turned Great Expectations into a national franchise where customers paid $595 to $1,995 a year for membership ($1 in 1975 is around $5 today). “We did not hard sell you. We did a ‘heart sell.’ We had all kinds of Type As — doctors, lawyers, studio production chiefs, who all thought they were God’s gift, or God’s gift to womankind, but when they talked about their loneliness, they cried.”

People will always be searching for that perfect mate, Ullman said, whether it’s through videos, words, photos, psychological compatibility, A.I., or through arranged marriages or matchmakers. “But there is no perfect match. My wife Cindy and I are well matched. She’s not perfect. I’m not perfect. The moment either one of us begins to think we’re perfect is the moment we introduce negative forces.”

‘What I wanted to do was turn pity to envy. Our videos were 5 or 6 minutes. There were no stock questions.’


— Jeff Ullman, created Great Expectations, a video-dating service in Los Angeles in 1975

Before TikTok and Skype, people were not as comfortable in front of the camera, particularly if they had to talk about themselves. “We always hid the camera,” Ullman said. The 1970s decor of dark wood and indoor plants made that easier. “When we were finished, they’d say, ‘When are you going to start?’” But they were already on tape. They were, he said, happy with the first take 95% of the time.

Ullman required his franchisees to give members a three-day right to cancel for any reason — including “I’m not going to tell you” — if they changed their terms of service. “They just had to mail us or fax us their notice. Half of my franchisees were about to revolt.” Until, he said, they realized they could not afford to have a bad reputation in an industry where people were putting their hearts on the line.

It all started with a Sony-Matic Portable Videocorder gifted to him by his parents when he graduated from UC Berkeley in 1972. “They were very expensive, but they were portable. Whenever I went anywhere, whether it was a parade or a demonstration, which were common back then, they always let me in because they thought I was from “60 Minutes.” It gave us a sense of power.”

Fast forward to 2023: That power is in the hands of the $3 billion online dating industry and, perhaps to a lesser extent, in the hands of the singletons who are putting their own messages out into the world through words and pictures. In the 1970s, most people were still meeting in person. These days, your online competition is, well, almost every single person within a 50-mile radius.

Watching out for those ‘green flags’

Video dating has come in handy for singletons like Andrew Kneeshaw, a photographer and publican in Streete, County Westmeath, a small town in the Irish midlands. He’s currently active on three dating sites: Plenty of Fish, Bumble and Facebook Dating. In-app video calls have saved him — and his potential dates — time, gasoline and money spent on coffee and lunch. 

“Even someone local could be 15 or 20 miles away,” he said. He’s currently talking to a woman in Dublin, which is more than an hour away. “Hearing someone’s voice is one thing, but seeing that they are the genuine person they are supposed to be on the dating site definitely does help.” He could spend upwards of 20 euros ($21.45) on coffee/lunch, excluding gasoline.

He did go on a dinner date recently without having a video call, and he regretted it. “Neither of us felt there was a spark,” Kneeshaw said. So they split the check as they would likely never see each other again? “That sounds terrible, but yes,” he said. “I go on a date at best once a week. If you’re doing it a few times a week, it does add up very quickly.”

Ken Page, a Long Beach, N.Y.-based psychotherapist and host of the Deeper Dating podcast, is married with three children, and has compassion for people like Kneeshaw who live in more remote areas. In New York, he said, some people won’t travel uptown if they live downtown, and many more people won’t even cross the river to New Jersey. 

‘If it’s a video chat, you have the opportunity to get to know them more, and have that old-fashioned courtship experience.’


— Ken Page, a psychotherapist and host of the Deeper Dating podcast

He said green flags are just as important as red flags when deciding to move from a video date to an in-person date. “Is their smile warm and engaging? Are you attracted to the animation they have in their face? You just get tons more data when you see the person. You save money, and you save time before you get to the next step.”

In-person first dates can be brutal. “Your first reaction is, ‘they’re not attractive enough, I’ve got to get out of here,’” Page said. “If it’s a video chat, you have the opportunity to get to know them more, and have that old-fashioned courtship experience where attraction starts to grow. The ‘light attractions’ have more opportunity to grow without the pressure of meeting in person.”

Dating apps are a carousel of romantic dreams. The focus is on looks rather than personality or character. “There are so many people waiting online,” Page said. “That does not serve us. Unless the person really wows us, we swipe left. If you do a video chat, you will be more likely to get to know that person — instead of only getting to know the ‘9s’ and ‘10s.’”

And Michelle? The divorced Californian mother of four said she finally met a guy on Hinge last October, and they’ve been dating since then. “He’s just a fabulous guy. He actually moved slower than what I had experienced with other guys I had dated.” She kept her sense of humor and perspective, which helped. “He said, ‘You’re so funny.’ I didn’t have anything to lose.”

“It’s almost going to Zara
ITX,
+1.55%
,
” she said. “Nine times out of 10 you may not find something you like, but one time out of 10 you do.”

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