Market

The yen surged to its highest level since the beginning of the year, driven by both domestic and international catalysts.<figure class="image"><img src="https://infofinance-prod.s3.ap-southeast-1.amazonaws.com/avatar1726027023729_17260270245711251014582_ae15967b75.webp" alt="avatar1726027023729-17260270245711251014582.webp"></figure>The yen reached its highest level since the beginning of the year against the dollar on Wednesday (Sept. 11) as U.S. presidential candidates Kamala Harris and Donald Trump began their first debate.As a result, the yen rose 0.68% to 141.5 yen per U.S. dollar, marking its highest level since January 2.The yen's appreciation comes as traders anxiously await the release of the August Consumer Price Index (CPI) in the U.S., which is set to be published the same day. This inflation metric could serve as a key indicator of the Federal Reserve's potential interest rate cuts during its policy meeting on September 17-18.Another driving factor behind the yen's rise was comments from Bank of Japan (BOJ) official Junko Nakagawa. On Wednesday, Nakagawa emphasized that the BOJ would continue to raise interest rates if the economy and inflation perform as expected by the central bank.Shoki Omori, a strategist at Mizuho Securities, noted that Kamala Harris appeared more confident during the debate and laid out clear economic policies.“This has eased market pressure, weakening the U.S. dollar. However, it's still difficult to predict how the dollar will behave depending on which candidate wins,” Omori said.The yen also gained strength from the BOJ official’s remarks, Omori added, citing Nakagawa's statement that “real interest rates are still low, so there is plenty of room to tighten policy.”The market anticipates that the Fed may ease policy for the first time in over four years on September 18, though traders remain divided on the extent of the cut. According to LSEG's calculations, federal funds futures suggest a 69% chance of a 25-basis-point cut and a 31% chance of a 50-basis-point cut.

The yen surged to its highest level since the beginning of the year, driven by both domestic and international catalysts.

Former President Trump and Vice President Harris Debate, BOJ Signals Interest Rate Shift, Yen Hits 8-Month High

The Federal Reserve is widely expected to cut interest rates for the first time in four years Wednesday and outline the path for future rate cuts.Investors have been hoping for a larger half-percentage-point cut versus a quarter-point cut. Traders, in recent days, have increased their wager that the central bank will cut by a deeper 50 basis points. Wednesday morning, Fed funds futures were pricing in a better than 60% chance the Fed cuts by 50 basis points, up from just 15% odds a week ago.“The Fed cutting by 50 basis points is a real possibility,” said Wilmer Stith, bond trader for Wilmington Trust, who just last week thought it was more likely the central bank could cut by 25 basis points. He’s on the fence, though, as to whether it actually happens.Ahead of the blackout period, which started Sept. 7, comments from Fed officials indicated they are more likely to trim their benchmark interest rate by a quarter percentage point. That would mean a new range of 5.0-5.25% from its 23-year high of 5.25% to 5.5% when their policy meeting concludes this afternoon.<figure class="image"><img src="https://infofinance-prod.s3.ap-southeast-1.amazonaws.com/1_94d857c1b7.webp" alt="1.webp"></figure>Either way, the Fed’s actions will officially mark the termination of the most aggressive inflation-fighting campaign since the 1980s. The rate cut will mark the first in a series of cuts, with intense focus on the Fed’s new interest rate projections, known as the so-called dot plot, for how many rate cuts officials see for the remainder of this year and next.<h2 style="margin-left:0;">Rate debate</h2>JPMorgan chief economist Michael Feroli is one who believes the Fed needs to cut by a bigger amount.“What the Fed should do is clear: Recalibrate the policy rate 50 basis points lower to adjust for the shifting balance of risks,” said Feroli.As inflation has continued a slow downward descent, officials are turning more attention to the job market, which has weakened, with Fed Chair Jay Powell pledging to do everything to maintain a strong job market.Feroli sees a 50 basis point cut Wednesday, with guidance for two 25 basis point cuts at the last two meetings of the year.But former Kansas City Fed president Esther George expects a quarter-point cut with the potential for Powell to lay the groundwork for deeper cuts in subsequent meetings.Who's right? We'll see, of course. But it could take a lot to form a consensus around the FOMC table to vote unanimously for a 50 basis point cut.Some of the committee members, including Fed governor Michelle Bowman, Atlanta Fed president Raphael Bostic, and Philadelphia Fed president Patrick Harker, had indicated that starting with 25 basis points made sense and they weren’t alarmed by the cooling in the labor market.In contrast, in Jackson Hole in late August, Powell struck a dovish stance with comments that indicated he could be in favor of a 50 basis point cut, saying the Fed “will do everything we can to support a strong labor market as we make further progress toward price stability.” He noted that the Fed does not "seek or welcome further cooling in labor market conditions" and that the current level of the policy rate gives the Fed “ample room” to lower rates in response to any weakening in the job market.<figure class="image"><img src="https://infofinance-prod.s3.ap-southeast-1.amazonaws.com/2_a377d98cbe.webp" alt="2.webp"></figure>In any case, Powell will have to explain the interest rate decision and projections in the press conference following the meeting. He'll either set expectations for deeper, more aggressive cuts or say the Fed is expected to take a measured, gradual approach and is prepared to take more aggressive action if warranted.Lots of changes to the language in the Fed’s policy statement are also expected to reflect the Fed’s decision to start a rate cutting cycle, including that officials have gained confidence inflation is falling sustainably to their 2% target, that officials are more focused on weakness in the labor market now, and that the timing and size of future cuts will depend on the data.In addition to their policy decision and interest rate projections, Fed officials will also release forecasts for unemployment, inflation, and the economic outlook. Fed Chair Powell will hold a press conference at 2:30 p.m. ET.

