smartest-data blog

Combining the Debt Debate with Inflation Stock Markets fall

INFLATION AND DEBT CEILING: STOCKS FALL

The SPY (S&P 500) on Wednesday closed down -0.73%, the DIA (Dow Jones) closed down -0.77%, and the QQQ (Nasdaq 100) closed down -0.50%.

INFLATION

Inflation concerns combined with the stalling of negotiations to raise the U.S. debt ceiling, to place stocks under pressure. On Wednesday, there was no sign of movement in the negotiations. Now this is starting to become serious. Inflation concerns are placing renewed focus on the minutes from the last FOMC meeting on May 2-3.
 
The notes revealed a disagreement among policymakers. This was over the necessity of further interest rate rises. Upside risks to inflation forecasts remained a prominent element influencing the FOMC. Inflation is still far above the committee’s longer-run goal. Further complicating the situation, the labor market remaining tight.
 
Global Bond yields moved higher on Wednesday. Across key bond markets, the yield on 10-year T-notes increased to 3.72%. Yields on the German 10-year bund increased to a 3-week high of 2.47%. The UK 10-year gilt increased to 4.21%.

SEMI CONDUCTOR STOCKS

The decline in semiconductor equities, was driven by Analog Devices. ADI’s stock closed down over -7.0% after it anticipated Q3 adjusted EPS below consensus. Currently the Barchart Technical Opinion is rating ADI as 16% Buy.
 
This is the weakest short term outlook. This was not good news for semiconductor stocks. Additionally, Inuit lost more than 7.0% of its value after reporting Q3 net revenue, below expectations. Revenue projection for the full FY 2023 were lowered.
 
 
Palo Alto Networks, which reported Q3 billings above consensus. This led them to increase the full-year revenue projection. PANW’s stock closed up more than +7%, a bullish sign. The Barchart Technical Opinion rating is an 88% Buy. This is the strongest short-term outlook on maintaining the current direction.
 
Wednesday saw a decline in international stock markets. The Euro Stoxx 50 dropped 1.81% at the close. Shanghai Composite and Japan’s Nikkei Stock Index both ended the day with losses of 1.3% and 0.9.
INFLATION

Subscribe to

BARCHART’S Pick of the day: Kodiak Sciences Inc (KOD)

The 20-50 Day MACD Oscillator for Kodiak Sciences Inc issued a New Buy Signal, with an Entry Price of $6.43.
 
Kodiak Sciences Inc. (KOD). The company is a clinical-stage biopharmaceutical business focused on developing innovative medicines. This is for the treatment of chronic, high-prevalence retinal disorders, the leading cause of blindness.
 
KOD has patented antibody biopolymer conjugate (ABC) technology. This is intended to keep robust and effective drugs in ocular tissues for longer periods of time. Compared to currently available biologic therapies for treating retinal illnesses.
 
Over the last 5-Years, a Buy signal on the 20-50 Day MACD Oscillator for KOD has resulted in a +428% gain. This is compared to a +216% market gain on the stock. The Signal gain is based on 10 trades with an average duration of 80 days.

NVIDIA Corporation (NVDA): Approaching $1tn in Market Cap

NVDA is the inventor of the graphic processing unit, or GPU. The company is the global leader in visual computing technologies. NVDA’s focus has shifted from PC graphics to AI-based solutions. They support high performance computing (HPC), gaming, and virtual reality (VR) platforms. All are strong growth markets. The success of NVIDIA’s GPU can be credited to its parallel processing capabilities.
 
They are supported by thousands of computing cores and are required to perform deep learning algorithms. NVDA’s GPU platforms are helping to establish multibillion-dollar end-markets. These include robotics and self-driving automobiles. The group is now the dominant brand in the Data Center, professional visualization, and gaming areas. The key competitors Intel and Advanced Micro Devices are catching up. A crucial driver is the company’s collaboration with nearly all major cloud service providers (CSPs).

NVDA up around 25%

 NVDA stock rose 24.6% to $380 in After Hours trading on Wednesday. YTD the NVDA stock is up, over 120%, see the graphs. The Q1 results exceeded expectations and NDVA will exceed full year estimates. The demand for generative AI and language models has extended NVDA data center visibility out a few quarters. NVDA has secured a significantly larger supply for the second half of the year. Nvidia executives said during a conference call.
 
“The simplest way to think about it is that over the next ten years, most of that trillion dollars will be essentially generative AI. This will compensate for all the growth in data centers still.”
 
