😲 Adobe Has Some Serious Competition

Plus, fears of a US recession are mounting.

Happy Saturday, and welcome back to our super skimmable Street Tweets newsletter.

Yesterday, Intel’s stock took an absolute nose dive, with shares falling 26%, marking its worst trading session ever.

Erasing $30 billion in market value over a single day is no joke. So, what was the cause?

Intel badly missed Wall Street’s targets for the second quarter and suspended its quarterly dividend. The company also announced it is laying off over 15,000 employees and will stop all “non-essential work.”

At the core of Intel’s woes is increased competition. Intel traditionally had a dominant market share in central processing units for data centers. But, as its latest quarterly report showed, Intel is losing market share fast to Advanced Micro Devices in both data center and client computing markets.

With Intel losing market dominance, it could be good news for stocks like AMD, Qualcomm, and Taiwan Semiconductor Manufacturing…

Plus, today’s partner is packing 40 years of investing secrets into one free guide. Grab it here.

MARKET REVIEW

TL;DR: This week saw a dramatic sell-off in U.S. stock markets, triggered by a much weaker-than-expected July jobs report. The S&P 500 and Dow fell by more than 2% for the week, and the Nasdaq composite fell by nearly 4%. This comes amid exacerbated by concerns over slowing economic growth and rising unemployment, which reached 4.3%. Tech giants like Amazon and Intel saw substantial losses due to disappointing earnings and future outlooks, while bank stocks were hit hard by recession fears.

Despite a brief rally mid-week following the Federal Reserve’s hint at a possible rate cut in September, the Friday job data led many to believe the Fed should have acted sooner. The 10-year Treasury yield fell to its lowest since December as investors sought safety in bonds, reflecting heightened anxiety over economic stability and the effectiveness of recent monetary policy decisions.

MARKET PREVIEW

TL;DR: This week’s key economic events begin on Monday, with the release of the S&P final U.S. services PMI for July, expected at 55.0%. This is followed by the ISM services report, anticipated at 48.8%. On Tuesday, August 6, the U.S. trade deficit for June will be announced, with a projected figure of $75.1 billion.

Wednesday, August 7, brings the consumer credit report for June, expected to show an increase of $11.3 billion. On Thursday, August 8, the day starts with the initial jobless claims report for the week ending August 3, followed by June’s wholesale inventories data, anticipated to show a 0.6% increase. Richmond Fed President Tom Barkin is scheduled to speak later in the afternoon.

Friday, August 9, has no major economic events scheduled.

ByteDance has a knack for industry disruption…

In case you weren’t aware, ByteDance is also the parent company of TikTok, the social media platform that took Facebook and Instagram head-on and won — by 2023, its app revenue market share surpassed both of Meta’s platforms.

As seen in the chart above, it doesn’t look like ByteDance is finished disrupting industries quite yet.

CapCut was launched outside of China in 2020 and already has 81% of the total active users for mobile video editing.

This is especially bad news for Adobe, whose stock is down over 9% year-to-date. Part of this sell-off is fear that users will abandon Adobe’s sophisticated apps, like Photoshop, for simplified tools made by companies like CapCut, Canva, and OpenAI.

Adobe may get some breathing room next year. The TikTok ban is set to take effect on January 19th, 2025, and, under the divest-or-ban law, it would also take CapCut off the US market.

Gold is hitting new highs, and there are three famous investors bullish on the precious metal.

Last weekend, Danny Moses, Vincent Daniel, and Porter Collins, the investors known for successfully betting against the housing market in 2008, said gold is one of their top long bets.

Collins highlighted central banks around the world inflating their currencies as a key macro trend to invest in gold:

“If you just think about that one dollar in your wallet, tomorrow it’s worth less. I think that in … one, two, three, five, 10 years, you’re going to make a lot more money in gold than you will in U.S. Treasurys.”

Seawolf Capital, founded by Collins and Daniel, stated in its recent annual note to shareholders that it is very long on gold, gold miners, and Bitcoin.

