A nice little article on HD. Why Home Depot made an $18.25 billion bet on the pro business https://www.cnbc.com/2024/11/15/why-home-depot-acquired-srs-distribution.html (BOLD is my opinion OR what I consider important content) "Key Points Home Depot’s major acquisition is boosting the business as home improvement demand remains slow. The retailer announced in March that it was acquiring SRS Distribution, a company that sells supplies to roofing, pool and landscaping professionals, for $18.25 billion and closed the deal in June. The companies are testing how they can work together, such as selling SRS’ wider assortment of shingles, landscaping items and more at the pro desk in Home Depot’s stores. "PLANO, Texas — In a suburban warehouse, giant buckets of pool sanitizer and boxed-up heaters and pumps line the shelves. This isn’t a Home Depot store, but these aisles — and the company behind them — will shape the home improvement retailer’s success over the next decade. Home Depot made its biggest bet yet on expanding its business earlier this year when it bought SRS Distribution, a Texas-based company that sells supplies to professionals in the roofing, pool and landscaping businesses. The company has more than 11,000 employees and more than 780 branches across 47 states, including in the Dallas area. With the $18.25 billion deal, which closed in June, Home Depot signaled to investors that its growth will come not just from its big-box stores. It will also rely on large online orders placed by home professionals who need a long list of specific supplies for installing swimming pools, repairing roofs and tackling complex remodels. In its first few months, the deal has buoyed Home Depot’s business at a time when consumers are taking on fewer of their own home improvement projects. Earlier this week, the retailer said the acquisition fueleda more than 6% increase in fiscal third-quarter sales, even as shoppers went to stores less and spent less per transaction than in the year-ago period. In both of the past two quarters, Home Depot’s revenue would have fallen year over year if SRS’ sales were excluded. In an interview with CNBC, CEO Ted Decker said Home Depot bought the company not to offset the softer do-it-yourself market, but becauseit fits into its strategy to sell more to pros. Home Depot has long acted as a convenience store for pros, who might drop in to buy a tool or last-minute item. Over the past four years, it has built a nationwide distribution network with hubs in metro areas such as Dallas, Atlanta and Los Angeles, so it can deliver larger, truckload-size orders directly to the job site of a contractor or other pro. Yet SRS caught the retailer’s attention because it offered a different area of expertise: Catering to home improvement pros with specialties, Decker said. SRS CEO Dan Tinker said the specialty distributor brings a deeper catalog of merchandise, a dedicated sales force and a large network that delivers to about 15,000 job sites per day. It also offers trade credit, a financing arrangement that allows a customer to receive a big order and pay later. Home Depot, for its part, has just started offering that option to a small portion of its own pro customers. “What we bring to them is an accelerant to their pro strategy,” he said. At the time of the deal, Home Depot estimated the acquisition expands the company’s total addressable market to approximately $1 trillion, an increase of approximately $50 billion. SRS came with a steep price tag but could add rocket fuel to Home Depot’s pro growth, said Joe Feldman, a senior research analyst for Telsey Advisory Group. He compared the deal to Walmart’s $3.3 billion acquisition of Jet.com, an e-commerce player. Some industry watchers and Walmart’s own CEO have credited the move for accelerating Walmart’s online business, even though it eventually shut down Jet.com as a standalone. “They see it as an opportunity to enter a completely new market with a very established player,” he said. “It will take a few years to see if it pays off.” A jolt to the business For Home Depot, the expansion into the pro business comes at a challenging time. With housing turnover near its lowest in decades, the pro business has also felt pressure. On Tuesday, the company hiked its full-year forecast, but only because of a shorter-term boost in business. Hurricane-related preparation and repairs, and homeowners taking advantage of warmer, drier weather with outdoor-related purchases and smaller projects, drove additional sales in the third quarter. Customers have delayed home sales and purchases, or springing for pricier projects, as they wait for lower mortgage and borrowing rates. Home Depot’s “biggest challenge — and really, their only challenge — is when do we see a great retail vertical over the past few years get back to being that way?” said Chuck Grom, a senior analyst who covers retail for Gordon Haskett. Home Depot’s stock has underperformed the S&P 500. As of Thursday’s close, shares of the company are up 17% this year, but trail the S&P 500′s nearly 25% gains. Yet investors have expressed some optimism. Telsey Advisory Group’s Feldman recently upgraded Home Depot’s stock. While he said he expects negative comparable sales next quarter and perhaps even in the first quarter of next year, he said he anticipates a return to growth next spring. In other interest rate easing cycles, he said it’s typically taken about six to nine months to see housing demand pick up. The Federal Reserve kicked off interest rate cuts in September and has made one other reduction since then, with more expected. Grom said Home Depot’s growing pro business is what helps to attract investors and set it apart from its maincompetitor, Lowe’s. About half of its business comes from home pros compared with about 20% to 25% at Lowe’s. Pros are typically steadier and bigger spenders, and some of the businesses they serve better weather ups and downs in the economy. For example, about 80% of the roofing business comes from repairs or re-roofing projects rather than for new homes, Decker said. He cited that as one of the factors that made SRS attractive. Tinker said SRS is more insulated than Home Depot is from economic changes.As families hold off on moving, SRS has gotten business from investment