News and analysis

"What's the buzz? Tell me what's a-happening. What's the buzz? Tell me what's happening" (c) That's a line from 'Jesus Christ Superstar' soundtrack, as I just got the song stuck in my head when watching this kind of a bloodbath in the markets. And so, "Don't you mind about the future? Don't you try to think ahead?" Of course, we tried and we did. But not enough, as can be seen. Well, I personally sold all my stake in NVIDIA weeks ago, and shared this news with you, folks, running a risk of being ridiculed, even though NVIDIA continued to rise much higher. Sporadically, I reduced my share in other chip- and AI-related stocks to take some profit on the way, yet at the same time I also was guilty of adding extra volumes to some of my favourites like Dell, Micron Technology, Broadcom and AMD expecting even greater outcome from these roaring tigers of the cloudy big data revolution. Anyway, I don't regret a thing too much, as I am still sure most of them just entered into a stage of deeper and faster correction, no more than that, as I see the current happenings as not a fatal collapse of the whole uptrend or something similar. No and no, far from it. But I have missed an instant, when it was reasonable to run away and to convert most of my invested money into cash for a while, like many of you missed it, surely. Lulled by a linear climb to the top, all quiet and calm uptrend strategists are now gone with the stormy wind as the S&P 500 drop approaches 5,100.

Now NVIDIA is going to lose double digits to drop at least to $95 in the pre-market trading today, probably leading Broadcom to below $130, AMD to below $125 for the first time in 2024, Dell and Micron to below $90, and so on and so forth. I don't have Apple or Tesla in my portfolio, so I don't care about their price drops, and I expected Microsoft at lower levels to buy, and so I am even happy it may lose more weight now. But it still doesn't seem like the right moment to buy any of the listed stocks today or maybe tomorrow, isn't it? There are not so many catchers of falling knives around. Most of the crowd would like to get them later off the ground. O.K., let's "save tomorrow for tomorrow, think about today instead". And so, "I could give you facts and figures", without giving accurate "plans and forecasts" right at the moment and without responding to a crowd's tough question of "When do we ride into Jerusalem?", as it's too early to answer.

First of all, I don't think that weaker U.S. jobs data to ignite fears of recession should be blamed. Last Friday was not Good Friday or judgement day for Wall Street, it was just a normal day. The risk of recession is still limited, and the same crowd recently dreamed about smaller non-farm payrolls in order to make the Federal Reserve cut its rates sooner than later. And now, we got this opportunity, what's wrong with it? Yet, last Wednesday actually was the day that supplied our pork. The Bank of Japan raised its national interest rates by some minor 0.15%, from its near-zero 0.10% to its still near zero 0.25%, but for the first time since... I can't even remember... since 2008, I believe. The Bank of Japan also halved its bond purchase program to start saying good-bye cheap funding money for the country's stock market rally, which was mostly unfounded unlike Wall Street rally. A volt-free, de-energized Japan's benchmark Nikkei 225 immediately started to sink, yet didn't send an S.O.S. message for anybody until now, it plummeted and bumped its head only this Monday when it lost a tremendous 13.47% in one trading session to waste all of its ballooned 2024 achievements.

Of course, this acts in a complicated combination with still overheated US techs. The giants' fall already caused correction moves, but the Japanese domino effect on the American, European and global markets was not long in coming, already late Friday night, when the truth of approaching Japanese collapse became clear to big investment houses. And they hurried to compose an urban myth of US recession with supposedly a 0.5% Fed rate cut being nearly inevitable to avoid killing the US and world's economy. Yet, the root of all evil on the markets is not there, as I feel. For the S&P 500, an attempt of touching levels below 5,000, which is possible, is not a fatal error. So, when dust eventually settles somehow on Asia markets, with the Japanese Yen and the Chinese Yuan being on the ride, the U.S. Treasury yields would stop falling, and so the Wall Street indexes and chip stocks would quickly rebound as investors' money simply has no other way and refuse where to hide from all this world's troubles. At that time, all of us will have another chance to join the Mary Magdalene's sweet aria: "Try not to get worried, try not to turn on to problems that upset you, oh... Don't you know, everything's alright, yes, everything's fine, and let the world turn without you tonight..."

Ontology (ONT) is losing 10.0% to $0.1800 this week, underperforming the market. Bitcoin (BTC) dropped by 5.2% to $64,414. ONT has been hovering around $0.2000 with attempts to climb above this level, but it failed to do so and is now dropping along with the rest of the crypto market. If the general market correction continues, ONT could drop to the support at $0.1000. Alternatively, if the market resumes a rally in August, the token may jump above $0.2000.

Amazon stock shortly slid from $184 at before the report’s close to below $175. But, no drama. First, the current market price is only one $1.5 lower than where I bought an extra portion of Amazon in the night from July 30 to July 31. I am not sure that prices would be much lower today or next week. Moreover, there is even a high chance that the world’s most successful e-commerce business will recover to better levels already in the nearest days, as investors may focus mostly on Amazon Web Service (AWS) achievements, which are unique.

“We’re continuing to make progress on a number of dimensions, but perhaps none more so than the continued re-acceleration in AWS growth,” Amazon CEO Andy Jassy commented after the company’s cloud business collected quarterly revenue at $26.3 billion against consensus bets on $25.95 billion to generate a 19% gain in income YoY. This means Amazon’s cloud division thrives in a competitive environment of rising interest in AI-related decisions.

The last quarter gave $1.23 of earnings per share, which will surely increase the shine of Amazon in the eyes of investing crowds and market specialists. A small distance from $147.98 billion in revenue numbers to $148.68 on the analyst pool’s target should not confuse anybody, because Q2 revenue came out by far better than in the previous four quarters, excluding the epic record at $165.95 billion in the Christmas quarter of 2023. Current readings could not be called mixed in this context, as they were very close to perfect fundamental scenarios.

Amazon’s only “fault” is its shy projection for Q3, as company’s CEOs predicted sales growth to the range between $154 billion and $158.5 billion vs Wall St analysts’ strongly overheated hopes for $158.24 billion on average. But, too greedy estimates do not mean that great numbers are not great, or the company should be ashamed for a more realistic view on its own ever-climbing results.

European Airbus Group has began to rebound from dips of this summer, which were located at nearly €5 (or 12%) below my reference point of January, where I bought initially a large stake in Airbus stock when rival Boeing faced its famous door plug trouble. Aurbus finished the last regular session of July with a 4.23% daily surplus to confirm a mid-term trending line and this to mark a great opportunity to buy for non-holders or to add more for current investors in Airbus like me.

From a fundamental point of view, the airplane industry is not on the rise in 2024, yet Airbus takes a lion’s share of global orders. The only real problem Airbus may have is the speed of executing, i.e. delivery is just lagging off growing demand, as the need in new airplanes is high, but production costs of investing in increasing jetliner output and pre-announced charge (€989 million) for its own navigation satellite space systems business temporarily limited marginality. As a result, markets moderately greeted Airbus quarterly achievements, even though the industry leader revealed less impressive profits a couple of days ago.

Adjusted operating profit of Airbus lost nearly half to amount to €814 million, but on higher-than-expected revenue of €15.995 billion. However, even lower version of profits managed to beat consensus bets on €699 million with revenue basis of €15.822 billion. Airbus also said it launched an expanded cost-containment plan for the wider “defence and space division”, discussing alliances with France's Thales and Italy's Leonardo to deepen existing cost measures. This may rather improve the company’s financial efficiency planning, even though no specific cost reduction target was announced.

What is most important, Airbus reaffirmed its softened goals for 2024 (770 airplane deliveries, down from 800) but emphasized that mostly the supply of materials was a key constraint.