Mixed messages from the Fed might be a trial balloon.
So much of trading is dependent on “expectations” – what people think stocks will do in response to what some government official or powerful shareholder says.
Look at Taiwan Semiconductor Manufacturing (TSM) – it was up almost 6% after news spread that Berkshire Hathaway is taking a $4.1 billion stake.
Nothing fundamental with the company has changed – but that Warren Buffett vote means a lot to people.
What someone at the Fed says is an even bigger deal to the larger market.
Federal Reserve Vice Chair Lael Brainard suggested that slower interest rate increases might be warranted. That wasn’t enough to drive markets up yesterday, but it marks the first time the Fed has given those hoping for slower rate hikes something concrete to hang their hat on.
Up until this point, it’s mostly been wishful thinking.
The 10,000 layoffs coming from Amazon are also a powerful indicator of the state of the jobs market.
This comes after thousands of layoffs at Twitter, Meta, and SNAP.
While elements of the tech sector may be coming back (just look at AMD over the last month), most companies are obsessed with cutting costs.
Disney’s on the same path, suggesting that the crisis goes beyond the tech sector.
But then, this may be what the Fed wants to see.
The jobs market has been too tight for the central bankers for some time now… layoffs and falling wages may not look good in the papers but it’s what Jerome Powell is looking for.
Keep aware of the shift that could be coming… but don’t act without seeing the technical signals that mandate action.
Chris Hood has more for you today
Keep Moving,
THE OFFENSIVE is already underway.
WORD ON THE STREET
Fed Gives A Signal, AMZN Lays Off 10,000, AMD Gets An Upgrade
- Telling The Market What It Wants To Hear – Federal Reserve Vice Chair Lael Brainard told Bloomberg News that she thinks it will be “appropriate soon to move to a slower pace of rate increases.” While she also said the central bank still has “additional work to do both on raising rates and sustaining restraint to bring inflation down to 2% over time,” this is a major dovish signal from the Fed. It boosts the odds that the market will only price in a half-point interest rate increase in December.
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Largest Cuts In Amazon’s History – Amazon (AMZN) was down more than 2.2% during the trading day yesterday after reports that the online retail giant will shed 10,000 jobs – starting as soon as this week. The New York Times said cuts were coming in the company’s devices organization, retail division, and human resources.
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GOP Likely To Take The House – NBC News has projected that the Republicans will capture the House of Representatives with a thin 219-216 majority. It’s not much of a red wave, but it will be enough to displace Speaker Nancy Pelosi. House Minority Leader Kevin McCarthy (R-CA) is favored to be the next Speaker of the House.
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Advanced Micro Devices Up On Chip Comeback – AMD, like most other chip companies, has suffered so far this year, down more than 50% YTD. However, after receiving upgrades from both UBS and Baird, it rallied again yesterday, capping off a near 27% recovery over the last month. Fellow chip company Taiwan Semiconductor Manufacturing (TSM) was up almost 6% in after-hours trading after news broke that Warren Buffett’s Berkshire Hathaway took a $4.1 billion stake in the firm.
THIS TRADER MADE $64,000 IN JUST ONE WEEK
And he never risked more than $10,000 at a time…
HOT SPOTS: What’s Going on in Geopolitics
- Joe Biden/Xi Jinping Have “Blunt” Meeting – When you cut through the diplomatic niceties, they may well have been screaming at each other. The White House description of the meeting said the two leaders “spoke candidly about their respective priorities and intentions across a range of issues.” Xi Jinping also had said he was looking forward to a “candid and in-depth exchange of views” with President Biden. The meeting between Jinping and President Biden reportedly lasted for three hours. Though both leaders smiled and shook hands for the cameras, it’s likely both powers laid out the “red lines” each power fears. While China and the United States will keep negotiating, there’s no way to conceal the reality of conflicts over Taiwan and other issues.
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Zelenskyy Visits Kherson – Ukrainian president Volodymyr Zelenskyy toured the liberated city of Kherson in triumph. “We are, step by step, coming to all of our country,” he enthused. A Russian soldier disguised as a local was also reportedly arrested.
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Turkey Rejects American Condolences – It would seem to be a standard diplomatic communication. After six people were killed and dozens wounded in a terrorist attack in Istanbul, the United States offered its condolences to Turkey. However, Turkey rejected the American government’s words. Turkish Interior Minister Suleyman Soylu compared the United States expressing condolences as akin to “the murderer arriving as one of the first at the scene of a crime.”
CUTTING EDGE: What‘s Happening In Tech
- SoftBank Lost $100 Million In FTX – The Japanese bank SoftBank was down another 10% after it revealed that it had invested $100 million in disgraced crypto exchange FTX. The bank now anticipates writing down the entire investment in the now bankrupt company.
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Musk: “I Have Too Much Work On My Plate” – A comment like that isn’t going to make Tesla (TSLA) shareholders feel much better. “I have too much work on my plate, that is for sure,” Elon Musk said during a videoconference at the G20 summit. He said he was working at his “absolute most amount” all “seven days a week.” TSLA was down more than 2.5% yesterday.
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Does BCLI Have A Path Forward? – Brainstorm Cell Therapeutics (BCLI) was up almost 8% even though it reported a miss on earnings and revenues. It wasn’t enough to make up for losses from last week. The company received a potentially mortal blow when the FDA decided last week not to approve its cell-based therapy NurOwn as a possible treatment for Amyotrophic Lateral Sclerosis (ALS).
FOR YOUR CONSIDERATION
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