Traders work on the floor of the New York Stock Exchange on Sept. 26, 2023.
Brendan McDermid | Reuters
My top 10 things to watch Wednesday, Oct. 4
1. So much swirling in the markets right now. The tyranny of the 10-year Treasury. The break in the ranks for Apple (AAPL). The declining price we are paying for earnings estimates. The questionable role of oil in bonds. The short squeeze in bonds that doesn’t occur because there is too much supply. The questionable motives of those who say the yield on the 30-year Treasury must go to 6%. The awaited Moody’s downgrade if the U.S. government does shut down in November. The most oversold moment since March when we bounced hard, led by the mega-caps.
2. Apple (AAPL) downgraded by KeyBanc to hold from buy. Could this be the catalyst for a clearing event for the mega-caps? Analyst cites Apple trading near all-time-high multiples and a large premium to the Nasdaq historically.
3. BlackRock (BLK) price target lowered to $720 from $820 at Wells Fargo because of a possible decline in assets under management, but remains bullish on the company.
4. Mortgage applications decreased 6% from a week ago, down 22% from last year, to the lowest level since 1996. The average 30-year fixed mortgage jumped to 7.53% from 7.41% (and going higher). Housing stocks are too low. Private payroll growth declined sharply in September, according to an ADP report this morning.
5. Halliburton (HAL) has been going down so of course the bulls must support it. Citi raises to $46 from $42. Looking for expansion in margin. Of course, that won’t happen if crude is done going higher as the oil companies aren’t expanding drilling.
6. Kenvue (KVUE), the spin-off of Johnson & Johnson (JNJ) has been destroyed. JPMorgan cuts its price target to $26 from $29 — stock is at $20. However, analysts say the company’s strategies are good and keeps a buy rating.
7. Here’s one the analysts simply won’t let go of: Block (SQ), the ultimate fin tech stock. Despite taking its price tag from $65 from $90 because of a host of errors and mistakes and an uncooperative bond market, Citi analysts still keep it as a buy. That makes no sense whatsoever.
8. Intel (INTC) plans to turn its programmable chip division into a standalone business. The unit was created out of the company’s acquisition of Altera in 2015. I regard this as desperate. Intel paid $16.7 billion for this company, which creates chips on the higher end of most Intel chips. AMD paid $49 billion for competitor Xilinx to diversify away from PC and data center in 2022, so Intel should get a lot of money for the division, but at what price to the company? Or are they just showing that acquisitions Altera and Mobileye (bought in 2018) are worth a great deal more than people realize.
9. Automaker numbers are strong — selling an estimated 3.9 million new cars and trucks in the third quarter, up 17% over last year — and they still have plenty of inventory. Why not say take it or leave it to the UAW?
10. Oppenheimer says Netflix (NFLX) could hike prices on its ad-free plans sooner than expected, which should drive more revenue. Will anyone care? Oppenheimer always like Netflix.
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