companies that have been buying properties to fix up and rent, he said. “There’s such a huge need for people to rent until they can afford to buy,” he said. SRS is expected to contribute about $6.4 billion in incremental sales this year, according to Home Depot. Those sales include only the period after the deal closed in mid-June. The SRS deal and the focus on pro does not mean Home Depot is abandoning efforts to jolt the rest of its business. Decker said the retailer is still trying to attract more do-it-yourself sales. It has opened 10 new stores in the U.S. since late January and it plans to open two more by early February. Combining forces Home Depot has already started to see the synergies the deal brings. SRS brings a larger and more mature logistics network that can speed up deliveries and lower costs. The company has an approximately 4,000-truck delivery force. Home Depot, on the other hand, relies mostly on third-party delivery and had just started to use its own drivers, Decker said. SRS also sells a larger catalog of products that professionals use to satisfy customers’ varied demands, such as surf blue-colored roofing or a deeper selection of outdoor fire pits, Tinker said. The newly acquired business also has other advantages, including a dedicated sales force with expertise in specific verticals and deep relationships with pros who are frequent buyers, Tinker said. Its approximately 2,500-person specialized sales force is larger than Home Depot’s, which is in the hundreds, Tinker said. Home Depot does not disclose the size of its sales force. In Los Angeles, Home Depot and SRS are in the early innings of testing how they can bring their existing operations together. As part of a pilot project, SRS will use space in a Home Depot distribution center to expand its sales in the part of the country where it has a smaller footprint, Tinker said. “That’s a huge opportunity, but that’s even not touching or integrating with them,” he said. “That’s just using some of their assets.” SRS gains other business advantages from joining the home improvement behemoth. Home Depot’s big-box stores include pro desks where contractors can go for specialized support or to place orders. Those pro desks are now promoting and selling SRS’ deeper catalog of products, Decker said. In the meantime, SRS, which has made more than 100 acquisitions, has continued to buy small, often family-owned companies in the pool, landscaping and roofing business. It’s averaged 15 acquisitions annually in the past four or five years, Tinker said. Home Depot has taken a more hands-off approach, allowing SRS to run more independently after the deal, Decker said. “We’re letting them focus on their growth formula, but also beginning to look at where are their obvious synergies, without disrupting what they’re doing,” he said. Inside the SRS-owned Texas Pool Supply in Plano, which caters only to home pros, the aisles of items include many that couldn’t be found at a local Home Depot. Contractors can buy a wider range of tiles for the bottom of a swimming pool, or bulk items, such as 100-pound buckets of pool sanitizer. When Home Depot acquired SRS, Jeff Cabell, branch manager of Texas Pool Supply, said he got a lot of questions from customers. Some asked if Home Depot would soon carry the same products and worried it would change the business. Some employees asked if their uniform would change to Home Depot’s signature orange aprons. In both cases, Cabell said, the answer is no." MY COMMENT Sounds like a well thought out acquisition that is already paying for itself and helping HD earnings. I LOVE HD as an investment. The most dominant force in their market and business niche in the world. A well run business with GREAT management.
My personal opinion.....this company is significantly UNDERVALUED. Nvidia earnings on deck as AI kingpin tightens grip on $1 trillion market https://finance.yahoo.com/news/nvidia-earnings-deck-ai-kingpin-130300853.html (BOLD is my opinion OR what I consider important content) "Nvidia shares ended lower last week, giving back around $150 billion in market value amid a broader selloff in rate-sensitive tech stocks ahead of the group's hotly anticipated third quarter earnings on Wednesday. Nvidia (NVDA) , which commands a near 80% share of the market for high-end AI-powering chips and processors, is finding that its biggest challenge isn't the technological advances of its rivals, but rather the ability of its supply-chain partners to help it meet what CEO Jensen Huang has called "insane" demand for its new Blackwell line. Blackwell chips, as a stand-alone, are said to be around two and a half times faster than Nvidia's legacy H100 chips, also known as Hopper, when they are used to train large-language AI models. And they're around five times when used to run those models in real applications, a process called inferencing. That performance, of course, comes at a price: Blackwell GPUs reportedly cost around twice as much as their H100 predecessors, at between $60,000 and $70,000 per unit, with prices reaching as high as $3 million for a fully loaded server with 72 chips stacked inside. Nvidia's broader chip architecture makes this possible, as chips can be stacked and interlocked, almost Lego-like, based on specific client needs. Blackwell is also backward-compatible with the H100, enabling customers — if they're lucky enough to get their hands on them — to replace legacy chips with the newer, faster and more efficient models. Lucky for Nvidia, and ultimately its investors, there's no lack of willingness among its biggest customers to spend. Nvidia GPUs: Harder to buy than drugs? Elon Musk, who runs a host of businesses alongside his obligations as Tesla (TSLA) CEO and President-elect Donald Trump's budget-slasher-in-chief, could be one of its biggest customers. His XAi startup, which aims to challenge OpenAI and its industry benchmark ChatGPT, is looking to raise around $6 billion in fresh capital, CNBC reported last week. Such a funding would value that group at around $50 billion. Part of that funding, the report indicated, will go to buying around 100,000 of the H100 chips next year. That's on top of the 300,000 he wants to buy for Tesla to replace his existing cluster of H100 chips. "[Nvidia] GPUs at this point are considerably