Inflation in January was both hot and cold: Morning Brief

guardianpub on February 15, 2023

Consumer prices rose both faster and slower in January.

All that matters is where you draw the line.

On Tuesday, the Bureau of Labor Statistics’ Consumer Price Index (CPI) for January showed prices rose 0.5% over the prior month to start 2023 and 6.4% over last year on a headline basis.

The monthly increase in headline CPI showed the fastest increase in consumer prices since Oct. 2022; the annual increase marked the slowest increase in prices since Oct. 2021.

On a “core” basis — which strips out food and energy — prices rose 0.4% over last month and 5.6% over last year. This monthly increase marked the fastest rise in core prices since Sept. 2022; the annual increase was the slowest pace of increases since Dec. 2021.

In a word, January’s inflation data was good. In two words, not good.

Of course, the reason investors care so much about inflation is because of what this report may or may not mean for the Federal Reserve.

In the case of Tuesday’s data, this report suggests another 0.25% increase in the Fed’s benchmark interest rate is a near certainty next month. And the likelihood of further action in May just went up, too.

“In our view, inflation is still set to grind lower, but the process is likely to be bumpy and take time,” wrote Wells Fargo economists Sarah House and Michael Pugliese.

“Despite some directional improvement over the past couple of quarters, prices are still growing well-above the Fed’s 2% target, and the tight labor market suggests that there are still inflationary pressures that could forestall a full return to 2% inflation. We continue to look for the FOMC to raise the fed funds rate by another 25 bps at both the March and May meetings and to hold the target range at 5.00%-5.25% through the year’s end to ensure that high inflation will be quelled for good.”

Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote Tuesday, “this report won’t change anyone’s mind about the inflation picture; both hawks and doves will find something to highlight.”

For the hawks, continued firming in rent prices was the star on Tuesday.

“Housing accounted for roughly half of the total increase in the CPI, which won’t sit well with the Fed,” Ryan Sweet, Chief US Economist. “Rental prices were up 0.7% in January. Though market rents have rolled over, it takes roughly a year for that to feed into the CPI.”

For the doves, the balance of services inflation that excludes rent — or about 60% of that basket — rose at an annualized rate of 1.5% in January, per data from Bespoke Investment Group.

In other words, excluding housing, “core” inflation is running below the Fed’s target.

So while every piece of economic data is available for the kinds of fine-toothed examinations that render firm conclusions elusive, January’s CPI report stands as uniquely — and perhaps divisively — open for for interpretation.

“In our view, there is not a lot of new information in this report,” wrote Michael Gapen, an economist at Bank of America Global Research.

And for markets eager to re-write the status quo with each new piece of data that crosses the wire, there is perhaps no greater challenge than seeing more of the same.

Source: finance.yahoo.com

Toyota Makes a Big Change on EVs

guardianpub on February 14, 2023

The Japanese automotive giant will launch Lexus in pursuit of Tesla.

It’s a major u-turn but not a pivot.

This is the complex and contradictory message that the future CEO of Toyota TM has just sent.

Koji Sato, 53, who will take the helm at the automotive giant on April 1, on Feb. 13 spoke for the first time since his promotion last month.

Sato’s position on electric vehicles is particularly eagerly awaited. Toyota has pursued a strategy that runs against the tide of other car manufacturers — legacy companies as well as upstarts — which are mostly betting on battery-powered vehicles.

Under Akio Toyoda, the outgoing CEO and grandson of the founder, Toyota has been reluctant to embrace EVs. The maker of the Camry sedan has taken the opposite bet in the industry by developing hybrid vehicles, like its bestselling Prius model.

It has also pushed for hydrogen-fuel-cell cars.

Lexus Carries Toyota’s EV Ambitions

The company’s argument has often been that there isn’t enough supporting infrastructure — not enough charging stations — to support widespread adoption of electric vehicles. Toyota had also justified its approach by noting the high costs and complex investments inherent in the segment, while doubting the potential of EVs within the mass automobile market.

Sato wants to break with this approach. He wants to accelerate the group’s development in the electrical segment. According to him, Toyota has had a “communication problem” about its EV strategy so far, something he wants to correct and change.

“We want to listen to customers around the world and offer them various options,” but “in this multidirectional approach, 100% electric electric vehicles are also an important option”, Sato said during a news conference in Tokyo.

The new boss was introducing his team.

“I think around half of it is a communication issue. We can do better,” the future leader said when asked about the reasons for Toyota’s “slowness” in the field of EVs. “While making efforts to save energy (via hybrid vehicles), in the medium or long term, we will encourage a switch to electric vehicles.”

