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Tag: analyst comment

  • How to enjoy retirement without busting your budget

    How to enjoy retirement without busting your budget

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    The goal of many (or most) savers and long-term investors is to achieve financial independence. The combination of building up a nest egg, paying down debt and eventually receiving Social Security payments or another source of retirement income might put you in a comfortable position, but even people who have worked together to achieve financial independence may disagree on what to do after their careers end.

    Quentin Fottrell — the Moneyist — heard from one couple who are facing a quandary. They have been financially responsible, but as they near retirement, the wife wishes to be very careful with their combined investment portfolio, while the husband wants to begin spending a significant portion of it. They both make reasonable arguments. Here’s what they should do.

    From the Help Me Retire column: My 57-year-old husband works three shifts and is burned out. Can he retire?

    You have to get there first

    A behavioral study finds a correlation between having one specific type of conversation and taking action to build wealth.


    Getty Images

    Doing this even once might help encourage you or someone you know to begin saving and investing for the long term.

    The ‘Magnificent Seven’ stocks may not remain at the top

    Salesforce is among the companies passing a Goldman Sachs screen for growth of sales and earnings.


    Getty Images

    Even an index that includes hundreds of stocks can be heavily concentrated. Large technology-oriented companies have led this year’s 16% rebound for the S&P 500
    SPX,
    -0.29%    ,
    following last year’s 18% decline (both with dividends reinvested). But the index is weighted by market capitalization, which means the “Magnificent Seven” — Apple Inc.
    AAPL,
    -0.59%    ,
    Microsoft Corp.
    MSFT,
    -1.19%    ,
    two common share classes of Alphabet Inc.
    GOOGL,
    -0.52%

    GOOG,
    -0.65%    ,
    Amazon.com Inc.
    AMZN,
    +1.11%    ,
    Nvidia Corp.
    NVDA,
    +0.95%    ,
    Tesla Inc.
    TSLA,
    -0.76%
    and Meta Platforms Inc.
    META,
    -0.50%
    — make up 27.9% of the SPDR S&P 500 ETF Trust
    SPY,
    -0.25%    .

    In the Need to Know column, Barbara Kollmeyer lists companies that might turn out to be among the next Magnificent Seven, based on a Goldman Sachs screen.

    Getting back to the current Magnificent Seven, you may be surprised to see which of the stocks is cheapest — by far — per one commonly used valuation metric.

    Related: Top investment newsletters aren’t bullish on tech, Tesla or Meta Platforms. Here’s what they do like.

    A thrill ride for EV makers

    An electric Rivian R1S.


    Rivian

    There has been a lot of news in the electric-vehicle space this week. Here are lists of coverage organized by topic.

    Rising unit sales among EV makers:

    Legacy automakers report sales increases, including a tremendous increase in EV unit sales for Ford
    F,

    :

    Reaction from analysts and investors:

    In other news, Mullen Automotive Inc.
    MULN,
    -12.97%
    has started to deliver electric vehicles. Further developments for the company this week included the announcement of a stock-buyback plan and possible action against naked short sellers.

    A changing job market

    The employment numbers for June from the U.S. Bureau of Labor Statistics showed the lowest level of job creation since late 2020. Then again, the demand for labor in the U.S. remains high, despite the Federal Reserve’s efforts to slow economic growth.

    If you are looking to make a career change, what does all this mean to you? Andrew Keshner points to a development in the employment market that may have you thinking twice about jumping ship.

    Threads and Twitter

    Meta’s Threads app has signed up as many as 50 million users in its first two days of operation, some reports say.


    AFP via Getty Images

    Meta rolled out its new Threads service on Wednesday to compete directly with Twitter and has already signed up 50 million users, according to some reports.

    Twitter CEO Linda Yaccarino was quick to respond.

    More reaction:

    Consumer spending may spike

    U.S. shoppers have been taking it slow during a period of high inflation, but the overall economy has been stronger than expected even as the Federal Reserve continues tightening its monetary policy.

    The coming flurry of July sales events at Amazon, Walmart Inc.
    WMT,
    -2.30%
    and Target Corp.
    TGT,
    -0.60%
    could signal a turnaround for consumers, as James Rogers reports.

    Financial crime

    Lukas I. Alpert writes the Financial Crime column. Have you ever wondered how you might steal a lot of cash from a company that is likely to have rather tight accounting controls in place? This week Alpert explains how the manager of an Amazon warehouse managed to scale the heights of criminal achievement to collect $10 million — and a 16-year jail sentence.

    Also read: Silver dealer ordered to pay $146 million in case of 500,000 missing coins

    Want more from MarketWatch? Sign up for this and other newsletters to get the latest news and advice on personal finance and investing.

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  • ‘This is the best possible jobs report’ — economists react to June employment data

    ‘This is the best possible jobs report’ — economists react to June employment data

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    The June jobs report on Friday showed the U.S. economy gained 209,000 jobs last month, with the unemployment rate dipping to 3.6% from 3.7%.

    Economists polled by The Wall Street Journal had expected an addition of 240,000 jobs and an unemployment rate of 3.6%.

    See: Jobs report shows 209,000 gain in June — smallest increase since end of 2020

    Below are some initial reactions from economists and other analysts, including their views on what the jobs report means for the Federal Reserve as the central bank considers how to proceed with interest-rate hikes. The main U.S. stock indexes
    SPX,
    -0.29%

    DJIA,
    -0.55%

    COMP,
    -0.13%
    traded mixed following the data on nonfarm payrolls, also called NFP.

    • “This is actually a great number. This is a number that is something we can sustain. We can’t sustain adding 300,000, 400,000, 500,000 jobs a month. We need to see it slow. It’s doing exactly what it needs. If we’re going to have a soft landing, this is what it looks like. So I don’t think that we should make too much of this number being bad. But I do think that the Fed train is rolling toward another rate hike, but I wouldn’t put my money on a second one yet.” — Betsey Stevenson, economics professor at the University of Michigan and a former Obama White House economist, in a CNBC interview

    Related: July Fed rate hike remains largely priced in, expectations for September or November hike soften somewhat

    • “In a sense, this is the best possible jobs report, then, threading the needle between too strong and too weak. People should be happy to see decent job growth and decent wage growth. The Fed can take pleasure in slowing momentum and wage growth stabilizing rather than rising, while bond traders can breathe a sigh of relief there is no sign of the strength picked up by ADP yesterday. It is win, win, win.” — Chris Low, chief economist at FHN Financial, in a note

    • “The 209,000 rise in non-farm payrolls in June was the weakest gain since December 2020 and suggests labor market conditions are finally beginning to ease more markedly. That said, it is unlikely to stop the Fed from hiking rates again later this month, particularly when the downward trend in wage growth appears to be stalling.” — Andrew Hunter, deputy chief U.S. economist at Capital Economics, in a note

    • “Overall, the cooling in hiring is a welcome development, but the pace is still above growth in the working-age population, and combined with continued wage pressures and the drop in the unemployment rate, this leaves the Fed on track to hike rates by 25 [basis points] in both July and September.” — Katherine Judge, senior economist at CIBC, in a note

    • “Black unemployment went up to 6.0% for June, and is a statistically significant change from 5.0% in March. So while the employment rate is historically high, there is still room for growth. (As always when we’re talking about historical exclusion & discrimination).” — Kate Bahn, economist and research director at WorkRise, which is affiliated with the Urban Institute, in a tweet

    • “The markets maybe made too much of the ADP number, as that has shown to be not always exactly a great indicator. … The labor market is cooling, but marginally. Most importantly, though, the average hourly earnings number suggests still some firming in that space, and that’s where the Fed has been primarily focused. So for me, this is maybe a little lighter, but not a dramatic change in terms outlook and expectations.” — Roger Ferguson, former Fed vice chair, in a CNBC interview

    Now read: Part-time work surged in June as hours cut back, U.S. jobs report says

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  • Mullen Automotive’s stock more than doubles in 2 days. Here’s why.