harder to get than drugs," Musk told a Wall Street Journal CEO Council Summit last spring. He's not far wrong. Mark Zuckerberg's AI ambitions for Meta Platforms (META) , centered on the training and inferencing of its Llama supercomputer, reportedly require around 350,000 H100 chips. Upgrading those to the faster Blackwell line, which is sold out for all of next year, won't be cheap. Meta and hyperscaler peers Amazon (AMZN) , Microsoft (MSFT) and Google parent Alphabet (GOOGL) are poised to spend around $200 billion this year alone on capital projects tied to the new AI technologies. Once-in-a-lifetime opportunity in AI UBS analysts see that tally rising to $267 billion next year in what Amazon CEO Andy Jassy called a "once-in-a-lifetime" opportunity in generative AI. Total AI spending, which includes software, hardware and services, is likely to more than double to around $632 billion by 2028 from around $235 billion in 2023, according to IDC estimates. Supply challenges, however, might temper some of that demand. Taiwan Semiconductor, (TSM) the world's biggest contract chip manufacturer and a key Nvidia partner, is spending $65 billion on three new facilities in Arizona as it looks to expand its global footprint and wean itself from reliance on Asia-based production. It's also reportedly cutting off customers in China ahead of the expected export restrictions on high-end tech from the Trump administration early next year in order to find capacity. Interestingly, CFRA analyst Angelo Zino thinks Nvidia, which wins at pretty much everything, is likely to find advantage from Trump's expected tariffs. "The Biden/Harris approach has been to limit China to certain advanced chips and equipment, like GPUs and" ASML-made extreme ultraviolet lithography systems, he said. "According to our Washington Analysis team, Trump may be willing to offer more advanced AI chips to other nations, even China, if the price is right while maintaining a certain technology lead." Some of Nvidia's biggest customers as well are looking for ways to hedge against the group's dominant market position and any trade, tariff or supply issues that could temper their ability to build, train and ultimately monetize their AI investments. Amazon aims to produce AI chips Amazon told investors last month that some of its cloud customers want "better price performance on their AI workloads" as they scale their operations and look to reduce costs. The e-retail and technology group is investing in its own high-performance chips, called Trainium, that it can sell directly to clients who may not wish to wait for, or pay for, Nvidia's sought-after products. Microsoft is also working up a new line of AI accelerators, which it calls the Maia 100, to train large-language models. These could both help it wean it from reliance on Nvidia and offer a lower-priced alternative to its Azure cloud customers. That seems like a longer-term play, however, as both Microsoft and Amazon would need to enter the contract chip production market in order to grow their client base to scale, and there simply isn't a great deal of capacity beyond TSMC, Samsung and New York-based GlobalFoundries. Nvidia, meanwhile, looks set to go from strength to strength, with analysts forecasting October-quarter revenue of $33.12 billion, nearly double the year-earlier tally, when it reports after the close of trading on Wednesday. Looking into the final months of Nvidia's financial year, which ends in January, Wall Steet sees revenue in the region of $37 billion, as Blackwell sales start to hit the group's top line. By the end of the financial year in 2026, investors see Nvidia generating $185.4 billion in sales, a staggering 205% increase from 2024 levels. "We’re now in this computer revolution,' Huang told a Goldman Sachs Talks event in September. "Now, what’s amazing is the first trillion dollars of data centers is going to get accelerated and invent this new type of software called generative AI. "If you look at the whole IT industry up until now, we’ve been making instruments and tools that people use," he added. "For the very first time, we’re going to create skills that augment people. And so that’s why people think that AI is going to expand beyond the trillion dollars of data centers and IT and into the world of skills." Nvidia shares closed Friday at $141.98 each, falling 3.26% on the session and extending their one-week decline to around 4.45%. That still leaves the stock up more than 50% over the past six months, nearly five times the gain for the Nasdaq, with a market value of $3.48 trillion." MY COMMENT I continue to be AMAZED that this company is not way higher than it is now. With their DOMINANCE and product development history.....they are set to be a HUGE market force for a long time. In my view there should be MASSIVE and EXPLOSIVE demand for this stock. The question with the earnings will come from other market factors.....the FED, POWELL, media-fear-mongering, etc, etc, etc......distracting from and overshadowing earnings. I fully expect great earnings next week along with a HUGE future for this company.
I am DEFINITELY NOT.....suggesting that anyone buy SMCI. BUT.....I do see the company as a take-over target for someone. Of course they would need to clean house on management and dig into the financials and get the accounting all straight.
I also like this move....which was the primary reason for the bump up in price for PLTR on Friday. Palantir jumps 11% to a record after announcing move to Nasdaq https://www.cnbc.com/2024/11/15/pal...a-record-after-announcing-move-to-nasdaq.html MY COMMENT The company will start to trade on the NASDAQ on November 26. This will be a good bump up for the stock as any Index Fund that is focused on the NASDAQ will now have to buy the shares. The company symbol.....PLTR....will remain the same. The MOMENTUM with these shares and this company continues to build and build. NOW....the company needs to push even harder, to execute and to support and justify the momentum trend and keep the movement in the right direction for shareholders. I do like the odds for this company....especially considering the individuals that are owners, founders, and management of this company. A young company that seems to be doing all the right things....so far.