This big change in strategy will rely on Lexus, Toyota’s premium brand, of which Sato was the boss before being promoted to CEO of the entire group. The next generation of Lexus electric cars will be developed by 2026, “optimizing everything from the battery to the platform to how a car is produced, while expanding our current lineup,” explained the future CEO.

He promised to detail his EV strategy, including information on the group’s future electric platform, after taking office in April.

As Lexus’s current leader, Sato oversaw the development of the first electric Lexus, the RZ, which is set to launch this year.

Isn’t It a Bit Too Late?

Sato, however, did not want to completely turn the page on his predecessor. He said that the acceleration in the electric segment with Lexus was not a big change of strategy and that Toyota would continue to invest in different less-polluting technologies.

“This is not a fast pivot towards battery EVs,” the incoming CEO cautioned.

Toyota is keeping unchanged its goal of selling 3.5 million EVs by 2030, Sato said.

The road to achieving this will be long. Last year, the automotive group’s sales in this segment (including hydrogen-powered vehicles) represented just over 28,000 units for its Toyota and Lexus brands.

Toyota’s reluctance to get into electric vehicles has allowed disrupters like Tesla to take advantage of the vacuum and establish their dominance.

Ironically, the Tesla factory in Fremont, Calif., the biggest within Elon Musk’s group, was once jointly owned by Toyota and GM. But Toyota sold it to Tesla for just $42 million in a partnership that ended in 2014.

Tesla sold more than 1.31 million vehicles last year and produced 1.37 million.

Source: finance.yahoo.com

Here are the new 2023 tax brackets — and how to determine yours

guardianpub on February 14, 2023

Americans could save on taxes this year because of historically large inflation adjustments set by the IRS.

The agency adjusted many of its 2023 tax rules to help taxpayers avoid “bracket creep.” That’s when workers get pushed into higher tax brackets due to the impact of cost-of-living adjustments to offset inflation, despite their standard of living not having changed. On average, the IRS pushed up each provision by about 7% for 2023.

The changes could mean tax savings for some taxpayers, providing some relief at a time when Americans are still struggling with high inflation that’s eating away at their purchasing power. For instance, some taxpayers could fall into lower tax brackets as a result of the changes, while those who use the standard deduction — relied on by 86% of taxpayers — will be able to deduct more of their income from taxation.

Americans may get a tax refund shock this year

For instance, a married couple earning $200,000 in both 2022 and 2023 would save $900 in taxes this year because more of their income would be taxed at a lower rate, according to Tim Steffen, director of tax planning with Baird.

That could be a welcome change given that this year’s tax returns (for the 2022 tax year) are expected to deliver a “tax refund shock” to many Americans due to the expiration of pandemic tax credits. As a result, refunds could be significantly smaller in 2023 compared with a year earlier.

Still, the tax bracket changes may not save money for everyone, especially those who saw their incomes rise by 7% or more, noted the Tax Policy Center, a think tank that focuses on taxes.

“It’s just keeping them from facing higher taxes if their inflation-adjusted incomes (also known as real incomes) rise by 7%,” senior fellow Robert McClelland wrote in a blog post.

Taxpayers will file their 2023 tax returns in early 2024.

Standard deduction

The standard deduction is used by people who don’t itemize their taxes, and it reduces the amount of income you must pay taxes on.

For married couples filing jointly, the standard deduction is $27,700 for 2023, up from $25,900 in the 2022 tax year. That’s an increase of $1,800, or a 7% bump. For single taxpayers and married individuals filing separately, the standard deduction is set at $13,850 in 2023, compared with $12,950 last year. That’s an increase of about 6.9%.Heads of households’ standard deduction in 2023 jumps to $20,800 from $19,400 in 2022. That’s an increase of 7.2%.

“The flip side of this, though, is that it’s going to be harder to itemize your deductions in 2023,” Steffen said. “That means your tax payments, mortgage interest and charitable contributions are less likely to provide you a tax benefit next year.”

Most taxpayers take the standard deduction, especially after the 2017 Tax Cuts and Jobs Act enacted a more generous deduction. Only about 14% of taxpayers itemized their taxes after the passage of the tax overhaul, or a 17 percentage-point drop compared with prior to the law, according to the Tax Foundation.

Tax brackets

The IRS boosted tax brackets by about 7% for each type of tax filer for 2023, such as those filing separately or as married couples. The top marginal rate, or the highest tax rate based on income, remains 37% for individual single taxpayers with incomes above $578,125 or for married couples with income higher than $693,750.