    Mullen Automotive’s stock more than doubles in 2 days. Here’s why.

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    Shares of Mullen Automotive Inc. rocketed on massive volume for a second-straight day, after the electric vehicle maker announced plans to buy back a chunk of its shares.

    The company
    MULN,
    +29.02%
    said it believes its stock is “significantly undervalued,” given its current cash position of about $235 million. Therefore, the board of directors have authorized the repurchase of up to $25 million worth of its outstanding shares through the end of this year.

    The buyback amount represents 17.1% of Mullen’s current market capitalization of about $145.8 million.

    “We are initiating this buyback program as an attractive opportunity to deploy capital and return value to our shareholders,” said Chief Executive Officer David Michery.

    The stock soared as much as 88.2% intraday, before paring gains to be up 32.8% in afternoon trading. Trading volume swelled to an already record 1.78 billion shares, compared with the full-day average over the past 30 days of about 205.0 million shares.

    On Wednesday, the stock blasted 69.4% higher, the biggest one-day gain since it ran up 145.6% on Feb. 28, 2022, on then-record volume of 1.39 billion shares. That followed the company’s announcement that it retained a law firm to combat illegal naked short selling.


    FactSet, MarketWatch

    A short sale is a way for investors to bet that prices will fall. The short seller must pay to borrow stock owned by another investor so they can sell it with the hope of buying the stock back at a lower price. If the investor who originally owned the stock sells their stock, the borrower must cover their short so they can return the stock.

    “Naked” short selling refers to the illegal act of shorting a stock without borrowing it first. While that is often blamed for what companies believe are unwarranted declines in their stock, market structure experts have often refuted those claims.

    Read: Short sellers are not evil, but they are misunderstood.

    Before the stock’s two-day bounce, it had closed Monday at a record low of 10.1 cents, even after the company reported last week that it recorded revenue for the first time, and that it received additional financing that put it in the “best financial position” in its history.

    Mullen had said on Wednesday that it “believes it may have been” targeted by naked short sellers, and therefore decided to investigate any “potential wrongdoing.”


    FactSet, MarketWatch

    The latest exchange data showed that the percent of Mullen’s public float, or shares freely available to trade, that have been shorted was 16.2%, according to FactSet data. That’s less than half what the percentage was a month ago.

    In comparison, fellow “meme” stock AMC Entertainment Holdings Inc.
    AMC,
    +0.94%
    has 23.6% of its float shorted and 20.8% of GameStop Corp.’s
    GME,
    -4.48%
    float is shorted.

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  • Biden’s age is figuring ‘prominently’ in the 2024 White House race — but here’s what the pundits could be getting wrong

    Biden’s age is figuring ‘prominently’ in the 2024 White House race — but here’s what the pundits could be getting wrong

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    As the 2024 race for the White House gathers steam, one topic that just won’t go away is President Joe Biden’s age.

    It comes up whenever the 80-year-old president makes a mistake such as saying “Iraq” when he means to say “Ukraine,” as occurred twice last week, or when he takes a tumble, such as his trip over a sandbag at the Air Force Academy’s commencement on June 1. Biden later joked that he “got sandbagged.”

    The…

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  • EV stocks get a broad boost after Tesla, Rivian, Nio report upbeat deliveries data

    EV stocks get a broad boost after Tesla, Rivian, Nio report upbeat deliveries data

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    Shares of electric vehicle makers got a broad boost Monday, after upbeat delivery and production data from a host of companies, including industry leader Tesla Inc. and those based in China.

    The Global X Autonomous and Electric Vehicles exchange-traded fund
    DRIV,
    +1.08%
    jumped as much as 1.7% intraday, before paring gains to close up 1.1%. It has climbed 5.7% amid a five-day win streak. The ETF outperformed the broader stock market by a wide margin, as the S&P 500 index
    SPX,
    +0.12%
    inched up 0.1% and the Nasdaq Composite
    COMP,
    +0.21%
    edged up 0.2%.

    The ETF’s most-active component was Tesla’s stock
    TSLA,
    +6.90%    ,
    which climbed 6.9% to $279.82, the highest close since Sept. 28, 2022. It has run up 16.1% amid a five-day win streak.

    The rally comes after Tesla revealed over the weekend a blowout deliveries report, in which the EV leader said it delivered a record 466,000 vehicles in the most recent quarter, well above expectations of 449,000.

    The ETF’s second-most active member was Rivian Automotive Inc.’s stock
    RIVN,
    +17.41%    ,
    which shot up 17.4% to its highest close since Feb. 17, and rocketed 45.4% amid a five-day win streak.

    The company reported second-quarter EV production that was more than triple that of a year ago, and deliveries that nearly tripled.

    Nio Inc.’s U.S.-listed stock
    NIO,
    +3.51%
    rallied 3.5% to $10.03, the first close above the $10 mark since March 31, after the Shanghai-based EV maker reported June deliveries that jumped 74% from May, but were down 17.4% from a year ago.

    Among its China-based peers, the U.S.-listed shares of Xpeng Inc.
    XPEV,
    +4.17%
    advanced 4.2% to the highest close since Sept. 26, 2022, of Li Auto Inc.
    LI,
    +3.42%
    hiked up 3.4% to the highest close since July 21, 2022 and of Boyd Co. Ltd.
    BYDDY,
    +3.07%
    rose 3.1%.

    Elsewhere, Lucid Group Inc. shares
    LCID,
    +7.26%
    charged 7.3% higher to a record sixth-straight gain and the highest close since May 31, as the EV sector’s rally helped offset an effective downgrade at Citi Research.

    Mullen Automotive Inc.’s stock
    MULN,
    -6.31%
    bucked the trend, as it sank 6.3% toward a record low close of 10.1 cents, even after the EV maker reported last week that it recorded revenue for the first time, and that it was in the “best financial position” in its history.

    In an interview on YouTube channel “Financial Journey,” as disclosed on Friday, Mullen Chief Executive Officer David Michery said he doesn’t believe the stock’s price reflects the true value of the company.

    He said he expects manufacturing of the Mullen One class 1 last-mile delivery cargo vans to begin in August with “sellable” vehicles available in September.

    For the Mullen Three class 3 trucks, with a gross vehicle Weight Rating (GVWR) of 11,000 pounds, Michery said manufacturing will start “right around the corner” in July, with sellable vehicles in August and September.