This is probably one of the most important clips from the above article. If it all holds and gets completed without further delays and interference from the politicians. We need to invest in this type of infrastructure here and see it through. We need to tilt the scales back in our favor. LOL...What else do you want at this point??? No, seriously I think I know what you meant with that statement....meaning well into the future.
Yes.....my point about.....massive, explosive demand......means NOW and over the next ten years. But regarding the past ten or more years. I do see the environment as very different than when I held MSFT in the GLORY DAYS of 1990 to 2000. That stock just took off and shot up like a rocket for ten plus years. Split after split after split......with massive price jumps after each split. It seems like NVDA has had to fight its way up the entire time. Earnings have been fear-mongered, earnings have been ignored and disrespected, at times months of weakness, etc, etc, etc. In the last 17 years only two stock splits. Media doubt-mongers out there on steroids. It is a very different environment now than in the old MSFT glory days. BUT.........it is CRAZY.....how this stock has been treated at times considering what this company is doing and what they put up in the numbers quarter after quarter......with the results often being ignored.......in the days or weeks after earnings. I believe this will continue since it is now the environment that we have to deal with as investors.....everyone is JADED.....and we are stuck with the 24/7 negative media.
The only problem with this is......it is being predicted by the usual "EXPERTS"......that are always wrong. BUT in this case I do agree. ALL the opinion writing fear-mongers and market manipulators need to just SHUT UP and GO AWAY. HERE is the entire UPBEAT case for the markets, the economy, the consumer, and the country.....ALL....in a single article. The holidays are coming and experts say Americans will be opening their wallets https://finance.yahoo.com/news/the-...-will-be-opening-their-wallets-144804659.html (BOLD is my opinion OR what I consider important content) "Americans plan to spend more on holiday shopping this year than they did last year. That’s the takeaway from pretty much every consumer survey conducted over the past several weeks. Below are some highlights (emphasis added): “Our proprietary survey of ~2,000 US consumers reveals a more positive outlook for holiday shopping versus 2023 and 2022. Overall, 37% of consumers are planning to keep their holiday budgets roughly the same, 35% expect to spend more, and 22% expect to spend less yielding a net of +13%.” - Morgan Stanley (11/13) “Consumer sentiment has also shown signs of improvement, and the 2024 Bank of America Holiday Survey suggests people are planning to spend $2,100 outside of typical obligations and necessities this holiday season, up 7% YoY.”- BofA (11/12) “According to The Conference Board Holiday Spending Survey, the average US consumer intends to spend $1,063 in nominal terms on holiday-related purchases in 2024, up 7.9% from $985 in 2023. This is also higher than in 2022 ($1,006) and 2021 ($1,022). On gifts, consumers plan to spend an average of $677, up 3.4% from $654 last year. After slumping last year, consumers’ budgets for non-gift items such as food, decorations, and wrapping paper are also up 17% at $387.” - The Conference Board (11/12) “Some 89% of consumers admitted they're tempted to spend more than they should during the holiday season, while 94% indicated they'd be tempted to make an unplanned purchase if the item were on sale. Over half (55%) of consumers said holiday deals have caused them to overspend; these big spenders said they are most likely to splurge on gifts for others.”- Experian (11/4) “Consumers are reaching a little deeper into their pockets this season, their average holiday budget rising 4% y-o-y to $613, according to Accenture's 18th Annual Holiday Shopping Survey.” - Accenture (10/30) “In a year when sustained consumer spending propelled growth and helped the economy skirt recession, we're calling for a fairly modest holiday sales season. We look for holiday sales to rise just 3.3% in November and December compared to last year, which is slower than last year and below the long-run average.” - Wells Fargo (10/28) “Gallup’s initial measure of Americans’ 2024 holiday spending intentions finds consumers planning to spend an average of $1,014 on Christmas or other holiday gifts. This is substantially more than their forecast of $923 at the same time last year, signaling that the 2024 holiday shopping season could be a bit kinder to U.S. retailers.” - Gallup (10/25) “Consumer spending on the winter holidays is expected to reach a record $902 per person on average across gifts, food, decorations and other seasonal items, according to the National Retail Federation’s latest consumer survey conducted by Prosper Insights & Analytics. The amount is about $25 per person more than last year’s figure and $16 higher than the previous record set in 2019.” - National Retail Federation (10/22) “U.S. consumers are set to spend 4% more on holiday shopping this year, with average spending projected to reach $948, compared to $911 in 2023, according to the KPMG 2024 Consumer Holiday Shopping Survey.” - KPMG (10/21) “After expressing record holiday spending intentions in 2023, respondents are yet again planning to up their purchases, and expect to spend $1,778 (+8% year over year) this holiday season. The uptick in spend is attributed to a rosier economic outlook (+9 percentage points [PP]), perceived higher prices (70%), and an increase in spend by the $100K to $199K income group (+17%).” - Deloitte (10/15) “Despite 59% of consumers saying that inflation will probably influence their holiday spending this year, overall spending is projected to increase by 7% to an average of $1,638 per shopper.” - PwC (10/1) We’ll have to wait to see if consumers come through and actually spend more this year. If they do, it would be consistent with the years-long narrative of record consumer spending. Just this past Friday, we learned retail sales in October rose to a record $718.9 billion. All this spending has been supported by healthy household balance sheets and real income growth. Household finances