The Federal Reserve is widely expected to cut interest rates for the first time in four years Wednesday and outline the path for future rate cuts.

Fed officials set to cut rates for the first time in 4 years

The U.S. Secret Service said on Monday it was aware of a post by billionaire Elon Musk on the X social media platform musing about an absence of assassination attempts on President Joe Biden and Vice President Kamala Harris.Musk, who owns the platform, formerly known as Twitter, put up the post after a man suspected of planning to assassinate Republican former President Donald Trump at his golf course in West Palm Beach was arrested on Sunday.<figure class="image"><img src="https://infofinance-prod.s3.ap-southeast-1.amazonaws.com/1_76f7a48b88.jpg" alt="1.jpg"></figure>A Trump supporter and the CEO of Tesla, Musk wrote on Sunday: "And no one is even trying to assassinate Biden/Kamala," a post he ended with an emoji of a face with a raised eyebrow.He was quickly criticized by X users from the left and right, who said they were concerned his words to nearly 200 million followers could incite violence against Biden and Harris.Musk deleted the post but the Secret Service, tasked with protecting current and former presidents, vice presidents and other notable officials, took notice."The Secret Service is aware of the social media post made by Elon Musk and as a matter of practice, we do not comment on matters involving protective intelligence," a spokesperson told Reuters in an email. "We can say, however, that the Secret Service investigates all threats related to our protectees."The spokesperson declined to specify whether the agency had reached out to Musk, who seemed to suggest in follow-up posts that he had been making a joke."Well, one lesson I've learned is that just because I say something to a group and they laugh doesn't mean it's going to be all that hilarious as a post on X," he wrote. "Turns out that jokes are WAY less funny if people don't know the context and the delivery is plain text."Harris, a Democrat running against Trump in the Nov. 5 presidential election, issued a statement on Sunday night as did Biden expressing relief and gratitude that Trump had not been harmed and condemning political violence.The White House criticized Musk for his post."Violence should only be condemned, never encouraged or joked about. This rhetoric is irresponsible," White House spokesperson Andrew Bates said on Monday. &nbsp;

The U.S. Secret Service said on Monday it was aware of a post by billionaire Elon Musk on the X social media platform musing about an absence of assassination attempts on President Joe Biden and Vice President Kamala Harris.

US Secret Service says it is aware of Musk post about Biden, Harris

<h2 style="text-align:justify;">Goldman Sachs Group (GS) Company Description:</h2>Founded in 1869, Goldman Sachs Group, Inc. is a leading global investment banking, securities, and investment management firm. The company provides a range of financial services to clients including corporations, financial institutions, governments and individuals. The company operates through four segments: Investment Banking, Global Markets, Asset Management, and Consumer &amp; Wealth Management.<figure class="image"><img src="https://infofinance-prod.s3.ap-southeast-1.amazonaws.com/pic_1_1_493c512ecb.png" alt="pic 1"></figure><h2 style="text-align:justify;">Analyst’s ratings</h2>Morgan Stanley analyst Betsy Graseck maintained a Buy rating on Goldman Sachs Group (GS – Research Report) today and set a price target of $553.00. The company’s shares closed last Friday at $478.99.Graseck covers the Financial sector, focusing on stocks such as Goldman Sachs Group, Bank of New York Mellon Corporation, and Citigroup. According to TipRanks, Graseck has an average return of 3.1% and a 46.77% success rate on recommended stocks.Goldman Sachs Group has an analyst consensus of Strong Buy, with a price target consensus of $531.13, implying a 10.89% upside from current levels. In a report released on September 10, KBW also maintained a Buy rating on the stock with a $530.00 price target.The company has a one-year high of $517.26 and a one-year low of $289.36. Currently, Goldman Sachs Group has an average volume of 2.21M.<h2 style="text-align:justify;">Is GS a Buy Right Now?</h2>Analysts remain bullish about GS stock, with a Strong Buy consensus rating based on 13 Buys and four Holds. Over the past year, GS has surged by more than 40%, and the average GS price target of $531.69 implies an upside potential of 12.8% from current levels.<figure class="image"><img src="https://infofinance-prod.s3.ap-southeast-1.amazonaws.com/pic_2_1_6aaff8e96b.png" alt="pic 2"></figure>tipranks

Goldman Sachs Group (GS) Company Description:

