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Wall Street Breakfast: Will It Last?

Apr. 05, 2022 7:48 AM ET137 Comments
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Will it last?

U.S. stock markets have notched an impressive rally since mid-March, with the three major indices sailing out of correction territory in under two weeks. The Nasdaq pushed even higher on Monday, climbing 2% on sentiment surrounding Elon Musk's big stake in Twitter (TWTR). Bulls argue that companies will continue to deliver bumper profits despite the Fed's rate-hiking cycle, while so-called meme stocks are recording big increases in options activity. The sharp unanticipated rebound is having analysts rewrite their latest market forecasts, though some are holding strong by comparing it to a bear market trap.

Bank of America: "Over the last two weeks, the S&P has produced one of its sharpest rallies in history, larger than the biggest 10-day rallies in seven of the S&P's 11 bear markets since 1927," said analysts led by Gonzalo Asis and Riddhi Prasad. "It has done so despite clearly weaker fundamentals (more hikes, higher inflation, and curve inversion) and the Fed leaning against equity market strength to hike faster. The worsening macro backdrop and market-unfriendly Fed make sustained U.S. equity gains unlikely. In practice, this means lower risk assets."

Morgan Stanley: "The bear market rally is over," declared U.S. Equity Strategist Michael Wilson. The economy is headed for a sharp slowdown as a "payback in demand from last year's fiscal stimulus, demand destruction from high prices, food and energy price spikes from the war that serve as a tax and inventory builds that have now caught up to demand." Note that Wilson had similar bearish views in 2021, which he later admitted were "wrong" as U.S. benchmark indexes powered to continuous record highs.

J.P. Morgan: "Geopolitics remains a wild card, but we do not see equities fundamental risk-reward to be as bearish as it is currently fashionable to portray," analysts led by Mislav Matejka wrote in a research note. JPMorgan (JPM) CEO Jamie Dimon also flagged the "strength of the U.S. economy" in his annual letter to shareholders on Monday, citing "plentiful jobs with wage increases and more than $2T in excess savings." The consumer is in "excellent financial shape (on average)," he added, while leverage is "among the lowest on record." (8 comments)


Industry-changing technologies can take years or even decades to standardize, and many battles can be waged until a clear victor emerges. One such battle is currently taking place in the EV industry as companies debate the best way to power the cars of the future. NIO (NYSE:NIO), one of China's leading EV makers, is looking to expand the uptake of battery-swapping as it tries to gain ground on other automakers like Tesla (NASDAQ:TSLA) that have turned to charging stations instead.

Quote: "We are open to selling the platform," declared Hui Zhang, managing director of NIO Europe, which is looking to win over more drivers on the continent (currently one of the most competitive markets for EVs). It follows the recent opening of NIO's first European battery swap station in Norway, which was placed alongside superchargers used by Tesla, in part to display how much faster of a system it is. A battery swap by NIO only takes about 5 minutes via a dedicated robot-operated bay, compared to the fastest chargers on the market that give some power quickly, but take up to an hour to fully recharge an empty battery.

More pros of battery swapping include eliminating the costs of the battery, which can account for more than a third of a new vehicle's price tag. Drivers are also not worried about depreciating capacity or the value of their cars since the battery is not deeply integrated into the vehicle. Others caution that the technology works better in areas with high urban density and a scarcity of driveways, while the costs of building a swap station could be much higher than the infrastructure of a fast-charging network.

Some history: Tesla began conducting battery swapping trials in 2013, but dropped the project a few years later as consumers increasingly expressed interest in its Supercharger network. Three years earlier, Renault (OTCPK:RNLSY) trailblazed the industry by becoming a primary partner for Better Place, an Israeli startup that hoped to revolutionize the e-mobility industry. The company initially set up shop in Israel, Denmark and Hawaii, but was plagued by financial difficulties and mismanagement, and eventually went bankrupt in 2013. (23 comments)

'mRNA like a piece of software'

While more than 100 viruses impact humans, vaccines only exist right now for 25. Looking to change that, Moderna (MRNA) CEO Stephane Bancel believes the company can employ the same technology it used to quickly create a COVID vaccine in 2020 to develop shots for other viral diseases. He even predicts that many adults will eventually receive annual COVID boosters, which could be combined with variant-specific doses, or other vaccines, like those that target the flu.