are in good shape Sure, households aren’t as flush as they were earlier in the economic recovery — but they remain strong relative to history. This is best reflected by the debt-to-income ratio, which remains at historically low levels even as aggregate debt has been rising. “Although household balances continue to rise in nominal terms, growth in income has outpaced debt,” wrote Donghoon Lee, Economic Research Advisor at the New York Fed. It’s a reminder to take headlines like “US Household Debt Rises to $17.94 Trillion: N.Y. Fed" and “Credit card debt hits record $1.17 trillion“ with caution because they lack the context you need to avoid drawing the wrong conclusions. Better headlines read like “Household debt is up, but Americans are in a better spot to pay it" and “NY Fed says household debt up in third quarter as rising incomes ease debt burden." And in case you’re wondering: Households have a long way to go before they max out their credit cards. Yes, debt delinquencies have been rising. It’s an economic warning sign to keep an eye on. But for now, they can be characterized as normalizing. “Aggregate delinquency rates edged up from the previous quarter, with 3.5% of outstanding debt in some stage of delinquency,“ New York Fed researchers noted. That’s significantly below Q4 2019 levels. Also, it’s notable that wage growth has outpaced inflation for 18 months. “This is how most Americans will ultimately be able to get ahead,” The Washington Post’s Heather Long wrote. “Prices won't go down, but wages will go up enough to offset the higher prices.” We’re also on a 46-month streak of net job creation in America. When more people have jobs, more people have money to spend. With a new political party moving into the White House next year, we can expected an upheaval in consumer sentiment. But as we’ve learned in recent years, people won’t put their lives on hold just because sentiment is poor. If they have money, they will spend it. Review of the macro crosscurrents There were a few notable data points and macroeconomic developments from last week to consider: Shopping rises to new record level. Retail sales increased 0.4% in October to a record $718.9 billion. Strength was broad with growth in electronics, cars and parts, restaurants and bars, building materials, and online shopping. Card spending data is holding up. From JPMorgan: “As of 08 Nov 2024, our Chase Consumer Card spending data (unadjusted) was 0.8% above the same day last year. Based on the Chase Consumer Card data through 08 Nov 2024, our estimate of the US Census November control measure of retail sales m/m is 0.35%.” Unemployment claims tick lower. Initial claims for unemployment benefits declined to 217,000 during the week ending November 9, down from 221,000 the week prior. This metric continues to be at levels historically associated with economic growth. Inflation remains cool. The Consumer Price Index (CPI) in October was up 2.6% from a year ago, up from the 2.4% rate in September. This remains near February 2021 lows. Adjusted for food and energy prices, core CPI was up 3.3%, unchanged from the prior month’s level. On a month-over-month basis, CPI was up 0.2%. Core CPI increased by 0.3%. If you annualize the six-month trend in the monthly figures — a reflection of the short-term trend in prices — core CPI climbed 2.6%. Inflation expectations remain cool. From the New York Fed’s October Survey of Consumer Expectations: “Median inflation expectations fell at all three horizons in October. One-year-ahead inflation expectations declined by 0.1 percentage point to 2.9%, three-year-ahead inflation expectations declined by 0.2 percentage point to 2.5%, and five-year-ahead inflation expectations declined by 0.1 percentage point to 2.8%.” However, the introduction of tariffs as proposed by president-elect Donald Trump would be inflationary. For more, read: Wall Street agrees: Tariffs are bad Gas prices tick lower. From AAA: “The national average for a gallon of gas is now less than a dime away from dipping below $3 for the first time since May of 2021. But the possible formation of a new hurricane in the Gulf of Mexico could delay or even temporarily reverse the decline in pump prices. Since last week, the national average dropped two cents to $3.08.” Mortgage rates tick lower. According to Freddie Mac, the average 30-year fixed-rate mortgage declined to 6.78%, down from 6.79% last week. From Freddie Mac: “After a six-week climb, rates have leveled off, but overall affordability continues to be an issue for potential homebuyers. Freddie Mac’s latest research shows that mortgage payments compared to rents on the same homes are elevated relative to most of the last three decades.” There are 147 million housing units in the U.S., of which 86.6 million are owner-occupied and 34 million of which are mortgage-free. Of those carrying mortgage debt, almost all have fixed-rate mortgages, and most of those mortgages have rates that were locked in before rates surged from 2021 lows. All of this is to say: Most homeowners are not particularly sensitive to movements in home prices or mortgage rates. Importantly, the more tangible “hard” components of the index continue to hold up much better than the more sentiment-oriented “soft” components. Industrial activity ticks lower. Industrial production activity in October fell 0.3% from the prior month. Manufacturing output fell 0.5%. From the Federal Reserve: “A strike at a major producer of civilian aircraft held down total IP growth by an estimated 0.3 percentage point in September and 0.2 percentage point in October. Hurricane Milton and the lingering effects of Hurricane Helene together reduced October IP growth 0.1 percentage point.“ This is the stuff pros are worried about. According to BofA’s November Global Fund Manager Survey: “On tail risks… 32% of November FMS investors view higher inflation as the #1 biggest 'tail risk' (up from 26% in October). Concerns over geopolitical conflict took the 2nd place spot this month at 21% (down from 33% last month).” Offices remain relatively empty. From Kastle Systems: “Peak day office occupancy on Tuesday dropped more than five full points from the prior week to 57% as many workers went to the polls on Election Day. Occupancy also declined on Wednesday compared to the previous week, dropping 3.6 points to 57.8%. Washington, DC saw the largest decrease with its peak occupancy day dropping more than nine points to 50% on Thursday. The average low was on Friday at 32.6%, down six tenths of a point from last week.