Tuesday Talk: Big-Tech Under Attack

On Thursday the Justice Dept. filed an antitrust suit against Apple. The suit joins two others already filed against Google. How much this will affect the market in the long run is up for grabs, but it did bring the market down a bit on Monday.

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Yesterday the S&P 500 closed at 5,218, down 16 points, the Dow closed at 39,314, down 162 points and the Nasdaq Composite closed at 16,384, down 44 points.

Chart: The New York Times

Most actives were led by Tesla, (TSLA), up 1.1%, followed by Advanced Micro Devices, (ADM), down 0.6% and Micron Technology, (MU), up 6.2%.

 

In morning futures trading, S&P 500 market futures are up 16 points, Dow market futures are up 61 points and Nasdaq 100 market futures are up 83 points.

Contributor  Lallalit Srijandorn  looks at crude oil prices in WTI Gains Ground Near $82.00 Amid Weaker US Dollar, Supply Concerns.

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"Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around $82.00 on Tuesday. WTI prices edge higher amid the weaker US Dollar (USD) and the renewed geopolitical tensions in the Middle East and Eastern Europe, which fuel fears of supply disruption. 

The escalating geopolitical tension in the Middle East, combined with a rise in attacks on energy facilities in Russia and Ukraine, raised fears over global oil supplies and lift WTI prices. Disruptions to oil refineries in Russia were caused by Ukraine's recent attacks on Russian oil infrastructure, with at least seven refineries attacked this month alone. This increases the demand for available crude oil shipments. Analysts estimated that these disruptions affected around 12% of Russia's total oil processing capacity...

Oil traders will keep an eye on the US Consumer Confidence by the Conference Board, Durable Goods Orders, and the FHFA’s House Price Index, due on Tuesday. Later this week, the US Gross Domestic Product Annualized (Q4) will be released on Thursday. The US February PCE data will be published on Friday. These events could significantly impact the USD-denominated WTI price. Oil traders will take cues from the data and find trading opportunities around WTI prices."

TalkMarkets contributor Rod Raynovitch gives readers a snapshot of biotech and healthcare stocks in Biotechnology And Healthcare, A Bit Of A Lull.

  • "Strong momentum of Tech and Chip stocks may be too good of a distraction for biotech investors.
  • New therapeutic themes for 2024 are neuroscience and psychedelics.
  • Core positions in neuroscience are ABBVLLY, and SUPN."

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"The rally is broadening which is a good sign. Healthcare was flat with the XLV stalled at $145.44 but up 6.64% YTD. The IBB was down 0.24% and is flat YTD up only 0.24% at 136.24. And despite a slight uptick the XBI quickly faded and was down 1.12% to 93.56, but is for now holding the SMA 50 line.

With large cap technology companies under fire from governments like the “Digital Marketing  Act ” in Europe investors may shift their focus to more defensive areas like healthcare.

We have explored small cap trades in a list of momentum stocks picks with the idea that a few big winners would emerge with longer term prospects. We have several winners but the volatility causes us to trade too often for short term gains...

No major themes have emerged for biotechnology other than blockbuster drugs for weight loss and diabetes from Eli Lilly with Mounjaro and Ozempic from NovoNordisk. So we want to discover new market areas that are poised for scientific breakthroughs in 2024. The neuroscience area has been targeted because of the huge market potential and costs of treating neurodegenerative diseases like Alzheimers’s (AD), Migraines, Parkinson’s, and Depression. And investors are still hopeful as you can see from two of the major stocks focused in this area: Biogen (BIIB) and Eli Lilly (LLY); we have written about Abbvie’s (ABBV) major investments through the pending $8.7B acquisition of Cerevel Therapeutics (CERE) with a clinical pipeline for treatment of psychiatric disorders and Parkinson’s Disease. Abbvie has raised about $13B with a bond issue to fund R&D and recent acquisitions.

According to various market research reports the psychedelic drug market will open up with draft guidance on clinical trials last year from the FDA. The market is expected to grow from around $5B in 2023to $12B by 2029. But only two States have a legal framework to provide psilocybin services and Federal Law has no path for legalization."

See Raynovitch's full article for additional news and company results.

Contributor Bill Conerly writes how Artificial Intelligence is affecting the economy in AI Implementation In Business: Lessons From Diverse Industries.