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  • The banking crisis has eased but a credit crunch still threatens the U.S. economy

    The banking crisis has eased but a credit crunch still threatens the U.S. economy

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    Financial disruptions in 2008 contributed to the deep economic downturn that came to be known as the Great Recession. Could recent bank failures similarly lead to a broad U.S. recession?

    The $532 billion of assets of the three banks that failed in March and April 2023 exceed the inflation-adjusted value of $526 billion of assets of the 25 banks that failed in 2008. Yet the current situation differs in many ways from the underlying economic circumstances at the outset of the Great Recession.

    Still, that experience, as well as others, show how financial distress can lead to macroeconomic weakness which then contributes to further financial distress, resulting in a downward spiral during which credit becomes tight, investment is curtailed and growth stalls.

    Bank distress can have adverse consequences for borrowers and the broader economy. One source of recent U.S. bank vulnerabilities is the rapid increase in interest rates. Banks take in deposits that can be withdrawn in the short term and use them to make loans and invest in securities at interest rates that are fixed for some time.

    As interest rates rise, the value of banks’ existing portfolio decreases as new investments at higher rates are more attractive. By one estimate, the U.S. banking system’s market value of assets is $2.2 trillion lower than suggested by their book value of assets accounting for loan portfolios held to maturity.

    These book losses are realized if banks have to sell those assets to cover withdrawals from depositors. At the same time banks face challenges in maintaining deposit levels, depositors are less willing to place their money in low-return checking and savings accounts as higher-interest opportunities become increasingly available. 

    Banks that failed in 2023 have had specific weaknesses that made them particularly vulnerable. Silicon Valley Bank (SVB), for example, was particularly exposed to risk from rising interest rates as it had heavily invested in longer-term government bonds which lost market value as interest rates rose and its management failed to hedge against this risk.

    SVB was also especially vulnerable to a run by depositors because over 90% of the value of its deposits exceeded the $250,000 amount guaranteed by the Federal  through the Federal Deposit Insurance Corporation (FDIC). Depositors holding accounts in excess of this guaranteed amount, both individuals and companies (whose accounts were used for making payroll, among other reasons) are only partially protected in case of bank failure so they have an incentive to withdraw funds at the first sign of trouble.

    Moreover, depositors were connected to each other through business and social groups, so news traveled quickly seeding the conditions for a classic bank run at Twitter speed. Signature Bank also had about 90% of its assets uninsured and its portfolio was heavily concentrated in crypto deposits. Both banks grew rapidly with inadequate risk and liquidity management practices in place and, while regulators had raised concerns about these risks, they had not taken more forceful actions to address them, according to a GAO report. Meanwhile, First Republic Bank, catered to wealthy depositors and for this reason also had a high share of uninsured deposits that made it more vulnerable to a bank run as its bond assets lost value amidst rising interest rates.

    Commercial banks reduce lending when their deposits fall or when they otherwise cannot meet regulatory requirements. Deposits represent an important source of banks’ ability to lend. As a bank’s deposits decrease, it has less resources available for lending since other sources of funds are not as easily obtained.

    A bank may also cut lending in an effort to satisfy regulations such as meeting or exceeding the Capital Adequacy Ratio. Regulators require banks to have enough capital on reserve to handle a certain amount of loan losses. The Capital Adequacy Ratio decreases when loans fail and the bank sees its loan loss reserves decline. The bank can then increase its Capital Adequacy Ratio by using funds that would otherwise be devoted to commercial loans or by shifting from loans to other assets that are less risky (such as government securities).

    There is evidence that this effect contributed to the cutback in bank lending in New England in the 1990-1991 U.S. recession when there was a collapse in that region’s real estate market. A bank may choose to reduce lending if there are concerns about solvency even if it is not yet hitting up against the formal capital adequacy ratio requirement. 

    Read: San Francisco at risk of more falling ‘dominos’ as $2.4 billion of office property loans come due through 2024

    A credit crunch occurs when borrowers who would otherwise receive loans are precluded from doing so because of a restriction on the supply of loans by banks. But a reduction in bank lending could also reflect a decrease in borrowers’ demand for loans.

    Researchers have used a variety of methods to identify when there is a credit crunch rather than just a lower demand for loans. For example, a credit crunch could be identified through looking for differential borrowing, employment, and performance patterns by bank-dependent companies as compared to those that have access to financing through bond or equity markets. Bank-dependent companies are typically smaller than those that have access to other types of financing.

    Credit crunches due to bank distress can undermine investment and economic growth. An early and influential analysis by Ben Bernanke, who went on to chair the Federal Reserve and served during the 2008 Great Financial Crisis, analyzed the effects of bank failures during the Great Depression. He found that bank failures had a particularly strong effect in reducing the amount of borrowing by households, farmers, and small businesses in that period, which contributed to the severity and duration of the Great Depression.

    The U.S. banking system has been made more resilient since that time, but there is still evidence of the effect of a credit crunch on regional U.S. economies. The April 2023 IMF Global Financial Stability Report argued that a credit crunch in the United States could reduce lending by 1%, which would lower GDP growth by almost 0.5 percentage points.

    Michael Klein is the executive editor of EconoFact. He is the William L. Clayton Professor of International Economic Affairs at The Fletcher School at Tufts University.

    This commentary was originally published by EconoFact: Banks, Credit Crunches, and the Economy.

    More: Justice Department to weigh updating banking competition rules

    Also read: Senators make headway on clawing back pay from failed banks’ CEOs, as key committee advances bill

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  • Are the robots coming for us? Ask AI.

    Are the robots coming for us? Ask AI.

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    As we enter artificial intelligence’s brave new world, humans have naturally come to fear what the future holds.  Do computers like HAL from 2001: A Space Odyssey pose an existential threat? Or in an incident not from Hollywood fiction, an Air Force official’s recent remarks implying that a drone had autonomously changed course and killed its operator, only to be later declared a hypothetical, certainly raised alarm.

    Closer to home for most of us, the release of large language models like ChatGPT have renewed worries about automation, reminiscent of earlier fears about mechanization. AI has advanced far beyond rote data-storage tasks and can even pass the bar exam, or write news, or research papers, leading to fears of massive white-collar unemployment.

    But, as new research looking at data of job churn over the past two decades finds, the impact of automation on workers and industries is, in fact, pretty hard to predict given the complexity of the labor market, requiring carefully crafted policies that take these nuances into account.

    First, changes in exposure to automation are not intuitive: they do not easily mesh with “blue-collar” and “white-collar” jobs, as typically defined. Instead, automation is more closely linked to the tasks and characteristics of each job, such as repetitiveness and face-to-face interactions. That translates to the three most automation-exposed jobs: office and administrative support, production, and business and financial operations occupations.

    Meanwhile, the three least automation-exposed jobs are in personal care; installation, maintenance and repair occupations; and teaching. In other words, even with the Internet of Things controlling your HVAC system, it cannot fix itself when it needs new refrigerant, but its smart-panel interface can help the technician diagnose the problem remotely quickly and know what equipment to bring for a repair. But back-end accountants in that company may not fare as well in the AI jobs sweepstakes.