The lowest rate remains 10%, which impacts individuals with incomes of $11,000 or less and married couples earning $22,000 or less. Below are charts with the new tax brackets.

Tax brackets show the percentage you’ll pay in taxes on each portion of your income. A common misconception is that the highest rate is what you’ll pay on all of your income, but that is incorrect.

Take a single taxpayer who earns $110,000. In 2023, she will take a standard deduction of $13,850, reducing her taxable income to $96,150. This year, she’ll pay:

10% tax on her first $11,000 of income, or $1,100 in taxes12% tax on income from $11,000 to $44,735, or $4,04822% tax on the portion of income from $44,735 up to $95,375, or $11,14024% tax on the portion of her income from $95,374 to her limit of taxable income, $96,150, or $775

Together, she’ll pay the IRS $17,063 in taxes, which amounts to an effective tax rate of 17.7% on her taxable income.

Source: finance.yahoo.com

Is Apple Stock A Buy After December-Quarter Earnings Miss?

guardianpub on February 13, 2023

Consumer electronics giant Apple (AAPL) has seen its sales lowered by supply constraints and weakening macroeconomic conditions, which have rocked Apple stock. Still, many investors might be wondering if AAPL stock is a buy right now.

Apple Stock News: iPhone 14 Sales

On Sept. 7, Apple introduced its third-generation 5G smartphones, the iPhone 14 series. It also debuted its Apple Watch Series 8 smartwatches and second-generation AirPods Pro wireless earbuds. Apple stock rose 0.9% on the news.

Analysts praised the innovative new devices but some worried that the premium products would be a tough sell in the current economic climate.

However, demand for the high-end iPhone 14 Pro models has been strong, while sales of the regular models have disappointed.

On Nov. 6, Apple warned that a Covid outbreak at a factory in China would limit the availability of iPhone 14 Pro and Pro Max handsets in the holiday season. The Foxconn-owned factory was “operating at significantly reduced capacity” because of Covid restrictions, Apple said. The factory later saw worker protests that turned violent, according to news reports.

On Feb. 2, Apple said the production disruptions significantly impacted its iPhone sales in the December quarter.

Apple Opportunities For Growth

With the iPhone business maturing, investors are wondering what the next big growth driver will be for Apple stock.

Recently, two businesses have given Apple’s sales and profits a boost: services and wearables.

In the December quarter, Apple’s services revenue rose 6% year over year to $20.77 billion. Meanwhile, its hardware sales declined 8% to $96.39 billion. Services include the App Store, AppleCare, iCloud, Apple Pay, Apple Music, Apple TV+, Apple Arcade and other offerings.

In late October, Apple raised prices for the first time on its Apple Music and Apple TV+ services. It also hiked the price for its Apple One services bundle.

Meanwhile, Apple is facing antitrust scrutiny in the U.S., Europe and Asia for its App Store policies, including its 30% commission fee.

Apple Product Rumors Persist

Apple’s Wearables, Home and Accessories unit saw sales drop 8% to $13.5 billion in the December quarter amid product shortages. This unit includes wearables like the Apple Watch, AirPods wireless earbuds and Beats headphones. It also contains the Apple HomePod wireless speaker and other miscellaneous gadgets.

News leaks suggest that Apple will announce a headset for virtual reality and augmented reality in 2023. The computer headset could be a driver of Apple stock, analysts say.

Meanwhile, speculation continues that Apple is looking to make a self-driving electric car.

Apple Earnings: Miss and Guide Down

Late on Feb. 2, Apple missed Wall Street’s targets for its fiscal first quarter and guided lower for the current period. Still, Apple stock rose 2.4% in the next trading session.

Apple earned $1.88 a share on sales of $117.2 billion in its fiscal first quarter ended Dec. 31. Analysts polled by FactSet had expected earnings of $1.94 a share on sales of $121.4 billion. On a year-over-year basis, Apple earnings fell 10% while sales dropped 5%.

For the March quarter, Apple expects sales to decline about 5%, vs. Wall Street’s estimate for a drop of less than 1%.

In the December quarter, Apple’s iPhone revenue sank 8% to $65.8 billion. Wall Street was looking for $68 billion. Smartphones accounted for 56% of the company’s total sales in the period.

Meanwhile, Apple’s Mac computer sales tumbled 29% to $7.7 billion. However, Apple’s iPad business bucked the downtrend, growing 30% to $9.4 billion in the holiday quarter.

The company’s next earnings report won’t be until late April.