Goldman Sachs Group (GS) Gets a Buy from Morgan Stanley

Investors are playing defense ahead of the Federal Reserve’s looming interest-rate decision.They are piling into corners of the market that are considered safety plays, after a roaring first half powered by big technology stocks.<figure class="image"><img src="https://infofinance-prod.s3.ap-southeast-1.amazonaws.com/1_5cc3d2e280.jpg" alt="1.jpg"></figure>Shares of real-estate, utilities and consumer-staples companies are among the best performers to start September. Gold prices are hitting fresh all-time highs, and government bond yields are near their lowest level of the year as prices have risen.“It’s really been something to see,” said David Bahnsen, chief investment officer at the Bahnsen Group, of the rotation into defensives.Questions about the health of the U.S. economy, the magnitude of coming interest-rate cuts and the November presidential election have given some investors pause.Wednesday’s inflation report did little to ease the concerns. Core inflation, which excludes volatile food and energy costs, came in slightly higher than expected.Markets have struggled to find their footing since early August when some of Wall Street’s most popular trades unwound and data suggested the labor market might be cooling too quickly. Major indexes have been prone to sharp one-day swings, though the S&amp;P 500 is down just 1.3% from its July record and is up 17% for the year.Some of the shine has come off the Magnificent Seven group of big tech stocks. Nvidia, for one, has tumbled about 5% since Aug. 28 when it reported quarterly earnings and sales that more than doubled—a pace of growth that slowed from the turbocharged clip over the past year.The recent reordering of the market’s winners and losers has the utilities sector neck and neck with tech as 2024’s best performing group in the S&amp;P 500. Both are up more than 20%.The Fed is widely expected to begin easing interest rates at its meeting next week. Investors say the surprise in core inflation strengthens the case for a quarter-percentage point rate cut over a more aggressive half-point reduction.&nbsp;Interest-rate futures suggest the odds of a bigger rate cut are now about 31%, according to CME Group, down from 40% a week ago.With rates set to fall, that could make the chunky dividend yields on defensive stocks look more attractive. The real-estate sector of the S&amp;P 500 boasts a 3% yield, followed by utilities at 2.9% and consumer staples at 2.2%.“If you’re going to buy something that might have upside from an equity perspective, but it’s also going give you money to sit and wait, it’s not a bad place to do it,” said Mark Hackett, chief of investment research at Nationwide. “The yield doesn’t hurt.”Bank of America strategists suggested this week that the utilities and real-estate sectors will be beneficiaries in a lower-rate environment because of their dividends and encouraged clients to boost their exposure to utilities.Shares of real-estate, utilities and consumer-staples companies are seen as defensive plays because customers give priority to meeting rent, paying gas and electric bills and buying household goods, even when they trim other spending.Gold prices have hit repeated all-time highs since March. They have been boosted by demand for safe-haven assets. Plus, lower rates make gold, which pays no income, more attractive relative to assets such as stocks and bonds that pay dividends and interest. Gold prices are up 25% this year, outpacing the S&amp;P 500.The benchmark 10-year Treasury yield settled Thursday at 3.679%, the third-lowest level of 2024.&nbsp;Bond yields fall as prices rise, and investors tend to flock to the safety of U.S. Treasurys during periods of market unrest.Meanwhile, the S&amp;P Global Investment Manager Index’s risk appetite reading has fallen to its lowest level since May 2023. The monthly survey, based on data from about 300 institutional investors, found they are fretting about valuations, along with political uncertainty and recession risks.Stocks still look expensive historically. The S&amp;P 500 is trading at 21 times its expected earnings over the next 12 months, versus its 10-year average of 18.For now, the question for markets remains whether the surge in defensive assets is a blip or the start of a new market regime.“We’ve gone through a few of these headfakes, but we think this one is real because rates are going to start coming down,” said Emerson Ham III, senior partner at Sound View Wealth Advisors. “If you get a rally where you’ve got defensive names doing well but also technology performing on a fundamental basis, that’s kind of the best of both worlds.” &nbsp;

Investors are playing defense ahead of the Federal Reserve’s looming interest-rate decision.