    While automation can displace workers, history suggests that new technology also tends to boost productivity and create new jobs. Consider the automobile: while horses and buggies are outdated, we still need humans to drive (at least until autonomous vehicles come to full fruition), and the assembly line helped automate manufacturing with entire new classes of jobs created for every part of a car and all its electronic systems, with almost 1 million U.S. workers in auto manufacturing today.

    But automation has continued in the auto industry over the decades, with robots helping to make hard and heavy physical labor tasks easier, without fully displacing workers.  So there is a push-pull with automation, and the relative sizes of these countervailing effects remains an area of active scholarly debate.

    “ It is rare for an entire job class to disappear overnight; changes mainly take place over generations ”

    Second, it is rare for an entire job class to disappear overnight; changes mainly take place over generations. The research shows that newer generations of workers, perhaps deterred by the job insecurity observed in earlier generations and lured by high wages in the technology sector, are less inclined to enter automation-prone jobs than those before them. However, after embarking down those career paths, workers tend to stay in their fields, even if the prospects of automation loom large, likely because reskilling is time-consuming and expensive. It is relatively easy for recent high school graduates to opt for tech-centric college degrees like computer science, but learning new skills like coding is more difficult for mid-career professionals in automation-susceptible fields like manufacturing.

    Adjustments to automation can be slow on the business side as well. Incorporating automated technology takes time because modern production tasks tend to be so intertwined that automating one part of a business can affect all other operations. For example, when AT&T, once the country’s largest firm, began replacing telephone operators with mechanical switchboards, they found that operators had become central to the complex production system that grew around them, which is why there are fewer operators today, but some still exist.

    Third, the research found that the share of workers in highly automation-exposed occupations tends to be clustered, ranging from about 25% to 36% across commuting zones. The least-exposed areas in the U.S. are across the Mountain West, thanks to the area’s high shares of workers in management, retail sales and construction (which hasn’t had much automation or productivity improvement in decades but additive manufacturing may be a game-changer), as well as those on the East and West coasts, with their more innovative finance and tech industries.

    On the other hand, those most exposed to automation tend to be located in the Great Plains and Rust Belt, namely due to agriculture. In spite of the fact that U.S. agriculture has been exposed to automation for over a century (more efficient machines and advances in biotechnology), it has become even more technology-driven recently, making ag workers more likely to be impacted by automation.

    Read: How artificial intelligence can make hiring bias worse

    So will the robots take over your job soon?  More likely, they will make our jobs easier and more efficient. Trying to slow the adoption of technology is both futile and counterproductive: taxing or overregulating tech adoption may backfire, especially given global competitiveness and other countries who may not pause. While the advent of a new era of automation is likely to be both gradually incorporated and result in complements to human labor rather than full replacement, thoughtful policies can help disrupted workers transition to new and better opportunities, ensuring we can harness the transformative power of automation and foster a future of work that benefits all.

    Eric Carlson is associate economist at the Economic Innovation Group; DJ Nordquist is EIG’s executive vice president.

    More: AI is ready to take on menial tasks in the workplace, but don’t sweat robot replacement (just yet)

    Also read: ‘Make friends with this technology’: Yes, AI is coming for your job. Here’s how to prepare.

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  • Rivian stock has ‘clear opportunity’ to pull ahead, Barclays says

    Rivian stock has ‘clear opportunity’ to pull ahead, Barclays says

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    Rivian Automotive Inc.’s recent “clear improvements” reinforce investor’s confidence that the EV maker is on path to break even next year, presenting an opportunity for the stock.

    That’s from analysts at Barclays, led by Dan Levy, who said in a note Friday that they recently visited Rivian’s
    RIVN,
    -0.69%
    plant in Normal, Ill.

    “Our clear takeaway is that [Rivian] has moved past the many challenges/fire fights which deeply challenged operations in 2022,” the Barclays analysts said.

    Don’t miss: U.S. car sales are stronger than a year ago, but rising interest rates could hit demand

    The EV maker now has the bandwidth to address its manufacturing process improvements and cost-cutting goals.

    “There is much low hanging fruit, much runway, and clear improvements are being made … we see improved confidence on the path to reaching gross margin breakeven in 2024,” they said.

    The analysts reaffirmed their rating on Rivian stock at the equivalent of buy, with a price target of $22. That represents upside of about 59% over Rivian share prices on Friday.

    The automaker is not “out of the woods yet,” however.

    Related: Ford EVs will be able to use Tesla charging stations under new agreement

    “There is much work ahead, and execution is a key question. We believe demand is increasingly emerging as a question – just as it is for other EV automakers. And we see significant capital needs ahead,” the Barclays analysts said.

    Yet with that improved confidence that Rivian is on track to break even, and the company’s “great” products and the strength of Rivian’s vertical integration, “we see clear opportunity ahead for the stock,” they said.

    Rivian shares have lost 20% so far this year, contrasting with gains of around 12% for the S&P 500 index.

    The automaker last month reported a narrower-than-expected first-quarter loss and stuck with its production outlook for the year, in contrast with guidance cuts for two other EV startups.

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  • Why Intel’s stock is falling as Nvidia leads the rest of the semiconductor sector on a massive surge

    Why Intel’s stock is falling as Nvidia leads the rest of the semiconductor sector on a massive surge

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    Chip stocks experienced a significant surge Thursday in the wake of Nvidia Corp.’s upbeat commentary on AI-fueled demand — with one notable exception.

    Shares of Intel Corp.
    INTC,
    -5.52%
    were down more than 5% in afternoon trading Thursday, leading Dow Jones Industrial Average
    DJIA,
    -0.11%
    laggards by a wide margin, on a day when Nvidia Corp.’s
    NVDA,
    +24.37%
    stock was up 26% and the PHLX Semiconductor Index
    SOX,
    +6.81%
    was ahead 6%.

    Read: Chip index heads for highest close in 13 months as Nvidia momentum lifts semiconductor stocks

    Nvidia delivered a stratospheric beat on its quarterly revenue outlook Wednesday afternoon, with executives discussing how spending on artificial intelligence is already starting to drive sizable financial benefits for the company. That discussion has Wall Street thinking that many other chip makers will also be able to capitalize on the same wave of interest in the hot technology — shares of Monolithic Power Systems Inc.
    MPWR,
    +17.46%    ,
    Advanced Micro Devices Inc.
    AMD,
    +11.16%
    and Taiwan Semiconductor Manufacturing Co.
    2330,
    +3.43%

    TSM,
    +12.00%
    all joined Nvidia in gaining by double-digit percentages in Thursday’s session.

    Intel, though, was a key outlier. Nvidia’s commentary seemed to make investors more worried that Intel is behind the curve on what some see as a massive technological revolution.

    Nvidia CFO on record-breaking forecast: ‘The inflection point of AI is here’

    Intel’s revenue and profits from central processing units look “even more at risk” after Nvidia’s report, while Intel doesn’t have “any real” competitive position in graphics processing units or generative-AI compute, wrote Mizuho’s Jordan Klein, a desk-based analyst associated with the company’s sales team and not its research arm.

    Nvidia’s earnings call “will reinforce the negative view that [Intel] and all their CPU share is a major loser and share donor to GPU, ASICs and lower power ARM design chips on the way,” Klein added.