Apple Stock Retreats From Record High

In January 2022, Apple hit a market value of $3 trillion when its shares reached 182.86. It was the first company to reach a market capitalization of $3 trillion.

It notched a record high of 182.94 before pulling back. AAPL stock trended lower in the weeks that followed and it attempted to rally several times last year.

Apple’s Storied History

Apple has been an American success story several times over. First, it ignited the personal computer revolution in the 1970s with the Apple II. Then it reinvented the PC in the 1980s with the Macintosh.

Co-founder Steve Jobs returned to run Apple in 1997 and oversaw a winning streak of innovations that included the iMac, iPod, iTunes, iPhone, iPad and the App Store.

The biggest driver of Apple’s modern success is the iPhone. The game-changing smartphone, which debuted in 2007, sparked years of massive growth and created a loyal base of customers willing to buy Apple products and services.

Exclusive Apple Stock Ratings

After hitting its record high at the start of 2022, Apple stock pulled back as much as 32%.

AAPL stock has an IBD Relative Strength Rating of 37 out of 99. The Relative Strength Rating shows how a stock’s price performance stacks up against all other stocks over the last 52 weeks.

Apple stock has an IBD Composite Rating of 61 out of 99, according to the IBD Stock Checkup tool. IBD’s Composite Rating combines five separate proprietary ratings of fundamental and technical performance into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.

Also, Apple ranked No. 5 on IBD’s 2022 100 Best ESG Companies list. ESG is short for environmental, social and governance.

AAPL Stock Technical Analysis

For the past 58 weeks, AAPL stock has been consolidating with buy point of 183.04, according to IBD MarketSmith charts. It ended the regular session Feb. 10 at 151.01.

In a positive sign, Apple stock has been trading above its 50-day moving average line, as well as its 200-day line. Also, its relative strength line has been rising lately as it outperforms the S&P 500 this year.

Apple stock has an IBD Accumulation/Distribution Rating of A-, indicating institutional buying of shares.

Source: finance. yahoo.com

Executives are doing a great job talking down the US economy: Morning Brief

guardianpub on February 13, 2023

Powerful executives running public companies are collectively doing a great job at 1) worrying investors about the path forward for profit and cash flow growth this earnings season; and 2) managing expectations so their business could potentially beat earnings estimates even if the U.S. enters a mild recession in 2023.

And if CEOs sound dreary on earnings calls this reporting season, it’s probably because they have a lot of concerns on their minds.

According to a recent Conference Board survey, “the number one concern for CEOs around the world is the economic downturn and recession.” Inflation – also no friend to the top and bottom lines – comes in second.

“What we are hearing from retailers is better than what we heard in the fourth quarter, but it does vary through retailers,” XPO CEO Mario Harik said. “On the industrial side, quite a bit of strength.”

PepsiCo CFO Hugh Johnston told that he wouldn’t be surprised if there was a mild recession in the U.S. this year.

“Frankly, we are coming out of 2022 which was just an outstanding year,” Johnston explained. “I mean, 14% revenue growth, strong EPS. Obviously, the company is just firing on all cylinders. We have good momentum coming into the year, but we are also aware of the fact in a high-interest rate environment it could start to drag at some point.”

Amid the cautious C-suite talk and relatively weak earnings growth, the S&P is up about 6.5% so far in 2023 the year and the Nasdaq is up nearly 12%.

Corporate America may be on to something, however. If we are not at the beginning of a new bull market, then we could be in for a rude awakening at some point in 2023.

“I think at some point we are going to break last year’s lows on the S&P 500 and Nasdaq,” Academy Securities strategist Peter Tchir told. “In particular the Nasdaq, we are going to go through that because everyone got bullish again and we are going to realize oops, this is not as good.”

Happy Trading!

Source: finance.yahoo.com

Question for ChatGPT: Who Wins, Microsoft or Alphabet?

guardianpub on February 10, 2023

For the first time in memory, Google’s search dominance is facing a legitimate threat. Let’s see what that means.

In a news item that almost seems like science fiction, Alphabet (GOOGL) lost over $100 billion in market capitalization on Wednesday due to a technical error. The stock fell 8% when the company’s new AI chatbot, Bard, shared incorrect information.

Does Wednesday’s selloff create an opportunity? Let’s go to the charts to find out.

Just a week ago, Alphabet’s chart was looking good. The stock had broken out of a bullish cup and handle formation (curved lines), and closed above its 200-day moving average (red) for the first time since April of last year.

