E Market Briefing For Tuesday, May 18

The internal dynamics of this market are essentially unchanged. After a spooky series of shuffles last week, we see no confirmation of a holiday-seasonal rally or immediate resumption of decline.

However that's likely forthcoming, even though there are technical concerns that remain. So perhaps that's the takeaway from today, nothing resolved as of yet. I did call for a rebound on a couple intraday comments, and we finally got recovery to a good extent late in the day. Expecting more on Tuesday.

It was a rough semiconductor session, in our view that's not a surprise given not just supply shortage issues, but failure of most analysts overlooking an association with Servers used to a degree for 'mining' cryptocurrencies, and ideas that sector may be amply filled with servers, at least for present cycles. Now there are stocks like Texas Instruments (TXN) or even Advanced Micro Devices (AMD), that don't directly produce specialized servers, but their components may be present.

Executive Summary

  • The S&P generally features alternating jabs less than thrusts, as bull/bear skirmishes resume.
  • This should be resolved with temporary strength, albeit skeptically.
  • Fed Vice Chairman Clarida's comments about (again) transitory inflation and more work to be done, actually was not favorably received by stocks.
  • That would be so if markets would rather prefer 'biting the bullet' sooner rather than later, idea being a short-term hit, versus a more serious drop.
  • AT&T (T) merging it's media operations with Discovery Networks, it creates the (likely) world's largest streaming operation, and could ultimately cause an upward multiple valuation on AT&T shares, while short-term there will be a push by bears to press the common lower due to likely dividend cuts if the deal goes through (without much regulatory scrutiny).
  • Shifting cash flow 'could' result in 'resizing the dividend', which is how the CEO Stankey described it, organic growth being prioritized, the shares of course did an 'intraday up-down reversal' based on the 'dividend' issue, of course Stankey now will have an excuse to cut that, but long-term growth is likely better-ensured by this move.
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