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  • Tesla is a ‘soft landing’ stock, says Goldman Sachs. Here are its picks for a gentle economic landing and stocks for a recession.

    Tesla is a ‘soft landing’ stock, says Goldman Sachs. Here are its picks for a gentle economic landing and stocks for a recession.

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    Pour one out for the beleaguered economists, who for once got an important indicator, the consumer price index, right on the nose, after CPI fell 0.1% in December, while core prices rose 0.3%.

    “The 2021 surge in durable goods demand normalized, and the resulting collapse in durable goods price inflation was stunningly fast,” says Paul Donovan, chief economist of UBS Global Wealth Management.

    “The commodity wave of inflation is fading, and that leaves the profit margin expansion in focus,” he adds. What a good time for earnings season to be upon us, and what do you know, it is, kicking off with the banking sector on Friday before broadening out next week.

    Strategists at Goldman Sachs have a new note out, saying that the market is pricing in a soft landing even though the trend of earnings revisions points to a hard landing.

    They’re not that optimistic — even in the soft-landing scenario, the team led by David Kostin say the S&P 500
    SPX,
    +0.40%
    will end the year right around current levels, at 4,000. But they identify 46 stocks that could benefit — profitable, cyclical companies that are trading at price-to-earnings valuations below their 10-year median, among other factors.

    One name jumps out: Tesla
    TSLA,
    -0.94%    ,
    which trades at 22 times forward earnings versus the 10-year median of 117 times. But the other 45 names are less flashy, ranging from Capital One
    COF,
    +1.81%
    and Carlyle Group
    CG,
    +0.54%    ,
    to a host of industrials including 3M
    MMM,
    +0.12%    ,
    Parker-Hannifan
    PH,
    +0.73%
    and Otis Worldwide
    OTIS,
    +0.42%    .
    As a whole, these typically $10 billion companies are trading at 12 times earnings, versus 17 times usually.

    In the hard landing scenario, S&P 500 profit margins would shrink by 125 basis points, to 10.9% — about in line with the median peak-to-trough decline during the eight recessions since 1970, which has been 132 basis points. Consensus expectations are for a 26 basis-point margin decline.

    The Goldman team also have a 36 stock screen for a hard landing — profitable companies in defensive industries with a positive dividend yield. They’re typically food, beverage and tobacco companies as well as software and services companies — including Costco Wholesale
    COST,
    +0.58%    ,
    Kroger
    KR,
    -0.99%    ,
    Altria
    MO,
    +0.48%    ,
    Tyson Foods
    TSN,
    +0.23%    ,
    Microsoft
    MSFT,
    +0.30%    ,
    MasterCard
    MA,
    -1.13%
    and Visa
    V,
    -0.25%    .
    As a whole, these $37 billion companies are trading at 22 times earnings vs. a historical 24 times.

    The market

    After a 2.3% advance for the S&P 500
    SPX,
    +0.40%
    over the last three sessions, U.S. stock futures
    ES00,
    +0.39%

    NQ00,
    +0.58%
    declined on Friday.

    The yield on the Japanese 10-year bond
    TMBMKJP-10Y,
    0.511%
    exceeded 0.5%, the Bank of Japan’s yield cap, ahead of next week’s rate decision , prompting a second day of aggressive bond purchases from the central bank.

    For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

    The buzz

    Fourth-quarter earnings were rolling out from Bank of America
    BAC,
    +2.20%    ,
    JPMorgan Chase
    JPM,
    +2.52%    ,
    Citigroup
    C,
    +1.69%
    and Wells Fargo
    WFC,
    +3.25%    ,
    and outside of banks, Delta Air Lines
    DAL,
    -3.54%    ,
    BlackRock
    BLK,
    +0.00%
    and UnitedHealth
    UNH,
    -1.23%    .

    JPMorgan shares slumped after forecast-beating earnings, though investment bank revenue came in light of estimates. Delta shares also declined after topping earnings estimates.

    Tesla
    TSLA,
    -0.94%
    cut prices of Model 3 and Model Y vehicles in the U.S. and elsewhere by up to 20%. The electric vehicle maker stock dropped 6%.

    Virgin Galactic
    SPCE,
    +12.34%
    surged after saying it’s on track to launch space-tourism flights in the second quarter.

    Apple
    AAPL,
    +1.01%
    says CEO Tim Cook requested, and received, a pay cut after investor criticism.

    The University of Michigan’s consumer-sentiment index is due at 10 a.m. Eastern, and Minneapolis Fed President Neel Kashkari and Philadelphia Fed President Patrick Harker are due to speak.