After Wednesday’s flop, Alphabet is back below that key moving average, hovering at the breakout point of the cup and handle. The stock sold off on nearly triple its normal volume (arrow), Alphabet’s highest turnover since February. This is an indication of heavy institutional selling, and a warning that the stock could move lower.

Alphabet has a bigger problem than getting the bugs out of Bard. According to Statista, as of December 2022, Google dominated online search with an 84.08% market share. Microsoft’s Bing had only 8.95%.

Now that Bing is integrating ChatGPT, Google has a lot to lose. The successor to Microsoft’s often-derided, now-retired Internet Explorer browser is now a legitimate threat to siphon market share, along with ad dollars, from Google.

Why have chatbots become so important, so quickly? Unlike a search engine, which simply pulls information from the internet, a chatbot provides personalized results. Chatbots could make search engines like Google obsolete.

For example, a search for poetry on Google provides over 1.3 billion links in less than a second. A chatbot, on the other hand, can be instructed to create poems with specific style, tone, and content.

There are reports that in late December, Google declared “code red” in response to the suddenly ubiquitous ChatGPT, a chatbot created by OpenAI. OpenAI is a privately-held, San Francisco-based company that was funded in part by Elon Musk.

Earlier this month, in response to the sudden popularity of ChatGPT, Microsoft (MSFT) announced it was integrating the chatbot into its search engine, Bing. That was followed by this week’s introduction of Google’s AI product, called Bard.

Why did these companies adapt AI technology so quickly? Both Microsoft and Alphabet were faced with a threat that could undermine their search engines. Quick action was needed. Fast action can create results, but it also leads to mistakes, like the one Bard made on Wednesday.

Bottom line: For the first time in memory, Google’s search dominance is facing a legitimate threat. The stock’s suddenly discounted price may appear to be an opportunity, but heavy institutional selling is a warning that Alphabet could move lower before it finds its footing.

Source: finance.yahoo.com

Gigapresses – the giant die casts reshaping car manufacturing

guardianpub on February 10, 2023

By replacing around 60 welded components with a single module, gigantic aluminium die casting machines made by the likes of Tesla supplier IDRA Group are helping carmakers to simplify manufacturing and cut costs by up to 40% in some areas.

Tesla has pioneered the use of massive casting machines, also known as gigapresses, to make large single pieces of vehicle underbodies, streamline production and reduce the work of even robots.

This has helped it become the most profitable battery electric vehicle (BEV) maker.

Critics say the process poses quality and flexibility risks, as a single flaw can compromise a whole module, and make fixing more difficult if something goes wrong.

But with the industry struggling to preserve profit margins amid surging raw materials prices, carmakers including Toyota, General Motors, Hyundai, Volvo Cars and Chinese electric vehicle startup Nio are turning to companies like IDRA for help.

“The basic idea was to provide a technology that could simplify the car production process,” IDRA general manager Riccardo Ferrario told Reuters in an interview at the company’s headquarters in Travagliato, northern Italy.

Battery packs currently make up 25%-40% of the total cost of BEVs.

“You need to make the rest cost less,” Ferrario said.

Automakers using aluminium casting machines claim they can reduce investments needed to build chassis – a vehicle’s second most expensive component after the engine – by 40%, and the average cost of their parts by 30%, Ferrario said.

“It’s a way to eventually make BEVs something for all pockets,” he said.

IDRA, which was taken over by Chinese group LK Industries in 2008, has been developing gigapresses since 2016. Competitors of IDRA and LK include Buhler Group in Europe, Ube Corp. and Shibaura Machine in Japan, as well as Yizumi and Haitian in China.

GIGAPRESS 9,000

Metal and plastic die casting has been largely used in manufacturing, but its application to large aluminium underbodies in carmaking is relatively new.

The global aluminium die casting market was worth almost $73 billion last year and is projected to top $126 billion by 2032, according to an AlixPartners analysis based on Apollo Reports data.

Aluminium is prized for its light weight, and is also used for other car parts including engines. The average content of the metal in European produced cars rose 20% to 179 kilograms in the three years to 2019, and is expected to increase to almost 200 kilograms by 2025, a study commissioned by lobby group European Aluminium shows.

IDRA’s newest and biggest gigapress – the 9,000 – is the size of a small house and produces a clamping force of over 9,000 tons.

The company, which made 100 million euros ($108 million) in revenues in 2021, does not disclose its customers. But after it posted a video of the first Gigapress 9,000 ready for shipping, Tesla CEO Elon Musk said it was for his company’s new cybertruck.

Tesla already operates gigapresses in all its facilities, including in Gruenheide, near Berlin, where it says it can churn out a Model Y in 10 hours – about three times faster than electric cars built by competitors.