    While Nvidia GPUs typically would run alongside CPUs from either Intel or AMD, Nvidia has been making inroads in CPUs. Chief Financial Officer Colette Kress said on Nvidia’s call that the company has seen “growing momentum for Grace with both CPU-only and CPU-GPU opportunities across AI and cloud and supercomputing applications.”

    Read: ‘Ride the Nvidia wave.’ Wall Street says the ‘undeniably pricey’ stock can keep roaring.

    Nvidia is perceived to be ahead of the pack in AI-related computing technology, but AMD is at least in a better position than Intel, with more of a one-stop shop across CPUs and GPUs. That’s likely why AMD’s stock is riding on Nvidia’s coattails Thursday, up more than 10% in afternoon action.

    AMD is “the only other real GPU supplier,” Klein wrote, though the company “could lose CPU spend in process and [has] a far way to go to catch [Nvidia].”

    In his view, it “will take some time for more advanced and higher performance GPU and software platform to ramp and really drive upside potential” at AMD. “But seeing how fast and much [Nvidia] benefited, few will want to wait and see how long that takes for AMD.”

    A more clear beneficiary, he noted, is Taiwan Semiconductor, whose stock was up more than 12% Thursday. You “cannot get any of these GPUs, inference, etc. without their fabs,” according to Klein.

    As for Intel, Klein likes that the company is approaching a second-quarter bottom and positioned to capitalize on a personal-computer refresh, but he said its stock “feels totally stuck at best and could get shorted.”

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  • 20 AI stocks expected to post the highest compound annual sales growth through 2025

    20 AI stocks expected to post the highest compound annual sales growth through 2025

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    Things move quickly in the world of artificial intelligence. It is easy to sit back and complain about developments that could be disruptive, but sometimes investors are best served by putting emotions aside and observing new developments and how they affect markets. Could AI developments and related trends make you a lot of money?

    Below is a new screen showing a group of AI-oriented companies expected to increase their sales most rapidly through 2025, based on consensus estimates among analysts polled by FactSet. Then we show expected revenue growth rates for the largest AI-oriented companies in the screen.

    Over the long haul, many businesses might perform more efficiently by employing AI. Maybe this technology can create an economic revolution similar to the one that moved the majority of the working population away from agricultural labor during the 19th and 20th centuries.

    Back in February, we screened 96 stocks held by five exchange-traded funds focused on AI and related industries and listed the 20 that analysts thought would rise the most over the following 12 months.

    Three months is a long time for AI, and the shakeout hasn’t even started.

    Read: Congress and tech seem open to regulating AI efforts, but that doesn’t mean it will happen

    There is no way to predict how politicians will react to perceived or real threats of AI and machine learning. And the largest U.S. tech players are doing everything they can to employ the new technology and remain dominant. But that doesn’t mean they will grow more quickly than smaller AI-focused players.

    A new AI stock screen

    Once again we will begin a screen with these five ETFs:

    • The Global X Robotics & Artificial Intelligence ETF
      BOTZ,
      +0.97%
      BOTZ was established 2016 and has $1.8 billion in assets under management. The fund tracks an index of companies listed in developed markets that are expected to benefit from the increased utilization of robotics and AI. There are 44 stocks in the BOTZ portfolio, which is weighted by market capitalization and rebalanced once a year. Its largest holding is Intuitive Surgical Inc.
      ISRG,
      +0.53%      ,
      which makes up 10% of the portfolio, followed by Nvidia Corp.
      NVDA,
      +3.30%
      at 9.4%.

    • The iShares Robotics and Artificial Intelligence Multisector ETF
      IRBO,
      +1.64%
      holds 116 stocks that are equal-weighted, as it tracks a global index of companies that derive at east 50% of revenue from robotics or AI, or have significant exposure to related industries. This ETF was launched in 2018 and has $304 million in assets.

    • The $246 million First Trust Nasdaq Artificial Intelligence & Robotics ETF
      ROBT,
      +1.83%
      has 107 stocks in its portfolio, with a modified weighting based on how directly companies are involved in AI or robotics. It was established in 2018.

    • The Robo Global Artificial Intelligence ETF
      THNQ,
      +1.81%
      has $26 million in assets and was established in 2020. I holds 69 stocks and isn’t concentrated. It uses a scoring system to weight its holdings by percentage of revenue derived from AI, with holdings also subject to minimum market capitalization and liquidity requirements.

    • The newest ETF on this list is the WisdomTree Artificial Intelligence and Innovation Fund
      WTAI,
      +2.42%      ,
      which was established in December and has $13 million in assets and holds 73 stocks in an equal-weighted portfolio. According to FactSet, stocks are handpicked and selected companies “generate at least 50% of their revenue from AI and innovation activities, including those related to software, semiconductors, hardware technology, machine learning and innovative products.”

    Altogether and removing duplicates, the five ETFs hold 270 stocks of companies in 23 countries. We first narrowed the list to 197 covered by at least nine analysts and for which consensus sales estimates are available through calendar 2025. We used calendar-year estimates because some companies have fiscal years that don’t match the calendar.

    Here are the 20 screened AI-related companies expected by analysts to have the highest compound annual growth rates (CAGR) for sales from 2023 through 2025. Sales estimates are in millions of U.S. dollars. The list also shows which of the above five ETFs holds each stocks.

    Company

    		 Ticker

    		 Estimated sales – 2023 ($mil)

    		 Estimated sales – 2024 ($mil)

    		 Estimated sales – 2025 ($mil)

    		 Two-year estimated sales CAGR through 2025

    		 Held by
    BioXcel Therapeutics Inc.

    		 BTAI,
    -2.47%         		$5

    		 $39

    		 $121

    		 411.5%

    		 WTAI
    Luminar Technologies Inc. Class A

    		 LAZR,
    +8.82%         		$86

    		 $266

    		 $588

    		 161.0%

    		 ROBT, WTAI
    BlackBerry Ltd.

    		 BB,
    +6.01%         		$685

    		 $769

    		 $1,925

    		 67.6%

    		 ROBT
    Credo Technology Group Holding Ltd.

    		 CRDO,
    +10.29%         		$183

    		 $259

    		 $363

    		 40.9%

    		 IRBO
    SentinelOne Inc. Class A

    		 S,
    +1.05%         		$619

    		 $881

    		 $1,176

    		 37.9%

    		 WTAI
    Wolfspeed Inc.

    		 WOLF,
    +5.02%         		$982

    		 $1,323

    		 $1,860

    		 37.6%

    		 WTAI
    SK hynix Inc.

    		 000660,
    +1.66%         		$18,319

    		 $27,899

    		 $34,542

    		 37.3%

    		 WTAI
    Mobileye Global Inc. Class A

    		 MBLY,
    +1.67%         		$2,109

    		 $2,782

    		 $3,920

    		 36.3%

    		 ROBT, WTAI
    Snowflake Inc. Class A

    		 SNOW,
    +1.42%         		$2,811

    		 $3,863

    		 $5,139

    		 35.2%

    		 IRBO, THNQ, WTAI
    Lemonade Inc.