Are you bullish or bearish on gold?

Login or Subscribe to participate in polls.

TOGETHER WITH DIVERSIFIED TRADING INSTITUTE

Investing expert Tom Busby's free guide, the Little Black Book, could do two things:

First, empower everyday traders to make what could be more profitable choices and second...

It could make the execs on Wall Street absolutely furious.

Find out why today!

Well, this is unusual.

Stocks rise and fall for various reasons, but nationalism is rarely a key driver of stock movement. But in the case of Taiwan Semiconductor Manufacturing, it most certainly is.

Taiwan’s retail investors view TSMC as a symbol of national pride and a “holy mountain that safeguards the nation.”

That’s because the company’s dominance in advanced chip manufacturing, essential for modern military machinery, is a major deterrence of Chinese territorial aggression. If China were to invade, it could cause the US and other allies to intervene due to their vested interest in this critical supply chain.

However, Taiwan’s chip industry dominance is also a major reason why China would like to conquer the nation… but TSM already has a deterrent for that.

TSM has confirmed that it has a remote kill switch that will disable all advanced chip machines if China invades, effectively destroying their tech if it gets into the wrong hands.

Will TSM's dominance continue to protect Taiwan from Chinese aggression?

Login or Subscribe to participate in polls.

Short China?

In 2020, hedge funds had roughly 15% of their capital allocated to Chinese equities. Last month, that figure fell to just 6.6%.

If you’ve had an eye on the Chinese economy over the past few months, you shouldn’t be surprised to see hedge funds withdrawing from the nation.

Here’s a run-through of what’s going on with the Chinese economy:

  • Last year, China’s exports fell for the first time since 2016 as global demand for the nation’s goods slowed.

  • Excluding students, China’s unemployment rate for young people aged 16 to 24 sits at 14.9%.

  • China’s Q2 economic growth fell short of expectations due to weak consumer spending and declining property investments.

  • China’s benchmark CSI 300 index and the Shanghai Composite Index fell to more than five-month lows this past week.

That said, China has a long history of deploying significant monetary stimulus to support economic growth during downturns. The real question is whether it will work this time…

Are you bullish or bearish on Chinese stocks?

Login or Subscribe to participate in polls.

TOGETHER WITH DIVERSIFIED TRADING INSTITUTE

Investing expert Tom Busby's free guide, the Little Black Book, could do two things:

First, empower everyday traders to make what could be more profitable choices and second...

It could make the execs on Wall Street absolutely furious.

Find out why today!

More like, “The stock market this week.”

First, A quick recap of how the three major indexes ended this past week:

  • S&P 500: -2%

  • Nasdaq Composite: -2%

  • Dow Jones: -4%

These declines came after a flurry of bad news for the US job market.

On Thursday, the Labor Department reported that initial applications for US unemployment benefits increased by 14,000 to 249,000 last week — the highest level in almost a year.

To top that, the Labor Department reported on Friday that nonfarm payrolls increased by just 114,000 jobs in July, substantially below the estimates for 185,000 jobs. And the unemployment rate jumped 4.3%, nearly a three-year high.

Some analysts, such as LPL Financial’s chief technical strategist Adam Turnquist, see this week’s declines as a “natural course” for a bull market reverting from a steep uptrend.

However, not everyone is so optimistic. Fears of a US recession are growing, as seen in foreign stock exchanges. On Friday, Japan’s Nikkei 225 ended 5.8% lower, its biggest daily drop since March of 2020. The cause? The release of the aforementioned US economic data.

Do you expect the US economy to enter a recession within the next 3 months?

Login or Subscribe to participate in polls.

TRIVIA

Last week, we asked: Which technology company's stock was the first to be included in the Dow Jones Industrial Average?

The correct answer was IBM.

This week’s question…

Which stock exchange is generally known for hosting the largest number of IPOs annually?

Login or Subscribe to participate in polls.

What did you think of today's edition?

Login or Subscribe to participate in polls.

Reply

or to participate.