Market Briefing For Wednesday, July 26

A 'peaking of the Fed rate-hiking cycle'  is what the market presumes, and I have suggested is the case, whether hiked once more or remain 'paused'. It is unnecessary to expand much more since you know my view about the Fed.

Freepik

Hence, we either get a bit of a rally if they stay 'paused', then sell-off a bit, but then it depends on the Chairman's comments. I can't read Powell's mind, but would hope he's been influenced by the sharp drop in many price gauges, of course which we don't see in real daily life.

Notably Texas Instruments (TXN) talks about weakness in most markets, as well as weakness in China, so aside automotive not much change. That's really ok...better than deep recession talk you hear from super bears. Comments from Google (o.k....Alphabet) and Microsoft similarly are not terribly dour.

Alphabet (GOOGL) also beat revenues, recognizes pressures in the 'search' realm, but generally this is all pretty good as far as not breaking the big-cap leadership. I note that Microsoft Azure was up 26% year-over-year, dynamics are good as I can attest, since our ScreenCast (video Server in Michigan) uses Azure.

Both of these stocks experienced good new profit-taking and then bounced.

 

In-sum: 

A few of such companies are beating numbers because they lowered the bar to achieving them, if you recall prior guidance. Nevertheless, revenue growth for all of them is satisfactory, not great, but not reflecting recession for the most part. This is competent management, however high share prices.

Fed day tomorrow, and there's not much more to say about that.

This has all been a high-level trading range, with no big shift for the S&P as it holds-in pretty good. After the Close Wells Fargo (WFC) announced a big buy-back, it's not a trend I'd like to see resumed, but helps some Bank stocks, while I'm not convinced there's not other simmering regional bank issues out there.

If anything we continue looking or a rough patch for the Senior Averages as a Summer-from-hell (climate change) makes everything complicated (including a degree of worries in yet-to-peak hurricane season, with many self-insuring where they don't have mortgages, since insurance companies left or priced to the max). Some believe that coastal housing in Florida will take a serious hit in the year ahead, not because of general real estate or interest rates, but as most folks who wanted to move here and could pay cash (no mortgage at all) already did so. And that's also why 'rents' are impossibly high for a majority that want to live here but can't afford to buy anything. It's almost as bad as California, maybe worse when you consider most incomes are lower here.

Meanwhile . . . new record high for AEHR Test Systems (AEHR) (our favored pick for 2 years now). Today it is achieved without any news that we're aware of. I'm speculating there may be something brewing, that chatter might be aware of .. probably in Silicon Valley, but not directly as scuttlebutt among investors.

Rallies without news or other influence actually can be favorable, it's likely not a matter of short-covering either, since most of those have been retired before now. So it's probably good. Maybe has to do with the (first?) orders for testing systems related to Photonics. Multiple companies are moving in that direction and AEHR's CEO Gayn has indicated AEHR expects to serve that segment.

Among potential customers heading that way that's already known, include a couple of companies outside of the big Silicon Carbide fabs, but may also be in both. Let's include Intel, nVidia, AMD, TSMC and Global Foundries since all those actually made public announcements regarding product roadmaps. It can involve co-packaged photonics, which i believe means 'integrated circuits with microprocessors', also graphics processors, chipsets for computing and dare we postulate artificial intelligence applications as well.

AEHR has also updated their website, and is hiring a new assistant to CFO, a reflection of growth and expanded compliance requirements as they expand. I think the CFO will build a Team of more staff than what the previous CFO had in anticipation of becoming an Accelerated Reporting Company in part due to achieving 'at least' $100mm in sales, as he outlined in the Conference Call.

Texas Instruments guidance talked of weakness in sectors aside autos, but general favorable views. Sort of a muted outlooks going forward. Not sure how they're business is impacted by the gravitation to EV's, which isn't a huge factor yet, but probably the overall 'digital vehicle' trend helps TXN some. In a sense they have inherent advantages in components, some profit-taking but not significant, after making a 52-week high just earlier today.

 

Bottom-line: 

Today was a fairly stable 'pre-Fed decision' session. Of course I allow for 'trench warfare' after the FOMC decision, and the moves dependent on the tone of the Fed Chairman, but they should be done now.


More By This Author:

Market Briefing For Tuesday, July 25
Market Briefing For Monday, July 24 '23
Market Briefing For Wednesday, July 19

This is an excerpt from Gene Inger's Daily Briefing, which typically includes one or two videos as well as more charts and analyses. You can follow Gene on Twitter  more

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