    Tyler Winklevoss said charges by the Securities and Exchange Commission brought about Gemini Trust for allegedly offering unregistered securities were “super lame” as it seeks to unfreeze $900 million in investor assets.

    Best of the web

    There’s a bull market in swearing on corporate earnings calls.

    The West is now preparing to send tanks to Ukraine in what could be another escalation of its conflict with Russia, which on Friday claimed victory in the eastern town of Soledar.

    A look back at photos of Lisa Marie Presley, who died at age 54.

    Top tickers

    Here were the most active stock-market tickers as of 6 a.m. Eastern.

    Ticker

    		 Security name
    BBBY,
    -30.15%         		Bed Bath & Beyond
    TSLA,
    -0.94%         		Tesla
    GME,
    -0.68%         		GameStop
    AMC,
    +0.80%         		AMC Entertainment
    MULN,
    -8.59%         		Mullen Automotive
    NIO,
    -0.08%         		Nio
    APE,
    -2.56%         		AMC Entertainment preferreds
    AAPL,
    +1.01%         		Apple
    SPCE,
    +12.34%         		Virgin Galactic
    AMZN,
    +2.99%         		Amazon.com
    Random reads

    Like a scene out of “Stranger Things” — there’s uproar after new restrictions on the Hasbro
    HAS,
    +0.21%
    game Dungeons & Dragons.

    Starting next month, Starbucks
    SBUX,
    +1.30%
    rewards will be less generous for most items, though iced coffee will be easier to get.

    Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

    Listen to the Best New Ideas in Money podcast with MarketWatch reporter Charles Passy and economist Stephanie Kelton.

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  • Alibaba shares rise in Hong Kong after Jack Ma cedes control of Ant Group

    Alibaba shares rise in Hong Kong after Jack Ma cedes control of Ant Group

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    Shares of Alibaba Group Holdings are higher following news that co-founder Jack Ma is ceding control of affiliate company Ant Group Co., potentially paving the way to revive plans for an initial public offering by the fintech giant.

    Alibaba’s Hong Kong-listed shares
    9988,
    +7.78%
    advanced as much as 8.3% in early trade Monday, widening its year-to-date gains to 27%. Shares are outperforming a 1.7% gain in the city’s broader Hang Seng Index
    HSI,
    +1.65%
    and helping lift the city’s tech index by 3.0%. Alibaba is a shareholder of Ant.

    Ant, which owns China’s most widely used digital-payment platform, Alipay, has been overhauling its operations amid a government crackdown that began with Beijing calling off the company’s plans for an IPO in late 2020. The new change of control, announced by Ant over the weekend, moves the company a step closer to restructuring.

    Alibaba added Sunday that its equity interest in Ant remains unchanged.

    Shares of Alibaba were last up 7.6%. Shares of unit Alibaba Health Information Technology Ltd.
    241,
    +7.27%
    were 8.0% higher.

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  • Jack Ma Cedes Control of Fintech Giant Ant Group

    Jack Ma Cedes Control of Fintech Giant Ant Group

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    Jack Ma Cedes Control of Fintech Giant Ant Group

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  • One Of The Best Puzzle Games Ever Gets A Spin-Off About How Filing Taxes Sucks

    One Of The Best Puzzle Games Ever Gets A Spin-Off About How Filing Taxes Sucks

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    A Baba Files Taxes image of Baba staring at some jargon on a fictional tax document.

    It’s been a minute since we’ve heard from Hempuli aka Arvi Teikari, the developer behind the adorably excellent push-puzzler Baba Is You. Well, Teikari is back with another game in the Baba-verse. This time, though, instead of pushing objects and altering the rules of reality, you are pushing tax papers in a short exercise of comedic relief. That’s right, the white little critter is doing their taxes in the aptly titled Baba Files Taxes.

    Read More: Baba Is You Is A Brilliant Puzzle Game

    This new game, available for free on itch.io (Windows only), tasks you with helping the smol cat-dog thing get their taxes completed. There’s just one problem, though: the deadline to file is tonight! You’d better rush to get Baba’s paperwork done while there’s still time. What does this look like in practice? Basically, you’re forging Baba’s signature on a bunch of legal documents, which I’m pretty sure is a criminal offense, but hey! The government doesn’t know what’s going on, and you better not tell them! Besides, Baba’s just a lil guy, and as the game informs you early on, reading and writing are not among Baba’s strong suits.

    Icely Puzzles

    Once you’ve filled out the papers filled with legalese as well as multiple-choice questions like “What are clouds made of?” and “What is emptiness?”, you’ll submit the papers to a purple blob person who asks a simple question: “What are taxes?” A waste of time, buddy. A total waste of time. You’ll also get graded for how well your signature matches Baba’s, which is hilariously ironic considering the creature doesn’t have actual hands. But I digress. In all, Baba Files Taxes will take you roughly 10-ish minutes to finish.