    		 LMND,
    +8.08%         		$395

    		 $471

    		 $712

    		 34.2%

    		 THNQ, WTAI
    Nio Inc. ADR Class A

    		 NIO,
    +1.39%         		$11,874

    		 $16,733

    		 $21,304

    		 33.9%

    		 ROBT
    Stem Inc.

    		 STEM,
    +4.88%         		$607

    		 $833

    		 $1,055

    		 31.8%

    		 WTAI
    Upstart Holdings Inc.

    		 UPST,
    +10.37%         		$547

    		 $768

    		 $938

    		 31.0%

    		 BOTZ, WTAI
    Cloudflare Inc. Class A

    		 NET,
    +5.84%         		$1,284

    		 $1,669

    		 $2,194

    		 30.7%

    		 THNQ
    Samsara Inc. Class A

    		 IOT,
    +1.42%         		$830

    		 $1,062

    		 $1,364

    		 28.2%

    		 THNQ
    Ambarella Inc.

    		 AMBA,
    +3.45%         		$287

    		 $355

    		 $472

    		 28.2%

    		 IRBO, ROBT, THNQ, WTAI
    iflytek Co. Ltd. Class A

    		 002230,
    -1.34%         		$3,561

    		 $4,582

    		 $5,851

    		 28.2%

    		 THNQ
    Tesla Inc.

    		 TSLA,
    +4.41%         		$99,558

    		 $128,412

    		 $161,061

    		 27.2%

    		 ROBT, THNQ, WTAI
    CrowdStrike Holdings Inc. Class A

    		 CRWD,
    +2.40%         		$2,935

    		 $3,793

    		 $4,739

    		 27.1%

    		 THNQ, WTAI
    PB Fintech Ltd.

    		 543390,
    +1.39%         		$358

    		 $462

    		 $573

    		 26.5%

    		 IRBO
    Source: FactSet

    Click the tickers for more about each company or ETF.

    Click here for Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote pages.

    We have screened for expected revenue growth, rather than for earnings or cash flow, because in a newer tech-oriented business area, investors are most likely to consider the top line as companies sacrifice profits to build market share.

    It is important to do your own research if you consider purchasing any individual stock, to form your own opinion about a company’s ability to remain competitive over the long term. Starting from the top of the list, BioXcel Therapeutics Inc.
    BTAI,
    -2.47%
    is expected to show exponential sales growth, but that is from a low expected baseline this year.

    What about the largest AI-related companies held by these ETFs?

    Here are the largest 20 companies in the screen by market capitalization, ranked by expected sales CAGR from 2022 through 2025. Once again the sales estimates are in millions of U.S. dollars, but the market caps are in billions.

    Company

    		 Ticker

    		 Estimated sales – 2023 ($mil)

    		 Estimated sales – 2024 ($mil)

    		 Estimated sales – 2025 $mil)

    		 Two-year estimated sales CAGR through 2025

    		 Market Cap ($bil)

    		 Held by
    Tesla Inc.

    		 TSLA,
    +4.41%         		$99,558

    		 $128,412

    		 $161,061

    		 27.2%

    		 $528

    		 ROBT, THNQ, WTAI
    Nvidia Corp.

    		 NVDA,
    +3.30%         		$29,839

    		 $36,877

    		 $46,154

    		 24.4%

    		 $722

    		 BOTZ, IRBO, ROBT, THNQ, WTAI
    Taiwan Semiconductor Manufacturing Co. Ltd. ADR

    		 TSM,
    +5.83%         		$71,434

    		 $86,284

    		 $101,112

    		 19.0%

    		 $445

    		 ROBT, WTAI
    Advanced Micro Devices Inc.

    		 AMD,
    +2.23%         		$22,976

    		 $26,823

    		 $30,359

    		 15.0%

    		 $163

    		 IRBO, ROBT, THNQ, WTAI
    ASML Holding NV ADR

    		 ASML,
    +2.83%         		$28,974

    		 $32,374

    		 $37,796

    		 14.2%

    		 $263

    		 THNQ, WTAI
    Microsoft Corp.

    		 MSFT,
    +0.95%         		$223,438

    		 $251,028

    		 $282,397

    		 12.4%

    		 $2,318

    		 IRBO, ROBT, THNQ, WTAI
    Samsung Electronics Co. Ltd.

    		 005930,
    -0.61%         		$200,595

    		 $227,286

    		 $252,129

    		 12.1%

    		 $292

    		 IRBO, WTAI
    Amazon.com Inc.

    		 AMZN,
    +1.85%         		$559,438

    		 $626,549

    		 $702,395

    		 12.1%

    		 $1,164

    		 IRBO, ROBT, THNQ, WTAI
    Adobe Inc.

    		 ADBE,
    +3.34%         		$19,470

    		 $21,784

    		 $24,276

    		 11.7%

    		 $158

    		 IRBO, THNQ
    Netflix Inc.

    		 NFLX,
    +1.86%         		$33,915

    		 $38,067

    		 $42,275

    		 11.6%

    		 $148

    		 IRBO, THNQ
    Tencent Holdings Ltd.

    		 700,
    -0.58%         		$88,727

    		 $99,212

    		 $110,556

    		 11.6%

    		 $422

    		 IRBO, ROBT
    Salesforce Inc.

    		 CRM,
    +2.37%         		$34,392

    		 $38,273

    		 $42,786

    		 11.5%

    		 $205

    		 IRBO, THNQ
    Alphabet Inc. Class A

    		 GOOGL,
    +1.11%         		$299,810

    		 $333,077

    		 $369,195

    		 11.0%

    		 $710

    		 IRBO, ROBT, THNQ, WTAI
    Intel Corp.

    		 INTC,
    -1.20%         		$51,060

    		 $57,799

    		 $62,675

    		 10.8%

    		 $122

    		 IRBO, ROBT
    Meta Platforms Inc. Class A

    		 META,
    +1.53%         		$125,901

    		 $139,545

    		 $154,259

    		 10.7%

    		 $528

    		 IRBO, WTAI
    Alibaba Group Holding Ltd. ADR

    		 BABA,
    +2.17%         		$134,140

    		 $148,206

    		 $162,199

    		 10.0%

    		 $235

    		 ROBT, THNQ
    Texas Instruments Inc.

    		 TXN,
    +1.20%         		$17,941

    		 $19,433

    		 $20,799

    		 7.7%

    		 $148

    		 IRBO
    Apple Inc.

    		 AAPL,
    +0.36%         		$390,845

    		 $416,761

    		 $445,956

    		 6.8%

    		 $2,706

    		 IRBO, WTAI
    Siemens Aktiengesellschaft

    		 SIE,
    +2.55%         		$84,681

    		 $89,145

    		 $93,925

    		 5.3%

    		 $130

    		 ROBT
    Johnson & Johnson

    		 JNJ,
    -0.20%         		$98,761

    		 $100,990

    		 $103,870

    		 2.6%

    		 $414

    		 ROBT
    Source: FactSet

    Tech-stock picks that are small and focused: This fund invests in unsung innovators. Here are 2 top choices.

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  • Tech-stock picks that are small and focused: This fund invests in unsung innovators. Here are 2 top choices.

    Tech-stock picks that are small and focused: This fund invests in unsung innovators. Here are 2 top choices.