Ferrario said IDRA had contracts with three automakers and as many ‘Tier 1’ parts makers. South Korea’s Hyundai Motor is among them, sources familiar with the matter said.

Ralf Bechmann of manufacturing consultant EFESO said the benefits of die casting would push it “to be applied to an increasing number of new models of BEV vehicles, also by other manufacturers”.

Front and rear underbodies cast by gigapresses are now combined with battery packs to form a three-piece chassis for BEVs.

“I bet 80% of automakers will use gigapresses by 2035, at least for BEV cars based on new platforms,” Ferrario said. “But the real question is: will we need even bigger gigapresses?”

Yet not all automakers are convinced, and EFESO’s Bechmann cautioned that large module die casting required product design to be “super solid”.

“Fixing design flaws is much easier with a body made up of several small parts rather than a single module,” he said.

After initially considering die casting for its upcoming Trinity model, Volkswagen has backtracked, while BMW has never expressed an interest.

Ferrario said the auto industry tended to be conservative and that no one liked upending established processes, but he rejected idea that die casting posed a risk to jobs at carmakers, noting body-making was already highly automated.

“The real issue will be with businesses supplying those little parts replaced by our modules,” he said.

Source: finance.yahoo.com

Oil faces a ‘serious problem’ by 2024 as production capacity runs out, warns Goldman — here are 3 big oil stocks with yields as high as 4%

guardianpub on February 9, 2023

Oil prices have cooled down in recent months, but Goldman Sachs sees a major rebound on the horizon.

Speaking on the sidelines of a conference in Saudi Arabia, Goldman’s global head of commodities research Jeff Currie predicts that oil prices could climb back above $100 a barrel this year.

The analyst sees rising demand for oil from China. Meanwhile, sanctions against Russia will likely reduce the country’s oil exports.

“Right now, we’re still balanced to a surplus because China has still yet to fully rebound,” Currie tells Bloomberg. But the analyst notes that by May, the oil market could swing to a supply deficit.

And that’s not all.

“Are we going to run out of spare production capacity? Potentially by 2024, you start to have a serious problem.”

Here is a look at three big oil stocks. Wall Street already sees upside in this trio.

Shell

Headquartered in London, Shell (SHEL) is a multinational energy giant with operations in more than 70 countries. It produces around 3.2 barrels of oil equivalent per day, has an interest in 10 refineries, and sold 64.2 million tons of liquefied natural gas in 2021.

It’s a staple for global investors, too. Shell is listed on the London Stock Exchange, Euronext Amsterdam, and the New York Stock Exchange.

The company’s NYSE-listed shares are up 5% over the past year.

Piper Sandler analyst Ryan Todd sees an opportunity in the oil and gas supermajor. The analyst has an ‘overweight’ rating on Shell and a price target of $70.

Considering that Shell trades at around $58.50 per share today, Todd’s price target implies a potential upside of 20%. The stock also offers a dividend yield of 4.0%.

Chevron

Chevron (CVX) is another oil and gas supermajor that’s benefiting from the commodity boom.

In 2022, the company reported earnings of $35.5 billion, which represented a 127% increase from 2021. Sales and other operating revenues totaled $235.7 billion for 2022, up 51% year over year.

Last month, Chevron’s board approved a 6% increase to the quarterly dividend rate to $1.51 per share. That gives the company an annual dividend yield of 3.5%.

The stock has enjoyed a nice rally too, climbing 23% in the last 12 months.

In January, Barclays analyst Jeanine Wai reiterated an ‘overweight’ rating on Chevron while raising the price target from $196 to $212. That implies a potential upside of 24% from the current levels.

Exxon Mobil

Commanding a market cap of over $460 billion, Exxon Mobil (XOM) is bigger than Shell and Chevron.

The company also boasts the strongest stock price performance among the three — Exxon shares are up 36% over the past year.

It’s not hard to see why investors like the stock: the oil-producing giant gushes profits and cash flow in this commodity price environment. In 2022, Exxon earned $55.7 billion in profits, a huge increase from the $23.0 billion in 2021. Free cash flow totaled $62.1 billion for the year, compared to $37.9 billion in 2021.

Solid financials allow the company to return cash to investors. Exxon pays quarterly dividends of 91 cents per share, translating to an annual yield of 3.2%.

Bank of America analyst Doug Leggate has a ‘buy’ rating on Exxon and a price target of $140 — around 25% above where the stock sits today.

