2023-11-13 10:57:00 ET
Summary
- Wedbush Securities predicts a new bull market in technology stocks, with Apple as its top pick.
- Exxon Mobil plans to become a leading producer of lithium for electric vehicles by 2030.
- Stock and bond markets are punishing companies with weak balance sheets, with smaller companies being the most vulnerable.
Listen below or on the go on Apple Podcasts and Spotify
Wedbush analyst Dan Ives picks Apple as the leader for tech in 2024. (0:15) Exxon plans to become a leading producer of lithium for the EV sector. (1:48) Stock and bond markets are now punishing zombie companies . (3:04)
This is an abridged transcript of the podcast.
Out top story so far
Wedbush Securities says a new bull market in technology stocks has started, with spending set to accelerate next year.
Apple (AAPL) is its top pick in the space.
Analyst Dan Ives says Wall Street is "significantly" underestimating the amount of spending in the cloud and artificial intelligence for next year. He thinks spending will rise between 20% and 25% (compared to estimates of up "modestly") especially as use cases explode in both the enterprise and consumer spaces.
He says: "While it’s still a murky macro and the Fed shadow/10-year remains an albatross around tech stocks and multiples, we believe a short covering for the ages for the tech sector into year-end is on the horizon as the fundamental picture for growth tech stocks is rock solid based on our recent checks."
"We believe the new tech bull market has now begun and tech stocks are set up for a strong 2024 as the AI spending tidal wave hits the shores of the broader tech sector."
Along with Apple, his preferred names are Microsoft (MSFT), Google (GOOG) (GOOGL), Palo Alto Networks (PANW), Palantir Technologies (PLTR), Zscaler (ZS), CrowdStrike (CRWD) and MongoDB (MDB).
In today’s trading
Stocks are starting the week lower after the broader market notched a second-straight weekly win.
The Nasdaq ( COMP.IND ) trails the S&P ( SP500 ) and the Dow (INDU). Just two sectors are higher: Energy ( XLE ) and Consumer Staples (XLP). Info Tech ( XLK ) is the weakest as higher longer yields weigh on growth stocks.
The 10-year Treasury yield ( US10Y ) is up to back around 4.70%.
Among active stocks
Google-parent Alphabet has exited its position in Robinhood Markets (HOOD), the company disclosed in a filing. The tech giant had reportedly held a stake in Robinhood since it was an unlisted startup.
Exxon Mobil ( XOM ) unveiled plans to become a leading producer of lithium. The company says it has started work on the first phase of operations in Arkansas with a target of starting production by 2027. Exxon aims to be producing enough lithium to supply the manufacturing needs of more than 1 million electric vehicles per year by 2030.
Tyson Foods ( TSN ) swung lower in early trading after posting a mixed earnings report. Revenue fell 2.8% year-over-year to $13.35 billion and missed the consensus mark of $13.0 billion. Volume was down 0.6% during the quarter and pricing was 1.4% lower than a year ago. Volume was higher for the chicken and prepared foods segments, while the beef and pork segments saw a decline.
In other news of note
The United Auto Workers Local 862 union at Ford Motor's ( F ) assembly plant in Louisville, Kentucky disclosed that 55% of the production workers voted against ratifying the new labor contract, while 69% of the skilled trades workers that cast votes were in favor of the contract.
Tracking indicates that 70.7% of workers have voted in favor of the deal across all of the United Auto Workers plants that have taken votes.
The rejection of the deal by Louisville production workers is considered a signal that approval of the deal is not guaranteed. The union has not issued a statement over the new development.
And in the Wall Street Research Corner
The equity and bond markets are taking aim at companies with weak balance sheets, according to Societe Generale strategist Albert Edwards.
Edwards, a well-known bear, says Epiq’s latest bankruptcy data shows a "shocking" 106% rise year over year.
"This is just the tip of a huge corporate Zombie iceberg now being exposed - with smaller companies most vulnerable," he said.
"Bond investors clearly don’t need more evidence, with higher-risk junk (CCC+) ( HYG ) ( JNK ) materially underperforming. This is not the stuff of soft landings."
Edwards notes that his Quant colleague Andrew Lapthorne “has stressed that the equity market is already punishing companies with the weakest balance sheets in the US small cap space (Russell 2000) ( RTY ) ( IWM ) and thinks as each domino falls, investing in good ‘quality’ companies will be a key investment theme."
The “trade of choice is to go long the Russell 2000 stocks with the strongest balance sheets while shorting the index.”
For further details see:
Wall Street Lunch: Wedbush Sees A New Tech Bull