markets

10/2/24

US stocks have never had a run as good as the one China’s on

US stocks have had their fair share of parabolic gains, like the response to the massive monetary and fiscal stimulus in 2020, or a sharp countertrend rally after the government cobbled together a rescue plan for Citigroup back in 2008.

But recent performance of Chinese stocks is leaving those golden runs for US markets in the dust.

Since Chinese markets closed after Monday’s huge gain for the Golden Week holiday, we’re using the Xtrackers Harvest CSI 300 China A-Shares ETF as a proxy for the benchmark Mainland index. It’s not a perfect comp, but it’s pretty close.

The performance gap between the US and China, on the other hand, is not close: the ETF that tracks the CSI 300 has skyrocketed almost 40% higher over the past two weeks. The best period for US stocks came during their exodus from the bear market brought about by the Global Financial Crisis, when the S&P 500 surged nearly 22% in a 10-day stretch in March 2009.

Goldman Sachs’ technical trading guru thinks there’s still room to run.

“I am bullish on Chinese equities, this time is different,” writes Scott Rubner, managing director for global markets. “I have never seen this much daily demand for Chinese equities: I do not even think we have gone back to benchmark index weights yet.”

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markets

2h

Why Apple usually falls on a new iPhone launch

You can only shock the world so many times, and a thinner phone with a better camera isn’t always going to cut it.

That, in short, is why Apple has tended to go down on days when it’s introduced a new iPhone to the world, as this great chart from Bespoke Investment Group shows:

Bespoke iPhone announcement Apple performance — Source: Bespoke Investment Group

On average, the tech giant falls 0.4% on the release date and is negative more than 70% of the time, perhaps a useful tidbit on this, the day of the iPhone 17 launch.

One more thing....

A potentially complicating factor to the aforementioned data is that Apple has often done quite well in the six months leading up to a new iPhone announcement, roughly 5 percentage points better than its typical six-month return, as shown above. That’s not the case this time, with Apple shares up about 5% over the past six months compared to a typical near 20% advance in the prelude to a new iPhone drop.

So it’s not like expectations about how big of a catalyst this can be for the company are sky-high and due for a sharp retrenchment, especially given Apple’s relatively lackluster progress in developing AI capabilities relative to its megacap tech peers. But a seemingly low bar to clear hasn’t necessarily been a boon for the company on the big day, either.

In any event, staring too closely at the minutiae of all this may be missing the forest for the trees.

“While this info may be helpful to traders, we doubt it’s something that long-term shareholders are too worried about given the huge compounding returns the stock has provided during the iPhone era,” Bespoke wrote.

Negative US payroll revisions as bad as 2009 add to fears of consumer spending slowdown

Reconciling the spending versus jobs trends is the key question for US economic analysts.

Yellow traffic light against an office building

markets

4h

Planet Labs slips after big post-earnings gain

Smallish midcap satellite imagery and data company Planet Labs is giving back a chunk of the nearly 50% gain it racked up after posting earnings early Monday.

No tears, though: the shares, which seem to have a fairly robust retail following, are still up roughly 340% over the past 12 months.

Retail darling Planet Labs soars on earnings pop for second straight quarter

Retail darling Planet Labs soars on earnings pop for second straight quarter

markets

5h

CoreWeave soars as Microsoft’s deal with Nebius shows unrelenting demand for AI compute

CoreWeave is soaring as Microsoft’s $17.4 billion deal with Nebius shows the immense value and continued demand for all parts of the AI data center ecosystem.

One additional reason for CoreWeave’s jump may be that its pending acquisition of AI data center infrastructure company Core Scientific looks like a great deal compared to Microsoft’s renting of (more broad and advanced) AI data center capacity from Nebius.

CoreWeave’s all-stock deal to buy Core Scientific was initially valued at ~$9 billion, but with the subsequent decline in its shares, it’s worth about 40% less. And in purchasing Core Scientific, CoreWeave is saving $10 billion in what it would have paid the company to lease data center infrastructure over the next 12 years.

As it stands, Microsoft is getting about 300 megawatts in data center power capacity from Nebius, while Core Scientific boasts that its footprint is in excess of 1,300 megawatts. So, on the surface, it looks like an absolute steal for CoreWeave.

But again, this is not an apples-to-apples comparison; not all access to AI computing infrastructure is created equal.

There are differences in the type of AI infrastructure provided by the two: Nebius owns GPUs, while Core Scientific doesn’t, and what it provides in the software layer isn’t offered by Core Scientific as a stand-alone entity. This is the difference between the “full stack” approach (Nebius) and a “colocation” approach (Core Scientific).

That being said, CoreWeave’s acquisition of Core Scientific, once completed, will make the combined entity’s business model look more like Nebius’ model, which, as Microsoft just told us, is something that top hyperscalers are willing to pay a pretty penny for.

markets

J. Edward Moreno

5h

UNH rises after preliminary data shows most Medicare Advantage enrollees will be on more lucrative, top-rated plans

UnitedHealth rose more than 4% in premarket trading on Tuesday after the company disclosed that it expects the majority of its Medicare Advantage enrollees will be on plans rated four stars or higher in 2026.

Though the data is only preliminary, about 78% of UNH’s Medicare Advantage members are in plans rated four stars or higher, the company said in a regulatory filing Tuesday morning. On Monday, the company said it plans to reiterate its full-year guidance when it meets with investors this week.

Insurance companies that provide government-sponsored plans, like Medicare Advantage, have struggled this year amid unexpected rising costs. Plans that are rated four stars or higher earn bonus payments and are typically more lucrative for healthcare insurance providers.

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