Investors Adopt Defensive Crouch Ahead of Fed Rate Cut

Former President Donald Trump went into sales-pitch mode immediately after Tuesday night’s debate, walking into the spin room to extol his own performance, crowing on Fox News and going on a late-night posting spree to hype unscientific online polls that he said showed he had crushed Vice President Kamala Harris.<img src="https://infofinance-prod.s3.ap-southeast-1.amazonaws.com/0e5adebc198edbd34100931ac538ee41_28d896ebdb.webp" alt="0e5adebc198edbd34100931ac538ee41.webp">“That was my best Debate, EVER, especially since it was THREE ON ONE!” Trump posted on Truth Social, minutes after the debate ended, referring to the two ABC News moderators.Trump was insisting the same things privately to advisers and allies in the hours after the debate, according to three people with direct knowledge who spoke on the condition of anonymity to describe the private conversations. Trump appeared jubilant, as if he truly believed what he was telling them, the three people said.But Trump’s actions after the debate told another story.In the lead-up to his debate with President Joe Biden in late June, Trump’s aides suggested that he might want to go into the spin room afterward. But he rejected the idea, and after his triumphant performance that night he felt no need to enter the spin room, understanding that his victory over the enfeebled president was so comprehensive that he could sit back and watch the press tear Biden apart.His aggressive spinning Tuesday night and Wednesday morning appeared to be an unspoken acknowledgment that his performance was suboptimal.The day after Trump’s debate with Harris, his aides and his allies were largely echoing his praise of his performance in public, but privately several conceded that the former president had a rough outing, in stark contrast to his more controlled appearance against Biden.An exception was the recent Trump endorser Robert F. Kennedy Jr.“Vice President Harris clearly won the debate in terms of her delivery, her polish, her organization and her preparation,” he said on Fox News on Wednesday, adding that while Trump “wins” on substance, “he didn’t tell that story.”Some of his allies chose to publicly blame his debate preppers instead of Trump himself. And yet at the same time, the supporters who are close to him were also of the hope that one bad night would ultimately not amount to much for an unpredictable, norm-busting presidential candidate who has had dozens upon dozens of bad nights over the past nine years.His advisers began to brace for a wave of negative news coverage immediately after the debate, and for this to perhaps result in a temporary, modest polling boost for Harris. Some are expecting days of bad news cycles instead of a period of momentum in which they had planned to hammer Harris for her liberal record and connection to Biden.The Harris campaign immediately embraced a second debate. Trump was more circumspect.“The reason you do a second debate is if you lose — and they lost,” Trump told Fox News’ Sean Hannity on Tuesday night after the debate. By Wednesday, Trump was lashing out at ABC News. “They ought to take away their license for the way they did that,” he said in another Fox News appearance. He mused instead about which moderators from Fox he would find acceptable to host a second debate.Few if any of Trump’s close allies and advisers share his purported view of his performance against Harris, though it is unclear how honest they have been with him so far. When Trump asks, “What do we think?” — as he did repeatedly to people he spoke to overnight and on Wednesday — the easiest response has been to tell him that he was great. And many took that path of least resistance.Trump will most likely receive some of his toughest feedback through the television, even on what would normally be friendly shows. While some Fox News opinion hosts, such as Jesse Watters, hunted for the positives in Trump’s performance, many of the commentators on the network Wednesday morning did not offer glowing reviews.“The moderators didn’t fact-check her, but there’s no reason he can’t do it,” former Rep. Trey Gowdy, R-S.C., said on Fox News.Sen. Lindsey Graham, R-S.C., praised Trump on social media after the debate for making the case that America was safer under his administration. But in the spin room afterward, according to Politico, Graham was clearly disappointed, outlining what he wished he had heard: “What I was hoping for was: ‘When I left we had the most secure border in 40 years, mortgage rates were below 3%, gas was $1.87, the Abraham Accords, energy independent, you screwed it all up.’”Several Trump allies and advisers who spoke to The New York Times on the condition of anonymity said they saw the night as a colossal missed opportunity. He had one overriding goal for the evening: to force Harris to own her liberal policy record and to attach her in voters’ minds to the most unpopular aspects of the Biden-Harris record. Instead, he found himself defending many of his decisions and past positions, while spreading unfounded claims about immigrants’ eating pets.Asked to comment, Karoline Leavitt, a Trump campaign spokesperson, said the former president went to the spin room “because he’s fearless and unafraid to take questions from reporters, unlike Kamala Harris,” and knocked her for not giving one-on-one interviews or holding news conferences.She added that Trump “strongly drove home” his message that Harris was “responsible for the problems we are facing today,” a point Trump rarely made Tuesday night. And she insisted that Trump’s advisers “could not be more proud” of Trump “for delivering a masterful debate performance in a three-on-one fight,” accusing the ABC News moderators of ganging up on the former president.Trump’s advisers and allies had hoped he would turn every question Tuesday night back to Harris’ incumbency, asking her why she hadn’t accomplished her plans in the 3 1/2 years she has served alongside Biden. His aides felt good about how he had performed in his prep sessions. One person briefed on the sessions said before the debate that he expected Trump to ask the television audience a version of the devastating question that Ronald Reagan posed in his 1980 debate with President Jimmy Carter: Were voters better off now than they were four years ago?Yet Trump waited until the end of the debate to deliver a version of that argument, seeming to recall his key objective for the night only during his closing statement. He repeatedly took Harris’ bait, getting caught up on personal grievances like the size of his crowds, the dollar amount of his family inheritance and whether he won the 2020 election that he lost.In his debate prep sessions, Trump’s advisers suggested “pivots” for many of the lines of attack that came up Tuesday night. These were typically responses that would turn the focus back to Harris’ partnership with Biden and their joint stewardship of the economy and immigration. But instead of using those pivots, Trump snagged himself on every trap that Harris laid out for him.The question now for Trump and his aides is how to move ahead with eight weeks left in the race.He went to a memorial ceremony for the 9/11 terrorist attacks in New York on Wednesday, shaking hands again with Harris and appearing to greet her cordially. He later visited a fire station, bringing along Laura Loomer, the right-wing provocateur who also traveled on his plane to the debate and who last year shared a video on social media calling 9/11 an “inside job.” Loomer, who has advanced the pet-eating story line, posted conspiratorial questions Wednesday about Harris’ earrings.In the past, when he has faced similar moments of self-inflicted peril, Trump has tried to change the subject with an outlandish gambit or a campaign shake-up. He has publicly defended his campaign leadership but his recent empowerment of Corey Lewandowski to a senior role in the campaign has already caused friction within Trump’s team. Lewandowski, who was fired as his 2016 campaign manager, is known for having sharp elbows and encouraging a “let Trump be Trump” approach.It’s unclear whether there will be any changes to the campaign’s approach — or to his own approach — after Tuesday.After a disappointing performance, Trump typically casts around for others to blame. But at no point during his debate prep sessions was Trump advised to get hung up on responding to jabs about the size of his inheritance or over wild rumors about Haitian migrants’ eating pets, a person with knowledge of the sessions said.Readied for a tough stretch, his advisers now hope he can turn his focus back to the economy, with plans to hold events to highlight the high cost of living under the Biden-Harris administration and to compare it with the much lower prices before the coronavirus pandemic when Trump was in office.Trump is following the debate with a West Coast swing that includes one of his busier fundraising stretches. He will travel to Tucson, Arizona, on Thursday afternoon for a campaign speech billed as focused on the economy and housing, will hold a news conference at his golf course near Los Angeles on Friday morning and then a rally in Las Vegas that evening. In between the campaign events are a series of fundraisers, including in Los Angeles on Thursday night and in Silicon Valley on Friday afternoon.One remaining question is whether Trump will debate Harris again. In 2020, the former president pushed his disastrous first debate with Biden out of the news in part because he contracted COVID and wound up hospitalized. But he also stabilized his standing with a stronger second debate in October.

