My top 10 things to watch Wednesday, Oct. 14
1. The September consumer price index came in a bit hotter than expected: Headline CPI was up 3.7% on an annual basis, and the ex-food and energy core rate was up 2.6%. Bond yields are jumping, stock futures are falling, and odds of a Federal Reserve rate hike later this month are increasing.
2. The flood of bank earnings continues: Morgan Stanley turned a top and bottom line beat this morning, driven by a huge beat in equities trading. Shares aren't doing much. Bank of America missed on revenue and was hit with a $1.2 billion penalty by the Treasury Department over money laundering violations. Shares are off over 4%.
3. The big banks that reported yesterday were all very good in their own way. JPMorgan for scale, Goldman Sachs for making money away from M&A, and Wells Fargo for the integration of investment banking on top of profitable traditional consumer growth, such as auto loans and credit cards. We own Goldman and Wells for the Club and upgraded both stocks yesterday.
4. Can the semis break out of their rut? Lots of negative spillover how SK Hynix trades in Korea into our market. The iShares Semiconductor ETF is riding a six-day losing streak, its longest since May of last year. After these big declines, you typically have a sharp advance. However, better-than-expected results from Dutch lithography machine maker ASML don't appear to be helping sentiment this morning.
5. Club name Micron has been in the blast zone of the chip sell-off, down almost 9% in the past week. Tough to call the bottom. But I like what Elon Musk had to say last night on X: "Micron has been reasonable regarding future memory prices, while others have been extortionate, which is something today's customers won't forget. Micron is making the smart move for long-term customer loyalty."
6. Truist started coverage of Qnity with a buy rating and $170 price target, implying 38% upside to yesterday's close. The analysts said the DuPont spinoff's array of materials crucial to AI chip manufacturing and packaging is "supportive of durable above-market growth." This is what we have been waiting for — more coverage and recognition of this Club name's key role in the semiconductor supply chain.
7. Best days behind Dell? That's essentially what Barclays argued in its downgrade to hold from buy. Also downgraded fellow server maker HP Enterprise, taking a more cautious stance toward hardware stocks. Analysts argued that valuations look full and the boost to revenues from memory prices will start to fade. They also said they're not seeing a meaningful AI inflection yet.
8. Many told us to sell Microsoft. Now they want in? Yesterday, Club name Microsoft finally eclipsed last October's record close. It is up again this morning. In keeping with the software-over-hardware story that has propelled Microsoft, Citi raised its ServiceNow price target to $170 from $154. These enterprise software stocks are so back that you have to wonder whether they aren't the repositories of AI and hardware was a passing phase.
9. Apple shares are extending their gains after yesterday's record-high close. It came on the day that the Club name unveiled its new HomeView smart home hub, featuring Siri AI. Price tag: $299. I went to an incredible Apple showroom and liked what I saw. I still think the main catalyst for Apple is the new iPhone Duo. Preorders for the foldable device open Friday.
10. Jefferies upgraded Brinker International to a buy from hold. The analysts said the Chili's and Maggiano's operator is going from a turnaround to a durable compounding story. Brinker is up another 3% after closing up 4% yesterday. CEO Kevin Hochman has worked wonders for Chili's, and I like his gameplan to keep it going. Jefferies also upgraded Texas Roadhouse to a buy, calling it a "consistent, quality growth story."