"Artificial intelligence has been introduced to companies around the world, with some good results and some waste of resources...

One great example that McKinsey and I both have highlighted typifies large benefits that can be quickly implemented. Our specific case is AI-powered healthcare scribing, but managers in other industries can also benefit from the concept. Doctors and nurses use electronic medical records to document patient visits as well as to access information such as past visits and test results. Writing up visit summaries is a time-consuming and tedious task performed by high-paid workers. AI tools can listen to a conversation and prepare a summary in the appropriate format. (This works best when the doctor gets into the habit of speaking out loud the signs, such as “your lungs sound clear.” The practitioner then reviews and edits as appropriate, usually in a fraction of the time that would have been needed to write the visit summary..."

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"Large language models have led to imaging innovations, with business applications starting to arrive. In consumer sales, someone might take photos of a living room and use AI to add a black leather couch to see how it would look in that particular location. Or a new home might be visualized with a prospective buyer’s own furniture. The backyard might be imagined with the maple tree having grown 20 feet higher. A kitchen window’s view could be shown at 9:00 am on a winter morning.

Retailers might record how customers walk through a store, then visualize paths with different displays and fixtures. Visualization will increasingly be used in a wide variety of applications...

An important fact for everyone working with consumers. “… every customer gives tells. They drop digital breadcrumbs of things they like and don’t like when they bounce off of the page of a dot-com when they’re shopping; when they abandon a cart; when they return less frequently to search; when they arrive on a page only to check a single itinerary on a single day, on a single fare, rather than browsing for 20 minutes.” That has enabled websites to serve up ads to likely buyers, but it could also empower consumers themselves to use an app with access to all of their information—not just browsing history, but also credit card statements, emails, and calendar items—to get better buying options...

Business leaders looking for opportunities to serve customers better, at lower costs, should browse widely through AI applications in a number of industries and business functions."

The full article highlights additional use of AI applications for businesses.

TM contributor Sam Ro discusses How Rising Productivity Is Helping Boost Margins, Growth, And Valuations.

"According to BLS data released recently, labor productivity increased by 3.2% in the fourth quarter of 2023, the third straight quarter of gains. During the period, output increased by 3.5% while hours worked increased by just 0.3%..."

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The boom in new business formation may be another reason why productivity is improving. According to monthly Census Bureau data, business applications and formations have been trending significantly above pre-pandemic levels.

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Source: Census

Some of the world’s most successful businesses were started by entrepreneurs who cut their teeth at legacy companies, only to leave because they saw an opportunity to execute more efficiently. And poorly managed, unprofitable businesses tend to lay off workers, while better-managed, profitable ones tend to hire. There’s also the rapid uptake of Artificial Intelligence (AI) technologies.

Overall, there isn’t a single metric that does a great job of explaining the state of productivity in the economy. Part of the issue is there are so many ways to think of productivity conceptually. As such, improved productivity manifests in many forms."

To close out today's column we turn to TalkMarkets contributor Marcus Lu who maps Unemployment Claims By State.

"Unemployment claims per 100,000 people is a handy metric for gauging the health of the job market. Generally speaking, a higher number of claims suggests that more people are unemployed, which may highlight issues with the economy.

In this graphic, we’ve visualized the number of weekly initial unemployment claims per 100,000 people in the labor force across the U.S., using data from WalletHub. All figures are for the week ending Feb 26, 2024, with data being released in early March.

Across the country, there are 6.1 million Americans unemployed as of end of February, resulting in a national unemployment rate of around 3.9%. Notably, this is the highest figure seen since January 2022.

For further context, we can examine the change in unemployment claims by state for the period of Jan 1- Feb 26, in 2024 and 2023.

States that saw the biggest rise over this period were New York, New Jersey, and Nevada. A top 10 list can be found below.


From a broader perspective, weekly initial claims for unemployment insurance across the U.S. have hovered around the low 200,000s in 2024. This is generally in line with figures seen prior to the COVID-19 pandemic.

In the week of April 4, 2020, unemployment claims spiked to 6.137 million due to COVID-related lockdowns and business closures."

See the full article for more details.

That's a wrap for today.

Have a good one.

Peace.


More By This Author:

Thoughts For Thursday: The Fed Is In The House
Tuesday Talk: Still Talk Of The Town - Inflation
Thoughts For Thursday: 5,000 And Beyond

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