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    When investors think of technology stocks, they might automatically gravitate toward “the next big thing,” or to the giant companies that dominate the S&P 500
    SPX,
    -0.40%    .
    But Robert Stimson, chief investment officer of Oak Associates Funds, makes a case for diversification through exposure to smaller innovators which he believes are “overlooked in this environment.”

    The River Oak Discovery Fund
    RIVSX,
    +0.98%
    invests in tech-oriented companies with market capitalizations of $5 billion or less, with an average of about $2 billion. It has a five-star rating, the highest, from Morningstar, despite having what the investment information firm considers “above average” annual expenses of 1.19% of assets under management. The fund is ranked in the 6th percentile among 546 funds in Morningstar’s “Small Blend” category for five-year performance and in the 13th percentile among 374 funds for 10-year performance. The performance comparisons are net of expenses.

    The Black Oak Emerging Technologies Fund
    BOGSX,
    +1.54%
    has more of a midcap focus, with some small-cap stocks and follows a similar strategy to that of RIVSX. But with no restriction on the size of companies this fund invests in, “we don’t have to sell stocks,” Stimpson said. So long-term holdings of this fund include Apple Inc.
    AAPL,
    -0.05%
    and Salesforce.com Inc.
    CRM,
    +0.69%    .
    This fund is rated three stars within Morningstar’s “Technology” category and has a lower expense ratio of 1.03%.

    Both funds are concentrated. The River Oak Discovery Fund held 34 stocks and the Black Oak Emerging Technologies Fund held 35 stocks as of March 31. Lists of both funds’ largest holdings are below.

    During an Interview, Stimpson, who co-manages both funds, said that when investing in the small-cap technology space, he and colleagues identify companies that are “focused on niches.

    “I want a company that knows who they are, what they do and do it well, rather than a small company trying to growing into the next Microsoft, Google or Salesforce,” he said.

    More about giant companies dominating stock indexes: This twist on a traditional S&P 500 stock fund can lower your risk and still beat the market overall

    Stimpson said Oak Associates pays close attention to what corporate management teams say during earnings calls and in presentations, preferring comments related to improving sales and operations with a market niche, rather than expressions of grand visions for exponential growth.

    That type of narrow focus can support higher valuations over time, Stimpson said. “They have better execution, a better ability to fend-off competition and they are quality acquisition candidates.”

    “ “I caution everyone that until there is revenue, earnings and a product, the hype can be more dangerous than an opportunity.” ”


    — Robert Stimpson, chief investment officer at Oak Funds, when discussing AI and ChatGPT.

    All of those factors can be important to investors, considering how easily tech giants such as Microsoft Corp.
    MSFT,
    +1.00%
    or Google holding company Alphabet Inc.
    GOOGL,
    +2.89%

    GOOG,
    +2.88%
    can begin to compete with smaller innovative companies because they can afford to make such large investments, he said.

    Simpson went further, saying that when running screens for “quality” metrics, such as improving free cash flow yields, the Oak Associates team also looks for “shareholder friendly practices.” For example, a company may be repurchasing shares. But are the buybacks lowering the share count significantly (which boosts earnings per share) or are they merely mitigating the dilution caused by the shoveling of new shares to executives as part of their compensation?

    Finally, Simpson cautioned investors not to get caught up in tech-focused hype.

    “When I talk to our clients, I get questions about AI and ChatGPT and how to play it. People get focused on a new great tech innovation,” he said. “You can replace ChatGPT with bitcoin, metaverse or 3-D printing.”

    “I caution everyone that until there is revenue, earnings and a product, the hype can be more dangerous than an opportunity.”

    Two examples

    These companies are held by theRiver Oak Discovery Fund and the Black Oak Emerging Technologies Fund.

    Cirrus Logic Inc.
    CRUS,
    -2.37%
    is the largest holding of the River Oak Discovery Fund. Stimpson calls the company “a derivative play on the success of Apple.”

    “They are focused on the chips that go into mobile and [vehicles],” as well as the needs of their customers, including Apple, “rather than problem areas of the chip sector, such as memory or PCs. They are not talking about chips for AI, for example,” Stimpson said.

    Cirrus focuses on systems and related software used in audio systems..

    Kulicke & Soffa Industries Inc.
    KLIC,
    +1.92%
    makes equipment, tools and related software used by a variety of manufacturers of computer chips and integrated electronic devices.

    Stimpson likes the company as a long-term play on the worldwide disruption in semiconductor manufacturing and supply, in the wake of the Covid-19 pandemic. “All chip companies learned that any supply disruption in Southeast Asia is a problem. Over time, the opportunities for semiconductor equipment makers are very good. There will be more plants in more locations, so more equipment,” he said.

    He said KLICK was in a “protected” position, with returns on equity of about 20% and free cash flow yields of about 10%.

    Top holdings of the funds

    Here are the largest 10 holdings of the River Oak Discovery Fund as of March 31:

    Company

    		 Ticker

    		 % of portfolio
    Cirrus Logic Inc.

    		 CRUS,
    -2.37%         		4.9%
    Kulicke & Soffa Industries Inc.

    		 KLIC,
    +1.92%         		4.6%
    Advanced Energy Industries Inc.

    		 AEIS,
    +0.30%         		4.5%
    Cohu Inc.

    		 COHU,
    +1.45%         		3.7%
    Asbury Automotive Group Inc.

    		 ABG,
    -1.75%         		3.7%
    Korn Ferry

    		 KFY,
    -0.96%         		3.6%
    Kforce Inc.

    		 KFRC,
    -2.40%         		3.4%
    Ambarella Inc.

    		 AMBA,
    -0.50%         		3.3%
    Applied Industrial Technologies Inc.

    		 AIT,
    -1.71%         		3.3%
    Perficient Inc.

    		 PRFT,
    +0.72%         		3.2%

    Click on the tickers for more about each company.

    Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

    Here are the largest 10 holdings of the Black Oak Emerging Technology Fund as of March 31:

    Company

    		 Ticker

    		 % of portfolio
    Apple Inc.

    		 AAPL,
    -0.05%         		5.7%
    KLA Corp.

    		 KLAC,
    +1.69%         		4.6%
    Advanced Energy Industries Inc.

    		 AEIS,
    +0.30%         		4.5%
    Cohu Inc.

    		 COHU,
    +1.45%         		4.1%
    SolarEdge Technologies Inc.

    		 SEDG,
    -3.76%         		3.9%
    Cirrus Logic Inc.

    		 CRUS,
    -2.37%         		3.9%
    Cohu Inc.

    		 COHU,
    +1.45%         		3.9%
    Ambarella Inc.

    		 AMBA,
    -0.50%         		3.4%
    Applied Industrial Technologies Inc.

    		 AIT,
    -1.71%         		3.4%
    Salesforce Inc.

    		 CRM,
    +0.69%         		3.3%

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  • U.S. could run out of cash ‘at some point in the first two weeks of June,’ CBO says

    U.S. could run out of cash ‘at some point in the first two weeks of June,’ CBO says

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    The U.S. government faces a significant risk that it will no longer be able to pay all of its obligations “at some point in the first two weeks of June” if Congress doesn’t raise the federal borrowing limit, the Congressional Budget Office said Friday.