Quote: "Our first priority is to get an annual iPhone-like booster for all respiratory diseases," Bancel said in a speech to the Boston College Chief Executives Club. "You're going to get your [new] iPhone every year in September, and you're going to get your 'Moderna iPhone booster' every year [as well]. We're going to keep adding more and more 'apps' for viruses, and we'll refresh all of those and update all of those every year."

The Moderna CEO spent a decade doing mRNA vaccine research before COVID even emerged, but "once you get all of the pieces of the technology to work, then the next one is [easy]." As such, Bancel expects the firm to have annual COVID boosters available beginning this fall to protect people from new virus variants like Omicron. Moderna's rivals like Pfizer (PFE), BioNTech (BNTX) and Johnson & Johnson (JNJ) appear likely to develop future COVID booster shots as well.

Go deeper: While many consumers have gotten two-shot initial vaccinations and a third booster shot, Bancel said whether consumers get additional shots will depend on people's ages and individual risk tolerances to things like "long COVID." Bancel said he doesn't think his 19- and 20-year-old daughters will need boosters because "young people have very strong immune systems," but the 49-year-old CEO said he'll probably get additional booster shots himself because he's "petrified" to have symptoms that linger for months or years. (92 comments)

Russian business

The war in Ukraine has been a boon for Chinese companies as Western firms continue to suspend or exit their businesses in Russia. In fact, China's top envoy to Russia, Zhang Hanhui, has urged businesspeople in Moscow to seize economic opportunities created by the crisis, like adjusting their company structures and filling the "gap" in the Russian market.

Statistics: Telecom equipment supplier Huawei saw phone sales in Russia surge 300% in the first half of March, according to MTS, the country's largest mobile provider. Brands like Oppo and Vivo also logged triple-digit increases.

Meanwhile, popular Chinese companies such as Alibaba (NYSE:BABA), Tencent (OTCPK:TCEHY) and Xiaomi (OTCPK:XIACY) continue to conduct "business as usual" in Russia, while others that have made a decision to leave have quickly found themselves in hot water. In late February, ride-hailing giant DiDi (NYSE:DIDI) announced it would pull out of the country, only to reverse course five days later. Neither statement mentioned geopolitical factors, but users online pointed to heavy public pressure.

Outlook: If Chinese companies continue to sell in Russia, it could cut off their business in the West. Many of the electronics they export often contain high-end semiconductors - or are made with U.S. tools and machinery - making them subject to sanctions on Moscow. In the meantime, firms like Huawei are walking a tightrope, refraining from calling out Russia while trying to avoid secondary sanctions. "These policies and measures are complex and constantly changing, and Huawei is still in the process of careful evaluation," rotating chairman Guo Ping said in Shenzhen.

Today's Markets

In Asia, Japan +0.2%. Hong Kong closed. China closed. India -0.7%.
In Europe, at midday, London +0.3%. Paris -1.3%. Frankfurt -0.5%.
Futures at 6:20, Dow -0.2%. S&P -0.2%. Nasdaq -0.1%. Crude +0.4% to $103.72. Gold flat at $1933.30. Bitcoin +1.4% to $46,640.
Ten-year Treasury Yield +4 bps to 2.45%

Today's Economic Calendar

8:30 Goods and Services Trade
9:45 PMI Composite Final
10:00 ISM Service Index
10:00 Fed's Kashkari Speech
11:05 Fed's Brainard Speech
2:00 PM Fed's Williams Speech

Companies reporting earnings today »

What else is happening...

France's Macron calls for ban on Russian oil and coal imports.

Treasury halts Russian bond payments from U.S. accounts.

Baltic Dry Index down for eighth day as rates sink across the board.

Roku (ROKU) signs multi-year deal extension with Amazon (AMZN).

Citi (C) is said to pause SPAC IPOs due to new SEC rules.

Back to dealmaking: AMD (AMD) to acquire Pensando for $1.9B.

EV adoption: Hertz (HTZ) to buy 65,000 vehicles from Polestar.

U.S. coal prices top $100 for first time since 2008.

