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Wage Cut And Apple Complacency Please click here for a chart of Walmart Inc (NYSE: WMT).
Note the following:
- The Morning Capsule is about the big picture, not an individual stock. The chart of Walmart stock (WMT) is being used to illustrate the point.
- The trendline on the chart shows the steady move up in Walmart stock.
- The chart shows Walmart stock is breaking out on the news of wage cuts.
- RSI on the chart shows the stock has more room to run.
- As a full disclosure Walmart stock is in the Model Portfolio of ZYX Buy by The Arora Report.
- Walmart is the largest private employer in the country. For this reason, significant attention is paid to how Walmart pays its workers. The news is that Walmart is cutting starting pay for new hires with functions such as personal shopping, shelf stocking, and order picking.
- In The Arora Report analysis, wage cuts in the lower income segment will likely accelerate.
- In the higher income segment, employers are finding ways to layoff higher paid workers and replacing them with new hires at lower pay.
- Especially hard hit are many IT workers. Many IT workers have been told that there are no raises this year. Moreover, many IT workers who got bonuses last year are being told that there will be no bonuses this year. A large number of IT workers who were laid off last year and are insisting on matching their prior pay are still unemployed after months of searching for a job. There are reports of many workers accepting new jobs with as much as a 30% pay cut.
- Goldman Sachs Group Inc (NYSE: GS) is planning another round of job cuts to cull underperformers. As many as 5% of employees may be affected. Previously, Goldman Sachs cut 3,200 employees in the first quarter, the biggest job cut since the financial crash of 2008.
- The news of job cuts and wage reductions has to be music to the Fed’s ears. Afterall, this is exactly what the Fed has been intending.
- In The Arora Report analysis, the news of wage cuts and job reductions is a double edged sword. On the positive side, it reduces inflation. On the negative side, it will reduce consumer spending. This is especially important because the biggest reason the recession has been postponed is excessive consumer spending.
- There is complacency about Apple Inc (NASDAQ: AAPL) becoming a pawn in U.S. China geopolitics. In The Arora Report analysis, the complacency about Apple, along with over-ownership, represents a higher risk than is generally believed.
- Another challenge to Apple is a chip breakthrough in China leading to Huawei Mate 50 Pro. Previously due to the U.S. chip sanctions, Huawei was not able to produce a 5G phone. In a breakthrough, Semiconductor Manufacturing International, aka SMIC, a Chinese state-owned chip manufacturer was able to produce an advanced chip. Before the U.S. ban, Huawei had 12% of the smartphone market globally. Especially in China, the ban benefited Apple. The U.S. government is concerned and investigating how Huawei was able to produce such an advanced phone. This is an important subject for investors.
- Based on the U.S.’s request, the Indian military is reviewing how it will respond in the event of a Chinese invasion of Taiwan.
- In The Arora Report analysis, investors are underestimating the risk of a Chinese invasion of Taiwan.
- As an actionable item, the sum total of the foregoing is in the protection band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the protection band.
Magnificent Seven Money Flows In the early trade, money flows are positive in Apple Inc (NASDAQ: AAPL), Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc Class C (NASDAQ: GOOG), Meta Platforms Inc (NASDAQ: META), Microsoft Corp (NASDAQ: MSFT), NVIDIA Corp (NASDAQ: NVDA), and Tesla Inc (NASDAQ: TSLA).
In the early trade, money flows are positive in SPDR S&P 500 ETF Trust (ARCA:SPY) and Invesco QQQ Trust Series 1 (NASDAQ: QQQ).
Momo Crowd And Smart Money In Stocks The momo crowd is buying stocks in the early trade. Smart money is