“ Near-term GDP growth estimates remain positive. The Atlanta Fed’s GDPNow model sees real GDP growth climbing at a 2.5% rate in Q4. Putting it all together The long-term outlook for the stock market remains favorable, bolstered by expectations for years of earnings growth. And earnings are the most important driver of stock prices. Demand for goods and services is positive, and the economy continues to grow. At the same time, economic growth has normalized from much hotter levels earlier in the cycle. The economy is less “coiled” these days as major tailwinds like excess job openings have faded. To be clear: The economy remains very healthy, supported by strong consumer and business balance sheets. Job creation remains positive. And the Federal Reserve — having resolved the inflation crisis — has shifted its focus toward supporting the labor market. We are in an odd period given that the hard economic data has decoupled from the soft sentiment-oriented data. Consumer and business sentiment has been relatively poor, even as tangible consumer and business activity continue to grow and trend at record levels. From an investor’s perspective, what matters is that the hard economic data continues to hold up. Analysts expect the U.S. stock market could outperform the U.S. economy, thanks largely due to positive operating leverage. Since the pandemic, companies have adjusted their cost structures aggressively. This has come with strategic layoffs and investment in new equipment, including hardware powered by AI. These moves are resulting in positive operating leverage, which means a modest amount of sales growth — in the cooling economy — is translating to robust earnings growth. Of course, this does not mean we should get complacent. There will always be risks to worry about — such as U.S. political uncertainty, geopolitical turmoil, energy price volatility, cyber attacks, etc. There are also the dreaded unknowns. Any of these risks can flare up and spark short-term volatility in the markets. There’s also the harsh reality that economic recessions and bear markets are developments that all long-term investors should expect to experience as they build wealth in the markets. Always keep your stock market seat belts fastened. For now, there’s no reason to believe there’ll be a challenge that the economy and the markets won’t be able to overcome over time. The long game remains undefeated, and it’s a streak long-term investors can expect to continue." MY COMMENT WOW......I mean.....REALLY BIG WOW. It is like this little article is the breaking of a big dam. Suddenly here in one article is the ENTIRE positive story of the current environment and the near future environment for investors. It is like this stuff just could not be held back any longer and it all came flooding out in a single article. BUT in the time it took me to type the intro to this post the article dropped from the top of the page down many places to where I had to look in my history to find it. No doubt this POSITIVE information....all in one place....will soon be buried. There is a lot.....a VERY LOT....to be positive about right now....LONG TERM INVESTORS. You just have to see it hiding in all the media negativity and BS. Remember.....all the day to day BS and negativity and fear mongering even in the financial media is pushing someone or some AGENDA. it is all about creating fear to give others POWER and CONTROL. My preference......to TRUST my own instincts.....my own CLINICAL and RATIONAL view of reality......and when necessary.....disconnect from all the BS that is spread on a daily basis. I will continue to HIDE in the long term and ignore the short term.
I saw this little article yesterday. It is exactly what I am talking about in my NVDA post above about earnings and disrespect. Every single time they are going to report this stuff pops up in the media. The way I see this "stuff" is that it is ALWAYS ANONYMOUS. there is never a source for what is reported. The timing is ALWAYS just before earnings. I see this as a NON-ISSUE for the Blackwell chip and the company. Probably the type of issue that happens with every new design and is routine to have to make adjustments. YES.....I happen to believe that this is NOTHING in the scheme of things. BUT....as usual it has the potential to be amplified and cause a great earnings report to be IGNORED.....as usual. Nvidia drops on report overheating issue could delay new Blackwell AI servers https://finance.yahoo.com/news/overheating-issue-could-delay-nvidias-213003375.html (BOLD is my opinion OR what I consider important content) "Investing.com -- NVIDIA's (NASDAQ:NVDA) new Blackwell AI chip is said to be having issues with overheating when connected in customized server racks, The Information reported Sunday afternoon. The company is working with suppliers to change the design of the racks to alleviate the overheating issue as anxious customers worry about delays. Shares slipped 2.9% in premarket Monday trade. The AI chip giant has already delayed Blackwell by a quarter due to design flaws that have since been fixed. The new server racks combine 72 Blackwell chips, creating a powerful AI system. Major customers like Microsoft (NASDAQ:MSFT), Meta (NASDAQ:META), and Elon Musk’s xAI have been eagerly awaiting the new Blackwell server racks. While NVIDIA often adjusts server designs before a launch, the changes to the Blackwell racks are said to be coming late in the game. That said, Nvidia may still be able to deliver the racks to customers on time, and it hasn’t notified customers of any delay. An NVIDIA spokesperson declined to comment to The Information on whether the Blackwell rack designs have been finalized. All eyes are on NVIDIA ahead of earnings this Wednesday, November 20th. NVIDIA's stock is up 187% year-to-date." MY COMMENT I have no doubt that this is a common issue that companies face all the time with new designs. I also have no doubt that this will fade away and over a few weeks to a month will be meaningless. BUT....the timing of this release of information is being done just before NVDA earnings for maximum impact.