Climate change could see the U.S. lose $2T each year - White House.

Exxon (XOM) guides Street to higher Q1 earnings estimates.

This article was written by

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Comments (137)

eduso profile picture
"More pros of battery swapping include eliminating the costs of the battery, which can account for more than a third of a new vehicle's price tag."
And who will pay for the extra 1-2x batteries needed for the battery swapping? 1-2x of a new vehicle's price tag?
newfruit profile picture
Russia can turn to China but the Chinese don't pay the same price as EU and US consumers would, so a sale is a sale but less. If things continue as they are Russia is going to become China's little lap-dog. Not the glorious super-power they hope to return to but the one that beat its chest only to kowtow themselves into irrelevance and further poverty.

All of this is to say that China may see this as an opportunity but if it becomes one or the other, which way will they go? The world economy is truly in the balance.
Active_Trader profile picture
$sbux Good morning everyone. What a beautiful day it is. Welcome to Crash Wednesday. Loving my short Starbucks position. 425amest premarket SBUX is bid ask 83.90 / 83.91 en route to 70's, dramatically lower thereafter imho re due diligence, looking forward to several months ago 40's. Indices and indices-futures are a beautiful red in tandem withna tremendous amount of very negative socioeconomic news including incoming USA recession advised today by Deutch Bank, not surprising at all, with that rest assured consumer spending will implode more so with higher interest rates, inflation, covid6thwave, lockeown, et al. Folk don't drink 5 dollar cups of coffee in a recession, make it at home, get a thermos, works for me. With my savings I short more SBUX for profits. Good health and trading to all. www.marketwatch.com/...
Riot mined a record 511 bitcoin last month. They are almost all gone. Will be a worthless motherlode when US digital dollar comes out this summer. Bitcoin scams keep going up as Putin is funding his war with bitcoin.
the new generation profile picture
What happened why are the markets crashing
@the new generation Just BTFD and be happy. The question is, why haven’t they crashed sooner and deeper. The world is in deep dodod.
@the new generation Market is still near all-time high, not a crash.
@Bill345 market goes up and down, up and down, up and down
this Hertz deal with Polestar ( sounds like a winner) i hop that is for europe cause i'm not renting one in us.
Shipping dry bulk index down again i knew we shouldn't have bought sblk
OK annual shots for respiratory viruses that will go over well with the antivaxene crowd.. wish they had a vccine for cancer,heart disease.
@john boy it's called no red meat
@john boy If their only product is MRNA shots, then of course they see a future where everyone gets one of their shots once a year.
@Phil Dumfee
is red meat the cause or the cure or prevention
Whats the deal with these big bamks they cannot aggree if things will be ok or going downhill, Jammie Diamond says one thing another big bank says something different, to me the economy has to slow down therefore profits MIGHT slide, jobs will be OK but inflation of above 7% will continue but hey whats it all mean mr whoopie
deercreekvols profile picture
General Motors and Honda Motor will develop a series of affordable electric vehicles based on a new global platform, the companies announced Tuesday morning.
More affordable EVs are crucial to the mass adoption of the emerging technologies. While EVs are growing in popularity, they’re largely priced for luxury buyers. The GM-Honda developed vehicles are expected to be priced below $30,000.

Both GM and Honda are down on the day. Trying to figure this out. News of developing affordable EVs and the stocks drop.

Competition continues in the EV sector and this partnership is more evidence that there are plenty of companies to invest in to have exposure in the EV sector.
dont get your hopes up as everbody and their sister has been saying the same thing for a year now and nada
@deercreekvols I'm thinking these will be commuter type cars and in the size range of a Smartcar. Leaf or BWW i3 with a smaller or interchangeable battery. At any rate there are several companies well ahead of them in development and sales. Probably about the time these cars hit the market our Niro EV lease will be up with a $20k buy out price with 40k miles and 60k left on warranty. We'll see what's happening in the EV car market in 3.5 years as in my view the biggest car manufacturers, GM, Toyota, Honda are not really up to speed on EV's.
@deercreekvols Given the world situation with Russia - Ukraine and an increasingly likely China -Taiwan (or someone) issue, the likelihood is that the there will not be sufficient supporting commodities readily available and processable to produce the batteries needed to bring EVs up to even 50% of annual production (currently at less than 10%) in the next 10-15 years. That does not mean there are not many investing opportunities in that run up.
"The bear market rally is over,"

