Alchanati Campbell & Associates
The rebound, please don’t stop the music, Tesla fights back, and the controversy between markets and news.
Lackluster day. S&P500: (1.26%) DOW: (1.65%) NASDAQ: (1.04%) 10 Year: (1.90%) Oil: (0.89%) Gold: (-0.13%). The stock market enjoyed a nice rebound today after plunging yesterday due to a multitude of reasons: newly placed tariffs from China, worries over tech regulation, and an overall outlook of "sell" as we've entered correction territory. With a climb just north of 70 points, the NASDAQ retrieved some of the 2018 gains that were completely wiped out as of yesterday. For those that do not know, the NASDAQ is extremely tech heavy. With tech seemingly leading the market with every climb and plunge, it should be an index of much focus. While this is of course subjective, the NASDAQ may just be the best measure of the market in todays world in which tech becomes more pressing everyday. While the NASDAQ gets most of the heavy hitting tech stocks, that’s not always the case.
Welcome to the party Spotify. Spotify Technology SA (ticker $SPOT) began trading on the New York Stock Exchange today. The minimum set price by the NYSE was $132/share and at opening jumped to $165.90/share, and then closed at $149.01/share. Patience is key.
The President vs. Amazon. One big headline that’s been circulating this past week is President Trump's verbal assault on Amazon. He is attacking them due to his belief that their business with the USPS is costing the Postal Service money, and that they are taking advantage of them. This attack by the White House (along with other reasons) has sent Amazon stock down in the past week. However, White House officials stated that there are currently no plans to take action against Amazon. Shareholders responded by sending Amazon stock up 1.46%. This should be taken as good news for the entire industry, as reluctance to go after a heavy hitting tech company could show that there will be less interference/regulation from the government. However, this country has bore witness to the Trump Administration reversing its views, so tech names shouldn't be patting themselves on the back just yet.
The President vs. Trade. And the plot thickens... President Donald Trump has unveiled a new $50 billion tariff on Chinese semiconductors, car and aircraft parts, and machine tools. The tariff comes as a reaction to yesterday's $3 billion tariff by China. The growing conflict deepens the divide between the world’s two largest economies, the effects likely to impact US supply chains and product prices. The Trump administration is also likely to set quotas on Chinese investment into the US. Traders should expect tech industry and industrial stocks to remain volatile.
Sleeping on the job. Elon Musk, Tesla’s CEO, jokingly tweeted a photo of him sleeping in the Tesla factory on Sunday with speculation of production of the Model 3 not meeting the target level. Today, Tesla announced it built 2,020 of its Model 3 sedans in the last 7 days. The target production rate of 5,000 units per week is the goal Tesla plans too achieve in the next 3 months. With this news, Tesla does not need to raise any equity or debt this year. Tesla was up 6% at closing.
Markets drive news. A very interesting contrary to the widespread belief of news driving prices is prices driving the news. Many believe that all known information is incorporated into prices and we all know how random day-to-day prices can be and how quickly they can reverse themselves. Because of disproportionate coverage, news media can cause a distorted view of the world. The lesson to be learned is: the tendency to pay attention to stories and not real data can be disastrous for investors.
Your daily dose of sports. Last nights Championship game was close throughout the first half. It wasn’t until the second half when Michigan became careless and fancy. Turn over after turnover fueled the Super Nova and Donte DiVincenzo to have a scoring burst to leave behind the Wolverines and seal the second National Championship for the Wildcats in three seasons. More in basketball, the Lakers look to snap their five game losing skid tonight against the Jazz and the number 1 seeded Raptors are in the land facing a three seeded Cavs team who are finally looking like themselves at four o’clock pacific time. Tiger Woods will begin his quest for a fifth Masters on Thursday. Stay tuned and we will keep you updated for more on these contests.
The Alchanati Campbell and Associates Team
WHAT'S UP FRIDAY? is a weekly newsletter that will give you a summary of "What's up?" on Wall Street, in the US and around the World written by The Alchanati Campbell and Associates Team. What makes us unique is we focus on long-term knowledge; knowledge that will still be useful to you 10 years from now.