I find it INTERESTING that "The Information" has now put up a PAYWALL....requiring payment to read the original article on NVDA which is the source for all the comment today. When I looked at it and read it yesterday......no payment was required. I dont doubt that there is a heating issue......but I believe that is a typical issue for every new release and will be handled promptly and will cause no real impact on anything. HERE is what NVDA has to say" Nvidia downplayed the issue. “Nvidia is working with leading cloud service providers as an integral part of our engineering team and process,” a spokesperson for the company told Reuters today. “The engineering iterations are normal and expected.” https://siliconangle.com/2024/11/17...-server-racks-worrying-customers-reports-say/ "Nvidia GB200 systems are the most advanced computers ever created. Integrating them into a diverse range of data center environments requires co-engineering with our customers. "While our customers race to be first to market, Nvidia is working with leading CSPs as an integral part of our engineering team and process. The engineering iterations are normal and expected." https://www.businessinsider.com/nvidia-blackwell-chip-ai-overheating-delay-share-price-2024-11 MY COMMENT Typical exaggeration of the normal process of bringing a new chip to market. WHATEVER. BUT......this sort of media piece......WILL result in much speculation and gossip. Welcome to the........NEW NORMAL.
At least we have a GREEN open today for the NASDAQ and SP500. For the first 45 minutes of the week.......and....the first 45 minutes of the next TEN YEARS. YES....not very relevant to anything involving long term investors.
Moving on......to what is important.....the HOLIDAY RETAIL season. Americans have money, and they plan to spend it during the holidays https://www.tker.co/p/household-finances-strong-holiday-shopping-preview October Retail Sales: Stronger Than Normal Seasonal Bounce https://assets.realclear.com/files/2024/11/2582_retail.pdf MY COMMENT I was in Home Depot yesterday and ALL their appliances had big discounts with signs everywhere announcing BLACK FRIDAY pricing and sales prices. It begins......early....this year.
This is what the markets will see this week. Nasdaq rises slightly to start the week, led by Tesla shares https://www.cnbc.com/2024/11/17/sto...aders-await-nvidia-earnings-live-updates.html (BOLD is my opinion OR what I consider important content) "Stocks were mixed Monday as Wall Street awaits major earnings reports this week and monitors the state of the postelection rally. The Nasdaq Composite advanced 0.3%, as Tesla gained 7%. The electric vehicle maker rose after Bloomberg News reported, citing sources, that President-elect Donald Trump's team is working on ways to ease regulation on self-driving vehicles. The Dow Jones Industrial Average fell 60 points, or 0.1%. The S&P 500 edged up 0.1%. Investors await a final batch of earnings report this week from key retailers, offering greater insight into the health of the economy. So far, 93% of S&P 500 companies have reported results. More than 74% have topped earnings expectations and 62% have surpassed revenue estimates, according to FactSet Wednesday's report from AI chip darling Nvidia could have some major implications for the market. "The star this week is our friend Nvidia," said Kim Forrest, chief investment officer at Bokeh Capital Partners, she said highlighting its important to all the key indexes with its recent inclusion in the Dow. "Unless some information comes out before then, the market is going to wait and see what's going on with Nvidia." Monday's move follow a tough week for the three major benchmarks, which are now off the highs seen in the aftermath of Trump's election victory. The Dow lost 1.2% last week to close at 43,444.99 points, after briefly surging past 44,000 for the first time. The S&P 500 slipped 2.1%, while the tech-heavy Nasdaq Composite dipped 3.2%. Concerns about the path of interest rates continue to weigh on investors' minds, particularly after Federal Reserve Chair Jerome Powell said on Thursday that the central bank is not "in a hurry" to cut rates given the economy's strong growth and a solid labor market — which drove last week's sell-off. Most investors are now pricing in a year-end overnight lending rate in the range of 4.25% to 4.50%, according to the CME FedWatch Tool. The next major catalyst for the market this week will be Nvidia earnings, which are set to be released on Wednesday. Traders will be watching for guidance about the company's demand for its Blackwell AI chips. Nvidia shares were down nearly 3% after The Information reported, citing sources, that the company's Blackwell chips overheat when connected together in servers. CVS Health added about 3% after adding four new board positions." MY COMMENT Not much new going on this week. The ONLY real event this week that matters is the NVDA earnings.
HERE is what I consider the most important information above: I"nvestors await a final batch of earnings report this week from key retailers, offering greater insight into the health of the economy. So far, 93% of S&P 500 companies have reported results. More than 74% have topped earnings expectations and 62% have surpassed revenue estimates, according to FactSet Wednesday's report from AI chip darling Nvidia could have some major implications for the market." We are once again seeing a very strong earnings season. This has happened so often over the past years and quarters that is is just HO-HUM news now.
I have not looked at my account....yet. BUT....I know I am starting the day with seven stocks GREEN and two RED. Of course the two are PLTR and NVDA. At least NVDA has backed off on some of the loss today as REALITY impinges on the media drama and fear-mongering over the Blackwell chip this morning.
