TECH-HEAVY: Future most unrosy for US futures; And do not buy Baidu

Ahead of the Monday morning open in NotWyoming-wood, US Futures are getting smashed. It’s a s..t show.

At lunchtime in Sydney, you can take about 4% off all the major Wall Street indices. The Nasdaq is faring worst, if that’s possible, beyond 4%, and this follows the tech-heavy’s abominable last showing which was its worst since June 16.

Friday night our time, in a terrific show of obstinacy The Fed isn’t pivoting, pirouette-ing or apologising.  In fact Fed chairman Jerome Powell buried any of those ideas with his stirring, albeit brief (under 10 mins) ‘we will fight inflation on the beaches’ address in Jackson Hole.

Talking like a wartime consiglieri who accidentally started the war but no one knows it yet, Powell basically said The Fed will fight inflation vis a vis beaches, landing grounds, fields, streets and hills; never surrendering etc.

“Reducing inflation is likely to require a sustained period of below-trend growth,” Powell actually said. “While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses.”

Powell insisted that the Fed will do whatever it has to do “until the job is done” of getting the cost of living back to its 2% target.

These ill-chosen words of defiance grabbed US traders by the privates and squeezed, sending a thrill through markets that did not excite investors.

The upshot is thus: you might have thunk it was peak inflation, hell, it probably is – but to ensure we’ve not screwed up royally, we’ll be cutting rates for a good long time yet.

And so, on a Freaky Friday in New York, US traders ran for mother, as The Fed Chair’s rousing words inspired a fine, sharp selloff with the Dow Jones Industrial Average taking a dive by over 1,000+ points.

For the week, all three American benchmarks took on losses of more than 4%, the second straight week of losses for the triumvirate.

The Nasdaq copped it worst, shedding 4.4%.

This Week in America:

Well. September has traditionally been hands-down the crappest month of the year for the S&P 500 Index.

It’s PMI week and the States get their’s on Thursday. US home prices for June are on the cards and there’s going to be a test of confidence when August’s
consumer confidence drops. There’s a swaggle of US jobs data – the Jolt one and another one.

The US jobs report for August is expected to show 300K jobs added for the month and an unemployment treading water at 3.5%. Investors might want to keep an eye out for that one as well as non-farm payrolls.

Earnings reports don’t stop just because we want them too.

Lululemon (LULU), Broadcom (AVGO), CrowdStrike (CRWD) and Baidu (BIDU) are the names we’re watching, although the US investors are excited about the Bed Bath & Beyond (BBBY) strategic update which appears to be a trading opportunity.

European energy markets could be worth watching on a schadenfreude basis –  Russia’s evil genius state-run Gazprom stops the gas flowing through the we-told-you-not-to Nord Stream pipeline for another handy-ily-timed three days of maintenance.

The EU accuses Russia of using gas as a weapon to punish them against Western sanctions over Ukraine.  Russia accuses the West of using sanctions as a weapon to punish Russia for being Russian. Australia or the US are generally good places to view this disatser from.

While tonight’s opening session is a calm one for corporate earnings and economic data, fans of crypto and its various offspring will be staying up late for the CME Group cryptocurrency derivatives expansion, unleashing its new, though possibly ill-timed Bitcoin Euro and Ether Euro futures.

This week in Elon’s head:

This will happen again – just a matter of time https://t.co/HeyZhZbAih

— Elon Musk (@elonmusk) August 28, 2022

And US earnings this week:

After last week’s awful bout of earnings season ejecta, it’s almost back to business as per, but with a few notable exceptions:

Tuesday, August 30

Baidu (BIDU) – reports before the open

Wall Street expects Baidu to earn $1.58 per share on revenue of $4.23bn, contrastingly most unfavourably with its quarterly YoY when earnings came to $2.39 per share on revenue of $4.84 billion.

Baidu’s been on the frontline of China’s random tech regulatory crackdown.

The toll of arbitrary regulatory slapdowns out of Beijing – under the guise of corporate governance and anticompetitive mucking about – has instilled a genuine fear across wall Street that China tech, and Baidu’s core marketing business, is no place for the faint-hearted.

Growth will so very likely be stymied and there won’t be much fun for Baidu to look forward to – especially its much-hyped growth acceleration in the cloud. It’s a crap time to be a Chinese giant,  with the big names Alibaba (BABA), JD.com (JD) and Tencent (TCEHY) all under the watchful eye and shifting goals of the latest perplexing new operating requirements imposed by State Administration for Market Regulation (SAMR)  which includes forcing them to increase local investments.

CrowdStrike – (CRWD)

The street likes CrowdStrike and why not?

CRWD does cloud-delivered solutions for endpoint and cloud workload protection via a software-as-a-service (SaaS) subscription-based model. And it works. Shares have surged almost 40% in the past three months. CRWD is smashing it on the revenue estimates for 13 straight quarters and the cybersecurity play is flush with cash.

CRWD also offers Falcon platform in a SaaS subscription-based model, which delivers “integrated, technologies that deliver protection and performance, while reducing customer complexity”.

Analysts reckon CRWD to earn 27 cents a pop on revenue of $515.5 million. This compares to the year-ago quarter when earnings were 11 cents per share on revenue of $337.69 million.

Other notable reports include Best Buy and Hewlett-Packard Enterprise.

Wednesday, August 31

On Wednesday, Barnes & Noble, Express and Vera Bradley will deliver earnings results before the market opens. Five Below, Nutanix and Okta will take do the dance post-final bell.

Thursday, September 1  

Lululemon (LULU)

Wall Street expects Lululemon to earn $1.86 per share on revenue of $1.77 billion. This compares to the year-ago quarter when earnings came to $1.65 per share on revenue of $1.45 billion.

A year of rising inflation, rising interest rates, rising doubts and fears around the idea of a recession have taken the stick to stocks like Lululemon.

The tweeny retailer has lost well over 20% over the last fiscal.

Friday, September 2

Broadcom (AVGO)  

It’s time to measure the American chip stock bellwether.

And Broadcom will suffice.

Wall Street analysts forecast a $9.56 per share return on revenue of $8.4 billion. A significant beat on the same time last year when the result was $6.96 per share on revenue of $6.78 billion.

Chip stocks are certainly coming out of their global coma. After taking a massive hit over the past few months, these last weeks have seen the sector reinvigorated with old school optimism – Broadcom front and centre –  the stock is up in double digits over the last month.

Analysts point to AVGO’s $61 billion acquisition as a deal which exposes Broadcom to various applications such as cloud management, providing it a stronger-looking portfolio of high-growth services to drive revenue for years to come. But, for the share price to remain at its current bouyant trajectory, an upbeat revenue guidance and datacenter return needs to be part and parcel of the numbers.

NASDAQ IPOs this week

Hempacco (NASDAQ:HPCO) set to start trading on Tuesday.

As the name implies, HPCO sells hemp-based smokable products to excited US consumers. Hempacco plans on offering 3m shares between $4 and $6 per share, to raise circa $15m.