Former President Donald Trump went into sales-pitch mode immediately after Tuesday night’s debate, walking into the spin room to extol his own performance, crowing on Fox News and going on a late-night posting spree to hype unscientific online polls that he said showed he had crushed Vice President Kamala Harris.

Trump Says He Had a Great Debate. His Allies Privately Say Otherwise.

<ul style="list-style-type:disc;"><li style="text-align:justify;">August inflation was cooler than expected, setting up the Federal Reserve to cut rates next week.</li><li style="text-align:justify;">Nvidia should benefit from lower interest rates, as it will help its valuation and encourage economic growth and investment in AI infrastructure.</li><li style="text-align:justify;">One news outlet said Nvidia could get permission to export its chips to Saudi Arabia.</li></ul><h2 style="margin-left:0in;text-align:justify;">Good inflation news and other factors drove Nvidia up today.</h2>Shares of Nvidia (NVDA 8.15%) were moving higher today on several news items, including a cooler-than-expected inflation report this morning, a well-received presentation at a Goldman Sachs conference this morning, and news that the federal government could allow it to export chips to Saudi Arabia. As a result, the stock closed up 8% on the news.Chip stocks largely jumped as well on the inflation report, with the iShares Semiconductor ETF up 4.6% on the news, and the Nasdaq Composite was up 2.2%.<figure class="image"><img src="https://infofinance-prod.s3.ap-southeast-1.amazonaws.com/pic_1_1_52533da657.png" alt="pic 1"></figure>Image source: Nvidia<h2 style="text-align:justify;">Falling interest rates are good for Nvidia</h2>Investors seemed unsure if the CPI report, which showed inflation rising just 2.5% year over year in August, was good news for stocks, but by the afternoon, the Nasdaq was soaring, paced by Nvidia.The Federal Reserve is expected to cut interest rates next week, but investors are unsure if it will cut rates by 25 or 50 basis points. Ideally, interest rates will come down while the economy remains strong or even gets stronger. That would be the best scenario for Nvidia, as lower rates make growth stocks more valuable, and it should encourage borrowing for investment in artificial intelligence (AI) infrastructure, meaning spending on Nvidia components.Speaking at Goldman Sachs' Communacopia conference, Nvidia CEO Jensen Huang didn't make any major news, but touted the company's technology and the future of generative AI, noting the company's advantages, including its software libraries for applications like autonomous driving and climate tech. He also added, "Demand is so great that delivery of our components, our technology, infrastructure, and software is really emotional for people because it directly affects their revenue. It directly affects their competitiveness."Finally, according to a report from Semafor, the federal government is considering permitting Nvidia to export advanced chips to Saudi Arabia, which it would use to train advanced AI models. While Saudi Arabia isn't a huge market, the loosening of export rules would benefit Nvidia and could lead to other markets opening up.<figure class="image"><img src="https://infofinance-prod.s3.ap-southeast-1.amazonaws.com/pic_2_1_d0a24d0524.png" alt="pic 2"></figure><h2 style="text-align:justify;">Will Nvidia keep gaining?</h2>Tailwinds seem to be forming for the company, as falling interest rates will support investment and its valuation. It's also set to release the Blackwell platform in Q4, and its top customers, including tech giants like Microsoft, Meta Platforms, and Alphabet, have all said that investing in AI infrastructure is a top priority.Even after today's gains, Nvidia stock is still down 17% from its high in June, leaving room for more gains. The stock still looks like a good bet to outperform, even after skyrocketing over the last two years.fool

August inflation was cooler than expected, setting up the Federal Reserve to cut rates next week.
Nvidia should benefit from lower interest rates, as it will help its valuation and encourage economic growth and investment in AI infrastructure.
One news outlet said Nvidia could get permission to export its chips to Saudi Arabia.