NVDA’s market-cap rise of more than $185 billion, it is fast approaching the $1 trillion mark. Thus NVDA has become more valuable than many major tech stocks such as Meta (META). Advanced Micro Devices (AMD) is up 8.5%. MSFT and GOOGL, also implementing generative AI into their platforms, also climbed. The AI surge propelled Nasdaq futures up over 2% overnight.

An explainion of the present debt ceiling debate and Inflation

The Debt-Ceiling debate refers to the current discussion about how much the US government borrows. Borrowings are to fund its operations and meet its financial obligations. The debt ceiling is a statutory limitation imposed by Congress. This is based on the total amount of outstanding debt that the US Treasury may issue.

inflation

The deficit is financed by the issuing of Treasury instruments such as bonds. When the government spends more money than it receives in taxes this is the deficit. This needs to be funded. The bonds issued by the U.S. Treasury are assets for investors. They are purchased by both domestic and international investors. The government, can only issue debt up to the debt ceiling limit.

THE DEBATE

The debate occurs when the government is approaching or has reached the debt ceiling. Thus additional borrowing, issuing of Bonds is required to fund its operations. At this point, Congress must act to raise or suspend the debt ceiling. After which the Treasury may continue borrowing money and meeting its financial obligations. Funds are required by the government for its programs, salaries, and interest on existing debt.

inflation

The debt ceiling argument is a contentious political topic and no different this time. The discussion involves concerns about government spending, fiscal responsibility, and long-term economic implications. Some believe that raising the debt ceiling is necessary to avoid a potential default on US loans. 

THE ECONOMY AND INFLATION

An event such as this would lead to major economic impacts both in the U.S. and abroad. One key concern is that a failure to raise the debt ceiling will lead to higher borrowing rates. Also a loss of confidence in the US economy, and financial market disruptions. Inflation remains above target and as mentioned above target.

The recent release of the minutes from the last FOMC meeting indicates the internal debate. The notes stated that upside risks to the inflation forecast remained a prominent element influencing the policy outlook, with inflation still far above the committee’s longer-run goal 

FIRST TRADE

BARCHART: TOP STOCKS TO OWN

On a daily basis Barchart issues the list of Top Stocks to Own. The current pricing estimates as of May 25, 2023, Wednesday. The stocks are ranked based on their highest current Signals Rating. Combines signal direction and strength. 
 

PRICE SURPRISES AND VOLATILITY

For 25 May. Barchart lists Price Surprises both upside and downside. This is for volatile stocks, as indicated by standard deviation compared to their past 20 days of data.

STOCK PERFORMANCE LEADERS AND LAGGARS

Stocks below are ranked by Barchart based on the Highest Daily Percentage Change. 

PLEASE CLICK THE LINK TO THE DISCLAIMER
DISCLAIMER

One Response

Leave a Reply

Your email address will not be published. Required fields are marked *

Share this post
Table of Contents

Combining the Debt Debate with Inflation Stock Markets fall

Latest Posts
META (META)
META (META)
wwblog@smartest-data.blog November 8, 2023

FINSCREENER SUBSCRIBE TO FINSCREENER PLEASE CLICK THE LINK TO THE DISCLAIMER DISCLAIMER

Read More
GOOGLE (GOOGL)
GOOGLE (GOOGL)
wwblog@smartest-data.blog November 8, 2023

FINSCREENER SUBSCRIBE TO FINSCREENER PLEASE CLICK THE LINK TO THE DISCLAIMER DISCLAIMER

Read More
Last Video
Last videos
Written by
Warren William

Newsletter

Stay informed and stay ahead in the markets with Smartest Data!

* indicates required
for Telegram Group
Youtube Twitter Linkedin Instagram Patreon

Copyright 2023 - Smartest Data

Warren William

Meet the author behind Smartest-Data. Warren William has a career in Finance and Investments extending over 35 years, both on the Buy Side and Sell Side. His most recent roles include, developing Institutional Risk Management Programs for managing Equity and Fixed Income Risk.  Prior to this Warren William work in Alternative Investments, in Investment Management and as a Buy Side Equity Analyst. Warren William brings a wealth of knowledge and expertise to the table, providing in-depth analysis and commentary on the latest trends in the Stock Markets. Contact information: wwBLOG@smartest-data.blog or Telegram +393339034488

Welcome to
Smartest-Data

Smartest Data aims to be your go-to source for analysis and commentary on Investments, Personal Finance and the Global Stock Markets. The aim is to provide our readers with insightful and actionable information for independent minded Investors.  Dissecting  the daily avalanche of Data produced by the Stocks Market by using data Websites  and Apps available to people at home. Join us, to be Driven by Data to navigate the Investment universe markets and make better informed investment decisions.