Futures pop, US consumer thriving, AI trade is alive, Uberpedia
I’m at the age where if I miss my sleep window it’s game over. Gone are the days that simply resting my head on a pillow after an honest day’s work was enough for 8 hours of sleep. Now, sleep only comes if it occurs at a precise time every night with adequate distance from my last meal. I read exercise is important but not too much and not too close to bedtime. Melatonin can help but it also can make it worse. And heaven forbid I look at a screen! It’s all so exhausting. And yet…
Popping off: Futures are pumping this morning after better sales out of Taiwan Semiconductor. We also got a read of US retail sales that came in well above expectations across the board. The American consumer is thriving! A few minutes ago the European Central Bank announced they were cutting rates by 25 basis points. This was expected. Chinese stocks fell as officials continue to disappoint a market looking for whatever-it-takes stimulus. The TSX and the Dow Jones Industrial Average closed at a record high. Utilities were the best performing sector in part because of expectations of more aggressive rate cuts out of the Bank of Canada but also because of the AI trade. Today we have 11 companies reporting on the S&P 500 including a bunch of US regional banks and Netflix after the bell.
Breathe: Strong results out of Taiwan Semiconductor are supporting a collective relief rally in the AI trade today. Shares of the chipmaker are up 9% in the pre-market and poised to open at a record high. The company delivered a 54% increase in quarterly net income and gave a strong forecast that indicated all is well when it comes to spending on AI infrastructure. Chipmakers across the board are higher in the pre-market with Nvidia poised to open at a record high.
Super Uber: The dictionary definition of “uber” is “to the extreme, or excessive degree”. It seems that’s exactly where Uber’s CEO Dara Khosrowshahi wants to take the company. The FT is reporting Uber has explored a potential offer for Expedia. Shares of Expedia are up nearly 6% on the news. It’s a business that Khosrowshahi knows well, recall he was CEO of Expedia from 2005 to 2017. Expedia shares rose 600% over his tenure but are up just 7% since he left. In term of size, this would be the biggest deal yet for Uber but one it could easily handle given Expedia is 1/8th its size. Put this in the “stay tuned” category as interest was described to be at very early stages.
The opposite of lucid: Shares of embattled EV maker Lucid are plunging 18% in the pre-market on a surprise equity raise. Lucid plans to raise about $2 billion dollars as they warn of continued losses ahead of the launch of their SUV. Clearly investors are flustered especially since the company has access to about $5 billion worth of liquidity, according to Stifel. The analyst said the sale was not needed but “certainly creates a longer runway for Lucid,” in a note to clients.
Meet the misses: Shares of CSX are down about 4% in the pre-market as earnings and sales missed expectations. They also cut their outlook in part due hurricane impact, but analysts note the railway is struggling with volume growth and the ability to increase prices. A potential parable for the US economy. Meanwhile, Elevance is getting hammered right now. It is down about 12% in the pre-market. The health insurer cut its forecast in what is becoming routine in this sector. Rival insurers like Centene and Molina Health are also down as the industry deals with a one-two punch of fewer Medicaid enrollments while also receiving lower payments for existing customers.