Why Nvidia Stock Popped Today

Exchanges

Trump Media &amp; Technology Group&nbsp;(DJT&nbsp;-6.60%)&nbsp;has been one of the most polarizing stocks to own this year. When the optimism surrounding Donald Trump's chances of winning the presidential election was high, the stock was doing well. But when the outlook changed, the stock quickly went into negative territory.What's sometimes forgotten is that there's a real company behind the stock, not just the former president. Trump Media may not be much of a business right now, but its fundamentals are still the ultimate reason why investors should consider investing in the stock or not.However, the company's future is uncertain, and a lot seems to be hinging on whether the former president gets elected this year. Is this stock too risky to own? Could it ultimately be headed to $0?<figure class="image image_resized" style="width:100%;"><img src="https://infofinance-prod.s3.ap-southeast-1.amazonaws.com/a573cfd2ea868773a9dc3f626cf1480f_a3213d9723.png" alt="a573cfd2ea868773a9dc3f626cf1480f.png"></figure><h2 style="margin-left:0px;">It has the classic signs of a meme stock</h2>Trump Media generates minimal revenue, and the social media platform Trump Social isn't exactly taking off and giving other social media stocks cause for concern. As is the case with other&nbsp;meme stocks, factors outside of the company's core operations impact its share price, not its fundamentals.When President Joe Biden announced he was dropping out of the election in July, shares of Trump Media stock proceeded to fall, as speculators likely saw worsening prospects for Trump winning against Democratic candidate Kamala Harris than they did against Biden. Since that announcement on July 21, Trump Media has lost half its value.Another feature of a risky meme stock is that there are often plenty of&nbsp;short-sellers&nbsp;betting against it. The stock has averaged a fairly high short interest of more than 7% this year, and that percentage has been rising in recent weeks.&nbsp;This opens the door to a possible&nbsp;short squeeze&nbsp;if speculators become more bullish on Trump's chances, which would add to the overall risk and volatility that may come from owning the stock.<h2 style="margin-left:0px;">The fundamentals are what matter, and they aren't great</h2>Trump Media doesn't report user metrics -- likely because they aren't all that impressive. After all, they could help give investors a reason to buy the stock if they were good. At least they could provide investors with the hope that there's potential for the platform to draw interest from advertisers down the road, even though the business isn't profitable today and revenue isn't strong,I always look at the information a company leads with when it reports earnings, as that can help indicate what it thinks is most important for investors to focus on. For an unprofitable company, it might be user growth or some other metric to suggest it's doing well, such as shrinking losses.In Trump Media's August press release announcing earnings, the top bullet point was that it had $344 million in cash and no debt on its books. That's not exactly exciting for&nbsp;growth investors. Simply having a lot of cash doesn't make a business worth investing in, especially if it's not generating much revenue and burning through money -- as is the case with Trump Media.An average investor who's looking for a quality stock would likely pass on Trump Media stock because there isn't much substance behind it. At this point, it's largely a speculative play.<h2 style="margin-left:0px;">Is the stock heading to $0?</h2>Trump Media stock could rally if speculators believe Trump's prospects for winning the upcoming election look good and become more bullish on his chances. That would still be a short-term reason to bet on the stock -- not to&nbsp;invest in it for the long term.A short-term move fueled by election hopes wouldn't change the fundamentals, which are what matter most for investors. If the business isn't demonstrating meaningful growth in its operations, isn't profitable, and isn't generating positive cash flow, there's little reason to expect the stock to go anywhere but down.These are the reasons I think Trump Media stock ultimately will get to $0. It just may be a matter of how long until it gets there and what path it takes.

Trump Media & Technology Group (DJT -6.60%) has been one of the most polarizing stocks to own this year. When the optimism surrounding Donald Trump's chances of winning the presidential election was high, the stock was doing well. But when the outlook changed, the stock quickly went into negative territory.

Is Trump Media & Technology Stock Heading for $0?

Stock splits are essential to a functional stock market even though they don't affect the value of a company. Think of a company's market cap (value) as a pie or a pizza, if you prefer. All the split does is create more slices; it doesn't make the whole any larger. However, they are still essential, especially for those who aren't billion-dollar hedge funds. Microsoft (MSFT 0.17%) has split its shares nine times, most recently in 2003. A single share would cost $123,800 today without stock splits. That price is out of reach for many, if not most investors to buy a single share. And, as you can see below, the price is towering again.<figure class="image image_resized" style="width:100%;"><img src="https://infofinance-prod.s3.ap-southeast-1.amazonaws.com/3cdfca261af7d8e570b42af33c63039b_873c77163a.png" alt="3cdfca261af7d8e570b42af33c63039b.png"></figure>Splits also indicate that a company is booming, since the share price must have grown significantly. Unlike Microsoft, ServiceNow (NOW 1.54%) has never split; however, with share prices of $879, this could change soon.Here is why these companies are having tremendous success.Microsoft The release of the generative AI chatbot ChatGPT pushed the AI race to the center of society's and investors' consciousness. When Microsoft made a multibillion-dollar investment in its creator, OpenAI, it was full throttle for tech companies to catch up. ChatGPT integrates with Microsoft Bing, which could allow Bing to steal some market share from Alphabet's Google Search, which generated $95 billion in revenue in the first half of 2024. Even small inroads for Bing will generate billions in revenue.Another major AI product is Microsoft Copilot. Copilot integrates into several products, answers questions, summarizes or generates text, creates images, codes, and analyzes data. According to Microsoft, 60% of the Fortune 500 use Copilots, a staggering figure given the technology's newness. These innovations drove sales growth of 16% in fiscal 2024 to $245 billion. Operating income grew 24% to $109 billion, a terrific 45% margin.Microsoft stock trades at 36 times earnings, which is higher than its three-year and five-year averages of 33; however, the price-to-earnings (P/E) ratio drops to 33 on a forward basis. Due to the lofty valuation, investors shouldn't expect the price to skyrocket overnight. Still, Wall Street can justify the current price based on Microsoft's AI opportunities.ServiceNow ServiceNow and Microsoft have partnered for years on many technology initiatives. The latest integrates ServiceNow's AI product, Now Assist, with Microsoft Copilot. Without boring you with too many technical details, the Now Assist product increases productivity in areas like human resources, IT support, customer service, and others. For example, Now Assist saves customer service agents time by summarizing a customer's recent interaction so the agent doesn't have to go through the transcript, allows agents to search vast databases quickly to find answers faster, etc. The increased productivity is invaluable for companies in a highly competitive world.<figure class="image"><img src="https://infofinance-prod.s3.ap-southeast-1.amazonaws.com/download_317e644b63.avif" alt="download.avif"></figure>Around 85% of the Fortune 500 use ServiceNow. The chart below shows just how much ServiceNow's customer base has grown. Each year that a customer adopts ServiceNow is represented by a different color, and the expansion shows the increased revenue from these customers over time.ServiceNow is in a higher growth phase than Microsoft ($2.6 billion in sales on 22% growth last quarter), so sales rather than bottom-line earnings better represent its valuation. Its current price-to-sales ratio is 18, which aligns with its 5-year average. Looking forward, the company expects 2024 subscription sales of $10.5 billion, and $15 billion in 2026. This means the stock price could conceivably return nearly 50% through 2026 by maintaining the same valuation.Microsoft and ServiceNow are making huge moves in AI, and with soaring stock prices, splits may be on the horizon.

