markets

Luke Kawa11/5/24

It’s 2016 all over again as “America First” trade sweeps through markets

We need only remember back a mere 2,918 days, shortly past midnight following the 2016 election, to see price action like we’re seeing now. And, as it happens, for the same reasons.

Donald Trump’s victory in the 2024 presidential election is causing a huge divergence in US equity futures compared to foreign stocks, particularly emerging market equities.

Russell 2000 futures, tied to the popular US small-cap index, are up 6.1% as of 7:41 a.m. ET; meanwhile, MSCI Emerging Markets futures are off 1.5%. A lot of the weakness in the latter is linked to US dollar strength, as the Bloomberg Dollar Spot Index is up about 1.6%.

The simple thinking here is that Trump’s policies of lower taxes coupled with tariffs on imported goods are a boon for domestic producers, and negative for foreign firms.

Back in 2016, Neil Dutta, head of US economics at Renaissance Macro Research, wrote, “This is the Trump trade in action. ‘America First.’”

Flash forward eight years later to another email from Dutta: “Financial markets are re-running the 2016 playbook.”

Updated at 7:50 a.m. ET on November 6, 2024.

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Micron soars after reporting huge Q1 beat, with Q2 sales guidance ahead of every Wall Street analyst’s estimates

Micron has completely erased Wednesday’s big losses, rising 9.5% in premarket trading as of 4:20 a.m. ET, after the memory chip specialist posted stellar results for its fiscal Q1 2026 yesterday, as well as posting a much better outlook for the current quarter than Wall Street had anticipated.

For Q1, the company reported:

Revenues: $13.64 billion (estimate: $12.95 billion)
Adjusted earnings per share: $4.78 (estimate: $3.95)

And the Street’s consensus was well ahead of even the upper ranges of the guidance provided by management for the quarter for sales of $12.5 billion (plus or minus $300 million) and $3.75 (plus or minus $0.15).

For Q2, management provided an outlook for adjusted revenues of $18.3 billion to $19.1 billion, and adjusted EPS of $8.22 to $8.62. Wall Street had penciled in revenues of $14.38 billion with adjusted EPS of $4.71.

Even the bottom end of the ranges management provided is well above the top analyst’s estimate for the quarter.

These results may help spark a revival in semi stocks, which have gotten trounced in recent sessions. Hard disk drive sellers Seagate Technology Holdings and Western Digital are also rising in after-hours trading, as is flash memory seller Sandisk.

Micron has been one of the worst performers in the S&P 500 since last Thursday’s record close, down double digits from then until Wednesday close as investors broadly dumped AI names. Prior to that, shares had been on fire amid a bevy of Wall Street price target hikes and surging memory chip prices as demand runs ahead of supply. The AI boom has fueled a spike of immense appetite not only for GPUs and custom chips but also memory chips as well, as data centers also need a boatload of these to store information and feed it to those processors. Micron and its major competitors, SK Hynix and Samsung, have already sold out production for their most advanced high-bandwidth memory offerings for calendar year 2026.

Micron recently announced that it would be exiting its consumer chip business to focus on serving its AI customers.

Markets slump as AI trade tumbles

Tech dragged US stocks lower, especially the Nasdaq 100.

Sad brown bear

The East Side of the US Capitol Building in the early morning, Washington DC, USA.

Group of House Republicans defy leadership and join Democrats to force ACA vote

The subsidies are still likely to end before the deadline.

J. Edward Moreno18h

Bitcoin is behaving like a no-fundamentals tech stock

The three-month correlation between the daily changes in the iShares Bitcoin ETF and a Goldman Sachs basket of nonprofitable tech stocks is at a record high.

Bitcoin ice carving

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Matt Phillips18h

Oracle slides on report that data center partner Blue Owl won’t fund $10 billion Michigan facility; company says project is on track without Blue Owl

Oracle shares declined early Wednesday after the Financial Times reported that Blue Owl Capital, the largest funder of Oracle’s data center investment push, will not finance a 1-gigawatt Oracle data center planned for Saline Township, Michigan. The pink-paged periodical reports:

“Blue Owl had been in discussions with lenders and Oracle about investing in the planned 1 gigawatt data centre being built to serve OpenAI in Saline Township, Michigan.

But the agreement will not go forward after negotiations stalled, according to three people familiar with the matter.

The private capital group has been the primary backer for Oracle’s largest data centre projects in the US, investing its own money and raising billions more in debt to build the facilities. Blue Owl typically sets up a special purpose vehicle, which owns the data centre and leases it to Oracle.”

For its part, Oracle told Bloomberg on Wednesday morning that negotiations for a data center project in Michigan are “on schedule” and don’t include Blue Owl.

While not horrible, Wednesday’s drop puts Oracle down 15% so far this week, as the shares continue to be clobbered by rapidly shifting investor sentiment toward lofty AI investment plans.

Oracle is down roughly 45% from the all-time high it hit on September 10, in a plunge that has destroyed more than $400 billion in value. Yowza.

“Blue Owl had been in discussions with lenders and Oracle about investing in the planned 1 gigawatt data centre being built to serve OpenAI in Saline Township, Michigan.

But the agreement will not go forward after negotiations stalled, according to three people familiar with the matter.

The private capital group has been the primary backer for Oracle’s largest data centre projects in the US, investing its own money and raising billions more in debt to build the facilities. Blue Owl typically sets up a special purpose vehicle, which owns the data centre and leases it to Oracle.”

For its part, Oracle told Bloomberg on Wednesday morning that negotiations for a data center project in Michigan are “on schedule” and don’t include Blue Owl.

While not horrible, Wednesday’s drop puts Oracle down 15% so far this week, as the shares continue to be clobbered by rapidly shifting investor sentiment toward lofty AI investment plans.

Oracle is down roughly 45% from the all-time high it hit on September 10, in a plunge that has destroyed more than $400 billion in value. Yowza.

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