US Chip Tech Ban Threatens Supply Chain

MARKET MOVERS

• US chip tech ban threatens the supply chain. The Biden administration announced new restrictions on China’s access to US semiconductor technology, adding measures aimed at stopping Beijing’s push to develop its own chip industry and advance the country’s military capabilities. The Commerce Department added more names to a list of companies that it regards as “unverified,” meaning it doesn’t know where their products end up being used.

• Google unveils new flagship Pixel phones and its first smartwatch. Google unveiled the full details of its new Pixel Watch, as well as its Pixel 7 and Pixel 7 Pro phones. The Pixel Watch, with Fitbit built in, starts at $349.99. The Pixel 7 phone starts at $599, and the Pixel 7 Pro starts at $899. All are available for preorder today and will hit store shelves on Oct. 13.

• Samsung's profit plunges in the first drop since 2019 as chipmakers feel bite. Samsung forecast on Friday that its operating profit likely plunged 32% in the third quarter of the year as weaker memory pricing and demand hit the technology giant. The forecast profit fall adds further concerns about the chip sector which is facing softer demand amid a weaker global macroeconomic environment. Read more here.

• The US economy adds 263,000 new jobs in September as labor market conditions soften. The unemployment rate fell to 3.5 percent, down from 3.7 percent in August. This came in line with economists’ expectations. Today’s jobs report indicates the job market is chugging along, albeit at a slower pace, as available jobs still outnumber job seekers 1.7 to 1, and employer demand for talent remains elevated. Read more here.

• AMD cuts revenue forecast amid worst slump in PC shipments in years. The chipmaker said it expected about $5.6 billion of sales in the just-ended quarter, about $1.1 billion less than it previously said it was expecting when it issued a subdued outlook in August. Sales in the third quarter are expected to be down 15% from the prior quarter, though up 29% from the year-ago period when the company formally posts results Nov.
  

WHAT TO WATCH

• People are going back to work. Over a million jobs burned off in August. This implies that what the FED is doing and companies doing hiring freezes and cuts is finally having an impact. If we start losing a million jobs, people might actually go back to work. Meanwhile, Lyft and Uber are reporting that the driver shortages are over they no longer have to pay more for people to come back. Source(49:13)

• Peloton slashing 500 more jobs as it races to return to growth. Peloton is cutting another 500 jobs in a move that CEO Barry McCarthy said should position the struggling fitness equipment maker to return to growth. The cuts, which amount to about 12% of Peloton’s workforce, mark a pivot point for the company, McCarthy told CNBC. Peloton already has had multiple rounds of layoffs this year.

• Credit Suisse reduces debt in a display of financial strength. The Swiss lender has recently experienced sharp slides in its share price and said it will buy back $3 billion in senior bonds. It is putting its money where its mouth is after briefing about the strength of its finances last week. On Thursday, it was reported that it is looking for an outside investor to help fund a spinoff of parts of its investment bank. Read more here.

• Single-family rents are cooling, says Rick Palacios Jr. He is wondering how much of that is due to 'shadow supply' hitting the rental market. By shadow supply I mean fix/flip deals now broken, so renting becomes the exit. Many short-term rentals are likely not performing to plan, so repositioning as full-time rentals, etc.

• Google to open the first data center in Japan in its latest cloud push. The new data center will be based in Inzai City, Chiba, according to a blog post by Sundar Pichai, chief executive of Alphabet and Google. He said the data center was part of local infrastructure investment worth $730 million from 2022 through to 2024, as he visited Japan and met Prime Minister Fumio Kishida.