Stock splits are essential to a functional stock market even though they don't affect the value of a company. Think of a company's market cap (value) as a pie or a pizza, if you prefer. 

Stock-Split Watch: 2 Artificial Intelligence (AI) Companies That Look Ready to Split

Super Micro Computer stock (NASDAQ: SMCI) has seen a big sell-off in recent months, falling from highs of nearly $1,200 per share in March to about $445 presently. There have been a couple of trends driving the sell-off including concerns about gross margins, some supply chain issues, and the company’s delay in filing its Form 10-K with the SEC, after short-seller, Hindenburg Research accused the company of irregularities with its accounting. Despite these setbacks, the stock remains up by about 7x from 2022, driven by surging demand for server systems fueled by the generative artificial intelligence wave. However, with these challenges, the stock could decline further, possibly touching around $200 per share.<figure class="image image_resized" style="width:100%;"><img src="https://infofinance-prod.s3.ap-southeast-1.amazonaws.com/960x0_8_eed079d9cd.webp" alt="960x0 (8).webp"></figure>Super Micro stock trades at just about 18x trailing earnings and 12x forward earnings at the current price level. Although this isn’t a very high multiple, there’s a very real possibility that Super Micro’s earnings could decline after a couple of years of stellar growth. Moreover, the uncertainty relating to compliance-related matters could weigh on the stock. This analysis outlines how the stock could decline by about 50% in the next few years by looking at the company’s potential revenue growth, net margins, and price-to-earnings multiple. While this article spotlights the downside case for the stock, the upside case can be seen here: Can Super Micro stock fare better than AI bellwether Nvidia?SMCI Rallied Big But Witnessed Considerable VolatilitySMCI stock has generated better returns than the broader market in each of the last 3 years. Returns for the stock were 39% in 2021, 87% in 2022, and 246% in 2023. However, the stock has also declined by roughly 60% since March 2024 making it a relatively volatile bet. In contrast, the Trefis High Quality Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has outperformed the S&amp;P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment around rate cuts and multiple wars, could SMCI see a strong jump?Revenues Could Fall As Server Investment Cycle TurnsSuper Micro Computer is a data center solutions provider, which sells server systems, server boards, storage, networking solutions, management software, and installation and maintenance services. SMCI is projected to grow its revenue by close to 90% in FY’25 (the current fiscal year) to levels of about $28 billion, per consensus estimates, as data center-related spending remains strong, with tech companies continuing to invest in AI and accelerated computing capacity. However, the current euphoria might be masking the fact that the server market can, in fact, be cyclical and things could take a turn for the worse.The underlying economics of the end market for the broader AI ecosystem remain weak, and most of AI customers remain loss-making. Large language models are also very expensive to build and train. We could very well be in a phase where companies are seeing so-called FOMO, compelling them to invest in AI just because their rivals are doing so, without a thought about the return on investments. As shareholders seek better returns, we could see capital spending cool off, impacting the likes of Super Micro. Moreover, most AI companies are going through the compute-intensive training phase at the moment, and there’s a real possibility that demand for computing power and servers could cool off once these companies move to the less compute-intensive deployment phase. The server market is also very commoditized. While Super Micro does have some competitive advantages, given that its products are seen as being more customizable, the company’s lead in these areas is hardly insurmountable and competition could mount considerably. Considering a potential cooling of demand and higher competition, if SMCI’s revenues decline by about 15% each year over FY’26 and FY’27 revenues could stand at $20 billion by FY’27. Looking for more companies that can benefit from increased digitization and AI deployment?Combine this weaker-than-expected revenue growth with the possibility that Super Micro’s adjusted net margins (net income, or profits after all expenses and taxes, calculated as a percent of revenues) can decline a bit. Although margins expanded from 6% in FY’22 to about 9% in FY’24, driven by higher economies of scale, they could decline meaningfully if sales drop and competition mounts reducing the company’s volumes and pricing power. Moreover, SMCI has seen its gross margins face some pressure in recent quarters as it sells a higher mix of liquid-cooling systems, which are proving expensive to produce and this trend could also continue. Considering this, it may be reasonable to assume that Super Micro’s adjusted net margins could decline from an estimated 9% this year to about 6.5% by FY’27, or about 0.72x current levels.Valuation Multiple Could ContractIf revenues decline by about 0.7x between FY’25 and FY’27, with margins contracting by about 0.72x over the same period, this would imply that earnings could fall by about 0.5x. Now if earnings fall by 50%, the P/E multiple is bound to take a hit as investors re-assess SMCI’s overall long-term earnings growth prospects. If SMCI’s P/E multiple gradually shrinks from a multiple of about 12x based on FY’25 earnings presently to about 10x, this could translate into a decline in SMCI stock to levels of under $200 per share by 2027. What about the time horizon for this negative-return scenario? In practice, it won’t make much difference whether it takes 2 years or 5 - if the competitive threat plays out and SMCI sees the demand cycle turn, we could see a correction. And a sizable one at that.&nbsp;

Super Micro Computer stock (NASDAQ: SMCI) has seen a big sell-off in recent months, falling from highs of nearly $1,200 per share in March to about $445 presently. 

