VLVLY - Wall Street Breakfast Podcast: Micron Drops In War Over Silicon

2023-05-22 07:26:51 ET

Listen on the go! Subscribe to Wall Street Breakfast on Apple Podcasts and Spotify Who's next? Micron ( MU ) stock drops after being swept up into the war over silicon. Volvo ( VLVLY ) bags record order for 1000 electric trucks for Holcim. Why did Farfetch ( FTCH ) fly higher? Strong sales amid China rebound.

This is an abridged transcript of the podcast.

• China says Micron products failed its cybersecurity review. Micron is down 6 percent premarket.

• Volvo gets a record order for electric trucks. The company is selling a thousand trucks to Holcim.

• Farfetch is in our daywatch. The stock closed up more than 14 percent Friday and is up 1.4% premarket.

You can find links to all the stories we talk about on the show in show notes and our daily Seeking Alpha Wall Street Breakfast articles.

OUR TOP STORIES

Shares of Micron (NASDAQ: MU ) are down 6% in premarket trading after China banned the company's products from its "critical infrastructure supply chain" following a nearly two-month review .

While Micron ( MU ) is the biggest memory chipmaker in the U.S., with more than a quarter of its sales going to China, other semiconductor players like Intel (NASDAQ: INTC ) and Broadcom (NASDAQ: AVGO ) will also be in focus.

China said it found that Micron Technology's (NASDAQ: MU ) products have "relatively serious" potential network securities issues.

China warned that operators of critical information infrastructure should stop purchasing the goods.

China's Cyberspace Administration, which announced a review of Micron( MU ) in late March, announced its findings in a statement on Sunday.

Micron also released a statement, saying it's evaluating China's conclusions and assessing its next steps.

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Drama over the debt ceiling continues but things took a positive turn on Sunday night as Air Force One returned from the G7 summit in Japan.

President Biden said, "It went well," after speaking with House Speaker Kevin McCarthy. McCarthy described the call as "productive."

There have been a lot of questions surrounding the 14th Amendment and whether it would be an effective solution to the crisis.

Biden confirmed his belief that "we have the authority" to invoke the article, though a series of legal challenges could still mean the U.S. would default on its debt.

Meanwhile, Treasury Secretary Janet Yellen reiterated her warning that a default could take place as early as June 1 , and that "hard choices" would need to be made about which "bills will go unpaid" if the debt limit was not raised.

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One company reporting earnings this week is Lowe’s.

Last week we had what could be a preview of what to expect from Lowe’s through its competitor, Home Depot.

Home Depot reported a mixed Q1 earnings report. The company reported a comparable sales miss and light guidance.

But as Kim Khan noted on Saturday’s episode of the Catalyst Watch, Lowe’s looks good to Jefferies.

Lowe’s reports earnings tomorrow, Tuesday, May 23rd.

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Exxon Mobil (NYSE: XOM ) recently purchased drilling rights to a sizable chunk of land in Arkansas where it plans to produce lithium.

The Wall Street Journal reported Sunday that Exxon bought 120K gross acres from Galvanic Energy for at least $100M.

The land is in the Smackover formation of southern Arkansas .

Galvanic Energy believes the Arkansas prospect could contain enough lithium carbonate equivalent to power 50M electric vehicles.

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Mediterranean-themed restaurant chain CAVA Group ( CAVA ) has filed for a $100M initial public offering.

The company did not specify how many shares it intends to offer or the price.

CAVA hopes to list its shares on NYSE under the symbol CAVA.

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Volvo will sell 1,000 electric trucks to Holcim.

This is the largest commercial order to date for Volvo electric trucks, and the first 130 trucks will be delivered in 2023 and 2024.

Holcim is a global manufacturer of building solutions, with headquarters in Switzerland.

The trucks will be operational across Europe between now and 2030.

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Broadcom's (NASDAQ: AVGO ) planned $61 billion purchase of VMware has been extended to Aug. 26.

The termination date was set to expire this week as regulators continue to scrutinize the deal.

The end date was extended until Aug. 26 from May 26, according to an 8-K filing on Friday. The date may be further extended another three months until Nov. 26 if the deal isn't completed.

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In our day watch is Farfetch ( FTCH )…the luxury e-commerce company ended Friday up more than 14% on stronger-than-expected sales .

The London-based online retailer reported a beat on top and bottom lines for the first quarter.

In terms of geographic growth, the return of demand in China was cited as a key factor fostering an optimistic outlook from management.

Farfetch has a market cap of $1.97B.

And when you look at the ratings summary on seeking alpha you’ll see that SA Analysts and the Quant rating say this one is a hold. Wall Street says it’s a buy.

Michael Wiggins wrote an article about the earnings. It’s entitled Farfetch Q1 Earnings: Back To Growth Mode. In the article he says Farfetch has made one very large move in the right direction.

He says he’s unsure about the company’s long-term viability, but there was positive progress in profitability for the quarter.

Check out the article. The easiest way to do that is with a premium account. It’s less than 5 bucks for the first month. Just go to seekingalpha.com/subscriptions .

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And finally,

I want to tell you about our weekly survey that appears in the Wall Street Breakfast daily one page summary.

How much do you trust the economic data that is published by the federal government?

Be sure to share with us what you think.

We include all transcripts and links on Seeking Alpha where we publish under Wall Street Breakfast, we also include links to all articles on our podcast show notes, found under the episode description on your podcast player.

NOW MORE ON THE MARKET

U.S. stocks on Friday snapped a two-day win streak.

The Nasdaq ( COMP.IND ) ended down 0.2%. The S&P 500 ( SP500 ) fell 0.1%. The Dow ( DJI ) slipped 0.3%.

Of the 11 S&P sectors, seven ended in the red, led by Consumer Discretionary. Energy and Health Care topped the gainers.

Looking at the weekly performance of the markets, the Nasdaq Composite ( COMP.IND ) posted a hefty +3% gain, as investors have continued to buy technology stocks. The S&P 500 ( SP500 ) gained 1.6% for the week, while the Dow ( DJI ) added 0.4%.

Also in focus on Friday was Fed chief Powell, who was speaking on a panel at a Research Conference. Powell reiterated that the Fed monetary policy committee remains "strongly committed" to bringing inflation down to 2%.

The central bank chief said that failure to do so would "prolong the pain" and hardship that Americans experience when prices aren't stable.

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Now let’s take a look at the markets as of 6:20 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are mixed. The Dow is up a small fraction, the same is true for the S&P 500 and the Nasdaq is down a tiny fraction%. Crude oil is up 0.2% at less than $72 a barrel. Bitcoin is down 0.4% at less than $27,000.

In the world markets, the FTSE 100 is up 0.3% and the DAX is down 0.2%.

On today’s economic calendar, we have a few Fed speakers on deck today. James Bullard, Thomas Barkin and Mary Daly are set to speak at 8:30, 10:50 and 11:05 am, respectively.

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