Looks like we are getting lower highs.
The best correlation to dying from the C-virus is being unvaccinated, not gender, not age, not weight, nor any other way to classify a population. The decision to vaccinate is the best way to save your life. The virus mutates just as with the influenza, rhino or other virus in general circulation. Annual vaccinations to reduce the risk should remain a personal decision but it is wise to vaccinate.
@LK106218 hard to make informed decision when data on negative effects of the CV jab is suppressed. Like the flu vaccine it seems the CV jabs work some of the time so until we have good data on the negative results of the CV jabs I'm done after the first two.
@SB Pirate has Novavax gotten approval yet?
JRHighley profile picture
@LK106218 This is just patently false. Underlying conditions such as diabetes, obesity, and advanced age are the greatest correlating factors. Vaccinations come with an absolute risk reduction of 0.85% (vs. a 95% "relative risk reduction"), according to Pfizer's own data. And so far, any concern about side effects or adverse events (such as myocarditis/pericarditis and blood clotting) is being disturbingly censored and swept under the rug to the benefit of wealthy pharma agents and federal bureaucrats.
Does anyone here own an EV and actually park it in your garage?
yogatech profile picture
@wyostocks If an EV catches fire in your garage and burns down your house, does your insurance cover it? Or is it now or soon to be considered homeowner negligence?
@yogatech Good question. I don't own one but if I did I sure wouldn't do it.

you are concerned about an EV car catching fire but drive around with 9-20 gallons of combustible gasoline every day?

Traditional ICE vehicles are many multiples more likely to catch fire than an EV. Its not even close. It just happens so often you dont see a news story about it. I saw a car smoking on the highway (ICE) the other day. If that was an EV it would have been surrounded by news vans.

maddaj19 profile picture
I don't see a scenario where Musk doesn't take an activist roll in $TWTR up to including a buyout. I wouldn't put it past him to privatize the modern town square to preserve our first amendment ideals.
@maddaj19 you do realize that the 1st amendment can't be applied here...<3
@JGasu What? Of course it can. The censorship has got to stop.
You are correct and I believe that is why he used the word "ideals."
maddaj19 profile picture
I'm not too keen on buying an electric car until $TM is making one. And there's exactly 0% chance I'm buying a Chinese made EV.
Apple within $4 of all time high. Health care starting to wake up. Can't imagine a better place to be over next 10-20 years.
Eponymous One profile picture
"A battery swap by NIO only takes about 5 minutes"

Which is forever, considering that folks have been using backup batteries on a routine basis in an ICE environment as long as I can remember, which considerably longer that most as it turns out.

A great idea before its time or perhaps another solution looking for a problem?
@Eponymous One “folks have been using backup batteries on a routine basis in an ICE environment”
Not sure what you mean here, can you please explain?
Eponymous One profile picture
@Jake Speed

There are different levels here, both literally and figuratively.

Many commercial and industrial applications to include automotive use dual, supplemental, or backup batteries to ensure safety, maintainability, availability, reliability, and or performance depending on the specific requirements application, and operating environment.

@Eponymous One
How long is the wait in line 3 hours
matttrakker profile picture
Isn’t the battery the part that fails and blows up or catches fire? That’s not the part I want to play roulette with.
@matttrakker - if it catches fire, simply swap it out.
WeenRules profile picture
@matttrakker A few years ago I was in Reno on business and met a Tesla employee at the bar. He told me batteries were catching fire on the production line so I shorted TSLA. I lost enough money to buy one. Lesson learned.
@matttrakker I think we need more data. From what I've read I think the batteries catch on fire when exposed to atmospheric oxygen (accident) or when the fire starts someplace else like the voltage regulator interface getting too hot, or the charge cord getting too hot when plugged in. Our Kia instructions recommend 100 watt charger max. I limit to 50 watt to be safe as the extra charge is small. There are now 350 watt chargers out there that require different interface. Would be easy for someone with an older car to confuse if they do not read the instruction manual.
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