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🌩️ Weathering the Chinese Auto Market
Plus, bad news for biofuel
Happy Tuesday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.
🟩 | US Stocks Rose on Tuesday. All three major indexes rose, with the S&P 500 closing above 5,500 for the first time following Jerome Powell’s recent statement regarding progress on inflation.
📈 | One Notable Gainer: Apple’s stock rose 2%. Today’s gains marked an all-time high for the tech giant, which has seen its shares rise recently with the announcement of Apple Intelligence and recovering iPhone sales in China.
📉 | One Notable Decliner: Shares of Polestar tumbled 6% after the EV manufacturer posted an increase in car deliveries but a wider-than-expected net loss for the financial quarter.
🌩️ | Tomorrow's Trade: Weathering the Chinese Auto Market. Scroll down for more.
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YESTERDAY’S POLL RESULTS
🟩🟩🟩🟩🟩🟩 Bullish
🟨🟨🟨🟨⬜️⬜️ Bearish
S&P 500 Heatmap. Credit: Finviz
All Stock Heatmap. Credit: Finviz
Global ADR snapshot. Credit: Finviz
MARKET MOVERS
FUN (+5%) Shares of Cedar Fair rose on news that it will merge with Six Flags to form the largest amusement park operator in North America (Fox Business)
RIVN (+7%) Rivian’s stock rose after its deliveries in Q2 topped its own expectations, and the EV startup maintained its 2024 guidance (IBD)
PYPL (+2%) Susquehanna analysts raised their rating on PayPal to Positive from Neutral and increased their forecast for earnings (Barron’s)
PSTG (-4%) Pure Storage’s stock had its worst day of the year after a UBS analyst downgraded shares, citing competition concerns (Barron’s)
LEN (-2%) Shares of Lennar fell after downgrades by Citi and Raymond James, which noted broader housing market weakness in their analyses (CNBC)
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OVERHEARD ON THE STREET
Reuters: Concerns of a bird flu pandemic prompted the US to award Moderna with $176 million for vaccine development.
WSJ: Shell will pause the construction of its Rotterdam biofuels facility, one of Europe’s largest, seeking to reign in project costs amid weak global demand.
YF: Economists and some Federal Reserve officials are on alert that pain could be on the horizon for American workers amid signs of a slowing labor market.
TC: A group of senators are calling for Synapse’s owners and fintech partners to immediately restore customers’ access to their money.
CNBC: EverPass Media, which owns the rights to NFL “Sunday Ticket,” is getting into the business of streaming live sports at bars and restaurants.
TOMORROW’S TRADE IDEA, TODAY
Times Are Tough
Competition is heating up in Chinese auto manufacturing for EV and hybrid vehicles. Automakers are slashing prices and upgrading vehicle features to keep up. Many are also exploring overseas opportunities, but strained trade relations with the US and EU are making it difficult.
According to Morgan Stanley (MS) analyst Tim Hsiao, the Chinese auto market might begin to consolidate. This could be good news for automaker Geely (175-HK), which owns Volvo and several other automakers.
Solid Growth
According to the investment bank, Geely now controls the third biggest piece of the Chinese auto market pie.
Last Thursday the company announced the development of its new lithium iron phosphate battery, boasting a 50-year lifespan, which would open it up to secondhand sales. It plans to test the battery in its vehicles this year.
New energy vehicles (NEV) now account for 32% of Geely’s autos. Sales are expected to grow by 22% in 2024, and the company reported a revenue increase of 56% year-over-year in Q1.
Making It to Greener Pastures
Over the past year, Geely’s profits attributable to shareholders have more than doubled, reaching 1.56 billion yuan. Morgan Stanley analysts have set a price target of $1.43, around 27% upside from current levels.
The bank believes Geely’s profits will continue to grow as sales increase and NEV losses dissipate. Analysts believe these factors will allow the automaker to weather today’s uncertain Chinese auto market.
Are you bullish or bearish on Geely (175-HK) over the next 12 months? |
TOGETHER WITH CHEWY
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Great Savings: Take advantage of the special deal to get $30 off on purchases over $100, making pet care more affordable.
Fast Shipping: Most orders arrive within 1-2 days, ensuring you get what you need quickly.
Exceptional Customer Service: Experience top-notch customer support that’s ready to help with any questions or issues.
User-Friendly Shopping: Enjoy an easy-to-navigate website with detailed product descriptions and reviews from other pet owners.
Pamper your pet with $30 off essentials when you spend $100 or more at Chewy. Shop now
ON OUR RADAR
AP: An appeals court has allowed the U.S. Education Department to move ahead with a plan to lower monthly payments for millions of student loan borrowers.
Reuters: The Biden administration has revoked eight licenses that had allowed companies to ship goods to Chinese telecoms equipment giant Huawei.
AP: A judge ruled that Biden cannot delay consideration of liquefied natural gas export projects amid a legal challenge from 16 Republican-led states.
ABC: Inflation is down in Europe, but the European Central Bank is in no hurry to make more rate cuts.
Bloomberg: The Biden administration is awarding $504 million to 12 regional tech hubs to expand research in areas like AI and semiconductor manufacturing.
What did you think of today's edition? |
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