    Though they’re not the same kind of game, Baba Files Taxes reminds me of Snoozy Kazoo’s Turnip Boy Commits Tax Evasion. Maybe it’s because both games have “tax” in their titles, which makes my hairs stand up as we steadily approach the tax-filing season. The annual act is such a nuisance on its own, often becoming something of an IRL puzzle. Maybe Baba can help me file my taxes now that I’ve helped them, but to be honest, I’m not holding my breath. If you’re looking for something short and charming to check out, though, Baba Files Taxes is a quick hit before the floodgates open.

     

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    Levi Winslow

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  • Southwest, NIO, AMC, Tesla, and More Stock Market Movers Tuesday

    Southwest, NIO, AMC, Tesla, and More Stock Market Movers Tuesday

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    https://www.barrons.com/articles/stock-market-movers-tesla-alibaba-southwest-51671810917

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  • Apple, Alibaba, NIO, and More Stock Market Movers Monday

    Apple, Alibaba, NIO, and More Stock Market Movers Monday

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    Stock futures traded lower Monday as investors remained keyed on interest rate policy from the Federal Reserve and as a surge in China stocks over a loosening of Covid-19 restrictions in the country failed to boost U.S. equities.

    Here are some stocks that could make moves Monday:

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  • Dow down by more than 500 points as Fed officials point to more rate hikes, China protests rattle markets

    Dow down by more than 500 points as Fed officials point to more rate hikes, China protests rattle markets

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    U.S. stocks tumbled on Monday as protests in China raised the risks to global growth and Federal Reserve policy makers said more interest-rate increases are needed to control inflation.

    How stocks are trading
    • The Dow Jones Industrial Average was down 523 points, or 1.5%, at 33,824, near its session low.

    • The S&P 500
      SPX,
      -1.65%
      retreated 68 points, or 1.7%, to 3,958.

    • The Nasdaq Composite shed 195 points, or 1.7%, dropping to 11,031.

    U.S. stocks had notched weekly gains last week for the second time in three weeks. The Dow rose 1.8%, the S&P 500 advanced 1.5% and the Nasdaq gained 0.7%.

    What’s driving markets

    Wall Street started the week in a downbeat mood as traders absorbed the impact of unrest in China and assessed interest-rate commentary by a pair of Fed officials on Monday.

    St. Louis Fed President James Bullard told MarketWatch that he favors more aggressive interest-rate hikes to contain inflation, and that the central bank will likely need to keep interest rates above 5% into 2024. Meanwhile, his colleague John Williams, president of the New York Fed, said that U.S. unemployment could climb to as high as 5% next year, versus October’s rate of 3.7%, in response to the central bank’s series of rate hikes.

    Overseas, Hong Kong’s Hang Seng Index
    HSI,
    -1.57%
    closed down by 1.6% and most equity indexes across Asia also fell, with the exception of India’s, on concerns about unrest in China. Those concerns also spilled over into commodity markets, where West Texas Intermediate crude for January delivery
    CLF23,
    +0.93%
     briefly fell to less than $74 per barrel before recovering and settling at $77.24 a barrel on the New York Mercantile Exchange. Meanwhile, copper prices HG00 were off 0.9% at $3.594 per pound.

    “What people are worried about is the potential for protests in China to spread and whether the population is reaching its breaking point,” said Derek Tang, an economist at Monetary Policy Analytics in Washington. “At the same time, Fed speak is ramping up and the message is there’s more hikes to come. So investors aren’t finding relief.”

    Signs that economic activity in China will continue to be disrupted by the protests or by additional anti-COVID measures will likely continue to weigh on commodity prices, analysts said. Meanwhile, concerns about global growth helped to support government bond markets earlier on Monday, when the yield on the 10-year note
    TMUBMUSD10Y,
    3.693%
    briefly traded at its lowest level since October.

    The unprecedented waves of protest in China “have caused ripples of unease across financial markets, as worries mount about repercussions for the world’s second-largest economy,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. “As demonstrations spread across the country from Beijing to Xinjiang and Shanghai, reflecting rising anger about the zero-Covid policy, a sustained recovery in demand across the vast country appears even further away.”

    But the news wasn’t all bad: Reports of strong online Black Friday sales helped boost shares of Amazon.com Inc.
    AMZN,
    +0.29%    ,
    which were up 0.6%.