Source: finance.yahoo.com

Tesla Stock Tops $200. Here’s What Happens Next.

guardianpub on February 9, 2023

Tesla TSLA +2.28% stock just won’t stop going up. Shareholders should feel happy, but they should keep asking themselves what comes next.

Shares are up 2.3% at $201.35 in midday trading Wednesday. The S&P 500SPX –1.11% and Nasdaq CompositeCOMP –1.68% are down 0.9% and 1.6%, respectively. Tesla stock is now up 63% year to date, and up 98% from its Jan. 6 52-week intraday low of $101.81.

It’s been quite a run. The last time Tesla stock closed above $200 was Nov. 4. The last time shares touched $200 was Nov. 15. Still, the stock looks like it’s due for a pause.

“Tesla is into resistance at the $200 level, former support, from where it broke down in early November,” says John Roque, senior managing director at 22V Research and market technician. “Former support often becomes new resistance.”

Roque isn’t a fundamental analyst. His is looking at stock charts to figure out investor sentiment and what could happen next. He is also the technical analyst who thought Tesla stock would approach $100, which they did in early January.

“The preceding crash and current spike have been as symmetrical as possible over a two-month time frame,” says CappThesis founder and market technician Frank Cappelleri. “The downturn got the stock overly depressed, and the subsequent four-week rally also appears overextended short term.”

He also believes Tesla stock is due for a pause, calling shares overbought. That’s a term technicians uses to describe a situation when stocks rise a lot over a short period of time. At certain levels, it can mean all the buying is done, for a while.

A pause for a technician can last anywhere from two weeks to two months. Typically something new has to happen to shake the stock out of a trading band.

One thing that could do that is the company’s coming investor event on March 1. Management should be talking about new platforms, plants and the coming Cybertruck there.

Maybe Tesla stock should pause, but it doesn’t obey all the rules. Shares are still about $24, or 10%, below the level where Tesla CEO Elon Musk bought Twitter. Late in 2022 he said he would find a new leader for his social media network. If he does, it could give Tesla shares a boost.

Tesla investors have been worried that Musk hasn’t been able to fully focus on Tesla because of Twitter. Investors have also worried that Musk would sell Tesla stock to fund losses at Twitter. Musk tweeted on Feb. 5 that Twitter was approaching break-even. That reduces the likelihood of future Tesla stock sales. Tesla stock is up about 6% since then. The Nasdaq Composite is down about 2% over the same span.

The $225 level is also very close to the stock’s 200-day moving average. That would be another level of resistance for investors to consider what comes next.

Barron’s wrote positively about Tesla stock on Jan. 6. Since that article appeared, shares are up about 78%.

Tesla is a volatile stock, and banking some profits after run-ups can help investors weather the inevitable ups and downs of investing alongside Musk.

Source: barrons.com

Microsoft’s new Bing and Edge hands-on: Surprisingly well-integrated AI

guardianpub on February 8, 2023

The age of generative AI is upon us, and this week alone Google and Microsoft made major announcements around their respective products for the masses. While Google unveiled an “experimental conversational AI service” called Bard, Microsoft had a fuller slate of news to share at its event in Redmond, WA yesterday. Through a partnership with ChatGPT maker OpenAI, Microsoft is adding more advanced AI conversation models to power updates to Bing and Edge.

Bing improvements

In general, there are four new areas of change coming to Bing (and we’ll get to Edge later): Search, Answers, Chat and Create. The first update is the new search box. Instead of your typical long, one-line bar, there is now a box more similar to those on Twitter or Facebook that prompts you to ask Bing anything. The character limit is now 1,000. The idea is to make the process of looking for answers something more conversational — similar to Google’s approach for years now.

When you submit your query, results are now displayed a bit differently. On the left is a column with your typical “answers” just like how you see it on Bing now. On the right, however, is a box that explains how the system found those answers and also starts a chat. I initially thought this was similar to what Google does in its “About this search” panels, but I was wrong. This box is a home for the AI and fills up with text that appears in real time, complete with animation and a “Stop responding” button in case you don’t have the patience to see the AI’s explanation. In my time with the preview so far, these new features didn’t happen on my first few searches, but did appear subsequently.

Chat and create in Bing

The third and fourth parts are the more interesting updates. Chat, for example, is a new way you can get solutions to the problems you’re looking to solve. You can access the Chat page from the Bing results page by tapping the Chat button above the answers or by scrolling up (swiping down on touchscreens). When you’re there, you can continue the conversation about your ongoing search, or use the Broom icon next to the text input field to clean the slate.