    The nonpartisan agency’s projection falls in line with a forecast that Treasury Secretary Janet Yellen made on May 1, as she said her department’s best estimate is that it could become unable to continue to satisfy all obligations “by early June, and potentially as early as June 1.”

    It also fits with an estimate released on Tuesday by a think tank, the Bipartisan Policy Center, which said the government is likely to have insufficient cash to meet all of its financial obligations as soon as early June.

    “The extent to which the Treasury will be able to fund the government’s ongoing operations will remain uncertain throughout May, even if the Treasury ultimately runs out of funds in early June,” the CBO said. “That uncertainty exists because the timing and amount of revenue collections and outlays over the intervening weeks could differ from CBO’s projections.”

    While a breakthrough hasn’t happened yet in Washington’s debt-ceiling standoff, there is increasing chatter about what could go into a bipartisan deal that ends the stalemate and avoids a market-shaking default.

    See: Debt-ceiling standoff: Here’s what could go into a bipartisan deal

    President Joe Biden and the four top U.S. lawmakers had planned to hold another meeting Friday on the debt limit after a parley on Tuesday, but it was postponed. A source familiar with the meetings called the delay a “positive” development, as staff work is continuing and Friday wasn’t yet the right time to re-convene Biden and the congressional leaders.

    The CBO also said Friday that the government could end up staying solvent through the end of July without a debt-limit hike.

    “If the Treasury’s cash and extraordinary measures are sufficient to finance the government until June 15, expected quarterly tax receipts and additional extraordinary measures will probably allow the government to continue financing operations through at least the end of July,” the agency said.

    But it warned that if the debt limit is not raised or suspended “before the Treasury’s cash and extraordinary measures are exhausted, the government will have to delay making payments for some activities, default on its debt obligations, or both.”

    “Those actions could result in distress in credit markets, disruptions in economic activity, and rapid increases in borrowing rates for the Treasury,” the agency said.

    U.S. stocks
    SPX,
    -0.16%

    DJIA,
    -0.03%
    were trading lower Friday.

    In addition, the CBO updated a budget forecast on Friday, saying its “current projections show a federal budget deficit of $1.5 trillion for 2023 — which is $0.1 trillion more than the agency estimated in February.”

    “The project cumulative deficit over the 2024–2033 period — $20.2 trillion — is about the same as the shortfall CBO projected in February,” the agency said.

    “Measured in relation to the size of the economy, deficits grow from 6.0 percent of gross domestic product (GDP) next year to 6.9 percent in 2033 — well above their 50-year average of 3.6 percent of GDP.”

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  • Biden describes debt-ceiling meeting as ‘productive,’ but McCarthy says he ‘didn’t see any new movement’

    Biden describes debt-ceiling meeting as ‘productive,’ but McCarthy says he ‘didn’t see any new movement’

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    House Speaker Kevin McCarthy on Tuesday said he “didn’t see any new movement” toward ending Washington’s standoff over the debt ceiling, as he assessed how a much-anticipated meeting on the issue went.

    President Joe Biden hosted the meeting at the White House with the country’s four top lawmakers, and beforehand analysts had predicted it would not result in a deal.

    McCarthy…

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  • Debt-ceiling deal not looking likely yet as Biden meets with McCarthy and other lawmakers

    Debt-ceiling deal not looking likely yet as Biden meets with McCarthy and other lawmakers

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    As President Joe Biden prepares to host a much-anticipated meeting on the U.S. debt ceiling with the country’s four top lawmakers, analysts are predicting there won’t be a deal yet on this issue.

    If the meeting at the White House, scheduled for around 4 p.m. Eastern time Tuesday, were to conclude with an agreement, that would be very surprising, said Chris Krueger, managing director at TD Cowen’s Washington Research Group, in a note on Tuesday.

    The…

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  • Here’s how to play oil-industry stocks for long-term growth of 20% or more

    Here’s how to play oil-industry stocks for long-term growth of 20% or more

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    Oil demand is likely to hold up longer than many people expect during the anticipated transition to electric vehicles. And changes in the industry point to oilfield services companies as good long-term growth investments as offshore production ramps up.

    Below is a list of oil producers and related companies favored by two analysts who have followed the industry for decades.

    U.S….

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  • Debt-ceiling standoff: Here’s what’s next, as U.S. faces potential default on June 1

    Debt-ceiling standoff: Here’s what’s next, as U.S. faces potential default on June 1

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    A divided Washington is making a little progress toward raising the debt ceiling and avoiding a U.S. default, but the endgame still isn’t clear.

    Here’s what looks likely to come next, as a White House meeting among key players is planned for May 9 — and June 1 looms as a possible deadline.

    Biden aims for May 9 talks after Yellen’s warning

    The…

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  • Analyst sees market betting on First Republic bailout as early as Friday

    Analyst sees market betting on First Republic bailout as early as Friday

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    Odeon Capital analyst Richard Bove said the steep slide in First Republic Bank FRC stock on Friday is partly attributed to investor sentiment that the Federal Deposit Insurance Corp. will take over the ailing bank after the closing bell on Friday. “The stock is going to down toward zero because if the FDIC takes over a bank, they do it on a Friday afternoon after the market closes,” Bove said. “The market clearly believes that’s what’s going to happen today.” The FDIC typically acts on a Friday afternoon to give itself time to open the bank up for business on Monday. At last check, First Republic stock was down 37% to…

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  • ‘Sell’ signals are flashing across the stock market now. But bulls still have one chance.

    ‘Sell’ signals are flashing across the stock market now. But bulls still have one chance.

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    The stock market, as measured by the S&P 500 Index SPX, has struggled to maintain the rally that began in mid-March, and now we are getting new sell signals from some of our internal indicators.

    SPX was turned back by resistance near 4200 for the third time since last August. That is an extremely strong resistance area now. Moreover, there is further resistance at 4300. On the downside for SPX, there is technically support at 3970, where the small gaps exist on the SPX chart. A close below 3950 would be extremely bearish and…

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  • Fed ‘accident’ could slice 20% off the S&P 500, stock market strategist David Rosenberg warns. Here are 3 ways to protect your money now.

    Fed ‘accident’ could slice 20% off the S&P 500, stock market strategist David Rosenberg warns. Here are 3 ways to protect your money now.

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    David Rosenberg honestly doesn’t want to be bearish on stocks or bash the Federal Reserve. The veteran market strategist will get no satisfaction if he’s right about Americans having to slog through recession and consequently endure deflation, job losses and a wallop to the stock market.

    “As I play the role of economic detective, I can see the smoking gun,” says Rosenberg, a former chief North American economist at Merrill Lynch and now president of Toronto-based Rosenberg Research.

    Who’s…

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  • 8 value stocks that look like bargains for long-term investors

    8 value stocks that look like bargains for long-term investors

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    When is it a good time to buy stocks? Some investors would say the current negativity dominating the financial media means you are better off sitting on the sidelines. Others would say it is always a good time to buy stocks, provided you can get them for good prices.

    Count John Buckingham, editor of the Prudent Speculator, in the latter camp. He is a value investor with decades of experience. During an interview, he emphasized the importance of remaining disciplined through all market conditions. While he favors the value…

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