Basically treading water today. A small LOSS with PLTR, NVDA, and AMZN in the red. I got beat by the SP500 by 0.62%. Moving on and looking forward to the NVDA earnings after the bell on Wednesday.
The futures are down big today.....supposedly over Putin threats and the Ukraine war escalating. As a result short term traders are driving the markets down. Makes sense....even though I and other "little people" investors have no way to really know. It is having one very nice impact today......the Ten Year Treasury is way down at this moment. Currently at 4.367%. In any event.....as usual.....we are seeing outside factors and events rising up and stealing the spotlight from the upcoming NVDA earnings report. Not that it is some sort of conspiracy....but....this seems to happen every time they report. Talk about bad luck for shareholders.
As i said above. Dow, S&P 500, Nasdaq slide as Russia-Ukraine tensions rattle markets https://finance.yahoo.com/news/live...kraine-tensions-rattle-markets-114909511.html (BOLD is my opinion OR what I consider important content) "US stock futures fell on Tuesday as worries about a nuclear escalation to the Russia-Ukraine war rattled markets, stealing focus from Nvidia (NVDA) earnings and other corporate results. Dow Jones Industrial Average futures (YM=F) led declines, down 1.1%, while S&P 500 futures (ES=F) slid roughly 1%. Contracts on the tech-heavy Nasdaq 100 (NQ=F) also dropped 1% on the heels of a mixed day for the major gauges. Stocks are retreating as investors assess news that President Vladimir Putin has signed a revised nuclear doctrine that allows Russia to expand its use of atomic weapons. The changes mean any large-scale aerial attack could prompt a nuclear response, and come just days after President Joe Biden gave Ukraine the go-ahead to use US long-range missiles to strike inside Russia. Ukrain carried out its first such aerial attack in a border region on Tuesday morning. US bond prices climbed alongside gains for the yen (JPY=X), gold (GC=F), and other safe-haven assets as the risk-off trade kicked in. Treasury yields — which move inversely to bond prices — fell, with the 10-year benchmark yield (^TNX) down 5 basis points to around 4.37%. Gold jumped almost 1% to trade at around $2,639 an ounce. The geopolitical situation blotted out themes such as corporate earnings, President-elect Trump's cabinet picks, the path of interest rates, and Wall Street's view of where stocks are headed. Retailers Walmart (WMT) and Lowe's (LOW) posted quarterly reports before the bell, with investors watching out for hints to the resilience of the consumer. Walmart stock popped following a boost to guidance after a strong quarter. Lowe's likewise beat on earnings and revenue, but the DIY giant's shares slipped amid a negative outlook for sales. Meanwhile, the countdown is on to Nvidia earnings on Wednesday, seen as a test of the AI trade that has powered gains on Wall Street. The chipmaker's stock edged higher in premarket trading after getting bruised by a report of overheating issues with its flagship new AI product. Goldman Sachs strategists said they expect outperformance by Nvidia and its "Magnificent Seven" tech megacap peers to narrow next year, in an S&P 500 (^GSPC) forecast setting a 6,500 target by the end of next year. MY COMMENT OK.....politics aside.....WTF is the BIDEN Administration doing. They are the direct cause of this little semi-crises. Who in the world is making these sorts of decisions. I saw the news items this morning showing "President".......?......Biden wandering around in the Palm trees at the G20 meeting and missing the group photo. At the same time you can hear various aids and media people......"where is he"....."what is he doing"......"he is behind the palm tree".....etc, etc, etc. Add this in with what is happening in Russia and you have a potential very serious CRISES. A senile out of touch with reality President, our government being run by who know who, and Russia rattling swords and making nuclear war threats. GEE.......I wonder why the markets are down today. At the same time......we are seeing a typical market overreaction. (see next post)
Yes......to continue. We were seeing a HUGE overreaction in the futures today. At least when the markets actually opened the actual numbers were not anywhere near as bad as the futures. The short term traders are basically a bunch of scared of their shadows....weenies. But they operate totally differently from actual investors or long term investors. So....they have to do what they do or they will quickly get KILLED. From my usual CLINICAL standpoint I dont think we are going to see anything different come from any of this short term news. Although the BIG FEAR is that events will quickly take on a life of their own and spin out of control of Putin and anyone else. Actually now that we have been open for ten minutes......the averages are doing much better than the futures predicted. the DOW is down by 0.79%......the SP500 by 0.43%.....and the NASDAQ by 0.19%. So....as long term investors.....we just sit and watch. AND.......this little dip today will be NOTHING in a longer term chart of the SP500 in few months.
I try to NEVER get all caught up in politics on here......or as an investor. It is just about NEVER a good thing to make investing decisions based on politics and all the BIG DRAMA of the day to day political BS. At this point in my life at age 75......I have seen everything you can imagine in politics and the resulting DRAMA. So it is very easy for me to simply IGNORE IT ALL. Like anyone I have definite opinions....especially when it comes to what is the best course for a successful business economy. BUT.....I NEVER allow factors like the political environment to control or influence my investing. I figure that management at any companies that I own will do whatever they need to do in managing their business in light of whatever the current political situation is. That is why they are paid the big bucks. As long as they are putting up good fundamental numbers in their earnings reports and growing the business........that is ALL I care about.