This page is a more practical manifestation of the notion of an AI copilot — it’s basically ChatGPT or any other chat bot you may have interacted with while getting tech support from your bank or shopping website. But the results Bing’s Prometheus model has been able to return are definitely more impressive. The outputs it can return along with the inputs it can understand make it much more versatile and therefore more useful.

For example, you can tell it to create travel itineraries or meal plans with specific parameters and it’ll actually give you lists with what to do or make each day. The demos I saw included coming up with “3-day itinerary for Snoqualmie” or “vegetarian meal plan with chocolate included in the dessert” and each time Bing delivered the requested plans in plain, legible English that not only met the requirements but also cited its sources. It also didn’t take very long for the system to produce the results — we only had to wait between five and ten seconds on the demo Surface laptop. When the system is processing, you’ll also see the “Stop responding” button to give up waiting for results, just in case you’re running short on time.

I asked Bing to propose itineraries for a six day family trip to Los Angeles, which would have come in handy during my vacation last week. It took two attempts with different wording before I got the results I expected, but Bing got there. It suggested destinations and sights that my cousin also recommended, which is nice, though I have yet to closely scrutinize the program to see if it makes sense geographically and on timing.

I also used one of the suggested prompts in the preview to get Bing to create a 30-minute workout for me, focusing on arms and abs using no gym equipment and excluding situps. The resulting plan of several exercises, including three sets of 10 reps of dips, crunches and more all seemed sound. Bing pulled from various publications in generating this program and cited its sources as it churned out the words, meaning it was actually doing some work compiling instead of just regurgitating a single article.

Like other conversational assistants, Bing’s chat is capable of understanding context. In the demo, Saunders asked for spots to take photographs after first requesting a 3-day itinerary for Snoqualmie, and Bing replied with scenic locations in the same region. After my query about a 30-minute workout for abs and arms, I followed up with “how about an hour” and Bing was actually smart enough to follow up by telling me to add more exercises, suggested more things to do, as well as suggest I simply do the initial workout twice.

I did a lot of follow-up questions to other searches, and to list them all would take forever. Suffice to say that the conversations generally felt very natural and contextually rich, in a way that few other AI chatbots have achieved.

The Edge browser with an AI copilot built in

With the new Edge, a button on the top right will allow you to access the new Bing’s chat feature within your browser. But it goes beyond just answering your questions without having to leave the pages you’re browsing. Edge can help make sense of the sites you’re looking at and make research or multitasking much easier.

During its keynote yesterday, Microsoft showed how it was able to use Bing to summarize Gap Inc’s quarterly report and extract not only key takeaways but also financial highlights. When I opened the PDF from Gap’s investor relations page and asked Bing (in Edge) to give me the key takeaways, it told me about the company’s performance in digestible snippets. I then asked for “financial highlights” and the system gave me six bullet points listing the net sales, net loss, gross margin, operating loss, cash and cash equivalents and free cash flow. Each item listed the dollar amount as well as how that compared to last year’s performance.

What’s more impressive is that Edge can also find another company’s earnings report from this chat window, without having to open another tab, and compare the results. You can also then tell the browser to create a table analyzing the two companies side by side. The fact that this worked during my own testing of the new Edge left me very impressed, and I can already see myself using this to compare specs of new phones in future.

Finally, at least for this hands-on article today, I checked out the new Compose function, which you can use to come up with posts, emails or essays. I asked Bing to write an email for me to convince our video producer Brian Oh to come on this work trip to Microsoft in Seattle with me. There were several options to choose from for parameters like tone (funny, professional, casual, informational or enthusiastic), format (paragraph, email, blog post or ideas) and length (short, medium or long). At the bottom is a “Generate draft” button, which delivers the text in a box below it, under which is a button for you to “Add to site.” Clicking on that sends the generated words over to the website where your cursor is.

The resulting prose read like a human person wrote it, with proper grammar and punctuation (except in places where it would be more natural to ignore grammatical rules). I set the tone to “funny” and while some of the AI’s efforts at comedy were kind of cringe-worthy, it was fairly subtle. For example, at the end of a 4-paragraph letter extoling the virtues of Seattle and Microsoft, the system wrote “So, what do you say? Are you in or are you out? Please say yes, because I already booked your ticket and hotel room. Just kidding, I didn’t.”

That’s not my style but it’s definitely something a somewhat funny human might write. For anyone that’s ever played with ChatGPT, this will feel somewhat familiar. The integration into the browser, which allows for easy transferring of the AI-produced content into, say, emails and social media sites, makes things very convenient.

Source: finance.yahoo.com