Financial News vs. Noise
About as good as you could expect yesterday after all the damage on Tuesday. Especially given some weak economic numbers. This morning starting out flat, which is also to be expected ahead of Friday's jobs numbers. Today's focus will be on US ADP, initial claims, and ISM services.
From Mike O'Rourke on JOLTS......
The economic data point that furthered the flattening of the yield curve today was the lower than expected jobs openings reading in the JOLTS Survey. The 7.67 million job openings were below the 8.1 million forecast. Today's reading was the lowest since January 2021. The JOLTS data is interesting since it lines up directly with the data in the monthly employment report. There are some noteworthy long term trends one can see in the data. Except for the distortions created by the pandemic, the United States has consistently had at least one job opening for every unemployed person in the country since the start of 2018. That JOLTS Openings to Unemployed Person ratio has dropped to 1.07%. Except for the pandemic, that is the lowest reading since April 2018. Another way to look at it is the number of Unemployed Persons is set to surpass the number of Job Openings available.
From UBS this morning.....
Macro is back in the driver's seat with Q2 earnings season in the rearview. US equities remain very macro data-dependent, but more so on the growth side than inflation. We remain in a 'good is good' and 'bad is bad' environment with 25bpcuts already fully priced for September FOMC through year-end. This poses more binary risk, in our view.
Seems to be a lot of talk about Bad really being Bad now. I have a feeling tomorrow's number is going to be really important.
Seems to also be a lot of talk about a September correction, giving me reason to believe we won't have one.
This is a problem. I continue to think the average consumer is hanging on by a thread. If they can't afford Dollar Tree, what can they afford?
Dollar Tree’s stock heads for worst day in 2 decades after a big earnings miss-MarketWatch
“As we have seen for several quarters now, demand from Family Dollar’s core lower income customer remains weak,” said Chief Operating Officer Michael Creedon, according to an AlphaSense transcript of the post-earnings call with analysts.
“Dollar Tree has a broader customer base that includes more middle and upper-income households and beginning this quarter, we started to see inflation, interest rates and other macro pressures have a more pronounced impact on the buying behavior of these customers,” Creedon said.
ASML is a name I hold long term in my AI theme basket. My understanding is that you can't have AI without them. Chart looks kind of ugly lately.....
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On the daily maybe some support around 800. If you zoom out to a weekly there is some support at 750ish. Jefferies came out with some positive comments about it last night.....
Clearly, there have been many new concerns on ASML in recent days which has once again put a lot of pressure on the share price.
We outline below, in detail, why we believe these concerns are unjustified, both on the short term and the longer term outlook for ASML.
Comments yesterday from the CEO at a broker conference also support a strong outlook in our view.
We continue to expect ASML to see revenues at the high-endo f its €30-40bn revenue guidance range in 2025, with strong order in-take in Q3and Q4 this year.
We also expect no new sanction from the US govt in October impacting ASML’s equipment sales to China.
The company is also likely to move up the mid-point of its2025 and 2030 guidance range at its CMD in November.
Based on this we see current share price weakness as an attractive buying opportunity.
The stock is trading at 24.5x 2025 consensus EPS which represents a trough multiple.
Our own EPS forecast for 2025 is around 14% higher.
UBS thinks differently.....
ASML Was a Chip-Sector Darling. Why This Analyst Has Soured on the Stock.-Barron's
Wall Street has generally seen the fall as a buying opportunity, but now the stock is losing a bull in UBS analyst Francois-Xavier Bouvignies. He reduced his price target on ASML’s Amsterdam-listed stock to €900 ($994) from €1,050 previously and lowered his rating to Neutral from Buy.
I think if this stock finds support you want to be buying the dip.
Keep an eye on the VIX....
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If jobs come in strong tomorrow you could see it move back to the 200 day moving average pretty quickly. Remember, the great thing about trading VIX is that it needs a reason to stay elevated. Take that reason away and the bottom falls out pretty quickly.