A Scenario Where Super Micro Stock Could Fall 50%

In their bids to win the 2024 election, former President Donald Trump has promised to "drill, baby, drill" to lower energy prices, while Vice President Kamala Harris has assured she won’t ban fracking.Those promises may not matter much in the near term. Energy prices are poised to drop, regardless of who wins, says one industry watcher.“Whoever gets elected in November is going to be very fortunate in that they are going to be dealing with some of the most serious energy deflation ... since 2020,” Tom Kloza, OPIS Global head of energy analysis, told Yahoo Finance, referring to the start of the pandemic lockdowns four years ago when US crude prices slumped as travel demand collapsed.<img src="https://infofinance-prod.s3.ap-southeast-1.amazonaws.com/Screenshot_2024_09_16_at_20_05_55_34435265de.png" alt="Screenshot 2024-09-16 at 20.05.55.png">The past week was one of the year's most volatile for the energy markets as oil touched its lowest level since 2021 before ticking higher on Wednesday. Year to date, West Texas Intermediate (CL=F) is down about 2%, while Brent (BZ=F), the international benchmark, is down more than 4%.Gasoline prices have also fallen to their lowest level since February, with the national average at $3.24 per gallon, according to AAA.Prices are expected to go lower as the industry soon switches to a cheaper winter-grade gasoline. Analysts predict the national average will dip below $3 per gallon in the coming weeks barring an unforeseen event."These sub-$3 prices are sure to boost consumer sentiment going into the fall,” GasBuddy head of petroleum analysis Patrick De Haan told Yahoo Finance.Weak demand out of China, the biggest importer of oil, has been the main driver of declining crude prices. The country has been battling a housing crisis while shifting toward electric vehicles and more natural gas consumption.Cracks in the US economy and in Europe have also weighed on the markets, keeping some speculators notably at bay.“What happened this summer and what continues to happen is that you do not have speculators buying futures and options contracts anymore,” said Kloza. “The fact that we didn’t see more speculative money coming into the market … that might represent a real sea change for oil.”"Right now, financial participation in oil markets is probably as low as it’s been since oil became an asset class,” said Kloza.<figure class="image"><img src="https://infofinance-prod.s3.ap-southeast-1.amazonaws.com/b9ecfe70_6e8f_11ef_abf8_cdbd79f1bae3_39d997ec3b.webp" alt="b9ecfe70-6e8f-11ef-abf8-cdbd79f1bae3.webp"></figure>The fall in oil prices has been so rapid that Wall Street analysts have been forced to revise down their forecasts. On Monday, Morgan Stanley cut its Brent price target for the second time in a matter of weeks, citing risks of "considerable demand weakness."The analysts forecast Brent will average $75 per barrel in the fourth quarter of this year, $5 lower than the prior downwardly revised outlook of $80 issued in late August.Oil demand growth forecasts have also come down. The International Energy Agency cut its outlook for 2024, citing Chinese oil demand "firmly in contraction."The revision came the same week oil alliance OPEC slightly trimmed its own oil demand forecast. Despite the revision, OPEC's expectations are still near double other industry estimates.The oil alliance spearheaded by Saudi Arabia has been eager to bring back more of its supply by unwinding some of its production cuts, which have helped keep a floor on prices.However, the cartel recently delayed the reintroduction of barrels initially slated for October given the slump in oil. The postponement didn’t do much to boost prices.“OPEC+ still has a significant amount of oil that is just waiting to return to the market. And I think that’s the concern — is there really that demand to really satisfy and absorb that increased oil that is going to come back to the market sometime soon?” Tortoise senior portfolio manager Rob Thummel told Yahoo Finance on Wednesday.In a nod to centrists, during Tuesday's event Harris underscored record production in the US, the largest oil and gas producer in the world."We have invested a trillion dollars in a clean energy economy while we have also increased domestic gas production to historic levels," said Harris.Meanwhile, at rallies, Trump has promised to produce even more oil in order to cut energy prices in half and bring gasoline below $2 per gallon, though analysts expect producers to keep his "drill, baby, drill" vow in check if prices go too low.On average, companies need the price of US crude to be at least $64 per barrel in order to profitably drill a new well, and $39 for existing ones, according to the Dallas Federal Reserve survey.With WTI trading near $69, production is expected to continue growing amid technological breakthroughs. The US reached peak production last year despite declining US drilling activity because new wells are more efficient, according to government data. US oil production next year is expected to reach another record level, given advances in horizontal drilling and fracking."Ukraine war, the COVID lockdowns, those are the things that shaped oil prices in the last four years," said OPIS's Kloza."The more likely thing is that we’re going to see much more modest prices next year, and we'll see oil trade in [on] a lot quieter terms than we have for the last three years," he added.

In their bids to win the 2024 election, former President Donald Trump has promised to "drill, baby, drill" to lower energy prices, while Vice President Kamala Harris has assured she won’t ban fracking.

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