August 24, 2023

Nvidia Tops Estimates, Says Sales Will Jump 170% This Quarter

📰 News Organizations

  • Nvidia Tops Estimates, Says Sales Will Jump 170% This Quarter. Nvidia’s performance was driven by its data center business, with $10.32 billion in revenue, which includes AI chips, as cloud service providers and big techs like Alphabet, Amazon, and Meta snapped up next-generation processors.

  • US New-Home Sales Rise to Highest Level in Over a Year. Purchases of new single-family homes increased 4.4% to an annualized 714,000 pace after downward revisions to prior months, government data showed Wednesday.

  • U.S. Business Activity Is Stagnating, Sparking Bond Rally. The contraction in manufacturing worsened, while the services sector—which has powered the economy this year—barely grew. Bond yields fell around 0.1 percentage point as prices rose, a boon for bond bulls.

  • Peloton Shares Drop 20% After Posting Wider-Than-Expected Loss. The company reported a net loss of $241.8 million. Consumers have a tendency to pull back on workouts during the season as they travel and take part in other summer plans.

  • Andreessen Co-Leads $200 Million Investment in Biotech Startup Genesis Therapeutics. Genesis is one of several companies applying AI in an effort to uncover novel medicines and make drug discovery more successful. It says this financing will enable it to launch its first clinical trials.

  • Foot Locker Shares Sink 33% on Dividend Pause, Another Outlook Cut. The retailer will suspend cash dividends beyond a recently approved payout slated for October. Foot Locker is anticipating slower sales as consumers pull back spending on goods in the face of sticky inflation.

🐦 Twitter

  • The housing market is in complete stasis. US MBA home-purchase applications just dropped to the lowest since 1995 as 30-year fixed-mortgage rates climb to a new post-2000 high. Source.

  • Year/year trend in existing home sales continues to improve at margin. Sales still down 17% thru July; worth noting that the month/month trend has not improved yet. Source.

  • As supply tightens and rates rise, affordability is getting even worse. The median sales price of a home in the US is now 560% of the median household income. In 2008, it was 360% of the median household income. This is the least affordable housing market in history. Source.

  • What's next for stocks? Much of that will depend on earnings, which are expected to bottom in Q3. Both Q1 and Q2 showed that earnings growth was less negative than expected—a good sign. Meeting or beating consensus in the quarters ahead will be key for market momentum. Source.

  • Stock market volatility in 2023 has tracked alongside historical seasonality. A continuation of that trend would imply a spike in vol is coming. Source.

We don't have an inventory glut. We don't have toxic loan products. We don't have lots of variable mortgages. What we do have, however, is deteriorated housing affordability—and it's getting worse.

Lance Lambert

📓 Online Publications

  • New Construction Makes Up Record Share of Inventory. Newly built single-family properties comprised a record share of homes on the market in the second quarter of the year, making up nearly one-third of housing inventory nationwide, according to new research from Redfin.

  • Homebuyer Mortgage Demand Falls To Lowest Level Since 1995. As mortgage rates hit new post-pandemic highs on inflation worries, MBA survey finds purchase loan demand down 5% week over week and 30% from a year ago.

  • Mortgage Delinquency Rate Increased Slightly in July. While the national delinquency rate edged up 9 basis points in July to 3.21%, it was down 12 basis points year over year and remains within 12 basis points of March’s record low.

  • VCI Global Stock Surged 113% Wednesday. VCI Global announced that one of its subsidiaries, V Galactech, has collaborated with Microsoft to use its Azure OpenAI platform. VCI Global said it'll also use Microsoft's artificial intelligence technology for its current and new projects.

  • The Monthly Payment for a Starter Home Continues to Tick Up. Using the 7.37% mortgage rate for a 30-year fixed-rate mortgage reported last week, together with a 20% down payment, the monthly payment for a buyer looking for an average U.S. home has now doubled since before the pandemic.

🎧 Podcasts

  • Global Stocks Head For Worst Month In Nearly A Year. This August is turning out to be a terrible month for stocks. Global equity markets have lost about $3tn in value this month, according to data from Refinitiv. One reason is higher interest rates, especially in the US and in Europe. Source(4:24)

  • China’s Rate Caution Shines Light On $56 Trillion Banking System. Despite a lot of gloomy economic data, China made only small cuts to a benchmark lending rate this week. Markets had been expecting more economic stimulus so that China could meet its growth target of 5 percent this year. Source(5:12)

  • Threads Launching on Desktop. The desktop version would address one of the biggest of a long wish list of features users have sought for Threads. A web version of Threads would be useful for Meta in terms of promoting the service across the internet. Source(5:12)

  • Cargo Ship That Runs On Wind. A cargo ship retrofitted with solid wing sails embarked on a trial voyage earlier this week, chartered by food giant Cargill for a journey from China to Brazil. The concept could be a game changer for the shipping industry, which relies primarily on oil-powered vessels. Source(20:30)

  • The US Economy is Experiencing a Goldilocks Situation. With accelerating growth and decelerating inflation for five months, it's set to continue into August. GDP acceleration and a 5.8% growth projection from the Atlanta Fed, suggest a potential third consecutive quarter of re-acceleration. Source(3:34)