    Investors can expect more information about the health of the U.S. economy in what’s shaping up to be a busy week for U.S. economic data: Later this week, investors will receive the ADP employment report followed by the November jobs report. Revised data on third-quarter gross domestic product is due on Wednesday, along with the Fed’s Beige Book report. Federal Reserve chair Jerome Powell is set to speak publicly on Wednesday, and a closely watched gauge of inflation is due on Thursday.

    Read: ‘We see major stock markets plunging 25% from levels somewhat above today’s,’ Deutsche Bank says

    Single-stock movers

    — Jamie Chisholm contributed to this article.

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  • Dow ekes out gain, stocks end higher on signs of easing inflation, but Russia’s war in Ukraine intensifies

    Dow ekes out gain, stocks end higher on signs of easing inflation, but Russia’s war in Ukraine intensifies

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    U.S. stocks closed higher Tuesday, but off the session’s best levels, after more data suggested inflation may be slowing and mega-retailer Walmart offered a rosier annual forecast.

    The Dow turned negative earlier in the session after the Associated Press reported that Russian missiles crossed into Poland and killed two people, ratcheting up geopolitical tension given Poland is a NATO country.

    How stocks traded
    • S&P 500 index
      SPX,
      +0.87%
      rose 34.48 points, or 0.9%, to close at 3,991.73.

    • Dow Jones Industrial Average
      DJIA,
      +0.17%
      climbed 56.22 points, or 0.2%, ending at 33,592.92, after touching a nearly three-month high of 33,987.06 earlier.

    • Nasdaq Composite
      COMP,
      +1.45%
      climbed 162.19 points, or 1.5%, closing at 11,358.41.

    On Monday, U.S. stocks finished near session lows after early gains evaporated. The Dow Jones Industrial Average fell 211 points, or 0.6%, while the S&P 500 declined 36 points, or 0.9% and the Nasdaq Composite dropped 226 points, or 2%.

    What drove markets

    U.S. stocks closed higher Tuesday, after another batch of inflation data showed that whole prices rises were slowing in October for the second straight month.

    The Dow’s brief negative turn came after reports that Russian military bombarded Ukraine Tuesday. In the attack, missiles reportedly crossed into Poland, a member of NATO, the Associated Press said, citing a senior U.S. intelligence official.

    “Geopolitical concerns obviously are never positive for the market,” said Peter Cardillo, chief market economist at Spartan Capital Securities.

    On Tuesday, oil futures settled higher. West Texas Intermediate crude for December delivery rose to $1.05, or 1.2%, reaching $86.92 a barrel.

    While markets had started to price in the toll of Russian’s nearly nine-month invasion of Ukraine, it had not priced in an potential escalation of the war, said Kent Engelke, chief economic strategist at Capitol Securities Management.

    “Talk about geopolitical angst returning,” Engelke said, later adding, “If there were really missiles shot to Poland and that was really not an accident, wow, that is really  increasing the scope of the war.”

    A U.S. National Security Council spokesperson said the agency was aware of the news reports out of Poland, but that it cannot confirm the reports or any details at this time.

    While international worries clouded the session, there was also encouraging domestic news.

    The U.S. producer-price index climbed 8% over the 12 months through October, the Labor Department said Tuesday, easing from September’s revised 8.4% increase. Last week, stocks surged after the October consumer-price index rose more slowly than expected.

    See: Wholesale prices rise slowly again and point to softening U.S. inflation

    Tuesday’s PPI report helped support the notion that inflation has peaked, at least for now.

    “Today, it’s really about the PPI and the market reaction to it,” Steve Sosnick, chief strategist at Interactive Brokers
    IBKR,
    +3.45%    ,
    said in a Tuesday morning interview before the reports of missiles crossing into Poland.

    Markets ripped higher last Thursday after October’s consumer-price index showed signs of easing. The same dynamic was playing out Tuesday, but the response now has been “a bit more muted” because it’s an iteration on inflation data that investors already had been starting to see, Sosnick said.

    So, is the economy really at peak inflation? It’s too early to say for sure, according to Sosnick. Still, the PPI numbers, paired with last week’s CPI reading “does add evidence to that narrative,” he added.

    Walmart’s third quarter earnings also were buoying markets, Sosnick said. The massive retailer’s beat on earnings offers a glimpse at the minds and wallets of many American consumers. For anyone who worries about consumers “getting highly defensive” and not spending, Walmart’s numbers are “counter evidence.”

    In other news, the first face-to-face meeting between President Joe Biden and President Xi Jinping helped support stocks listed in China and Hong Kong, as some of the tensions between the world’s two largest economies were seen to be easing.

    The upbeat tone from Asia, which included Taiwan Semiconductor Manufacturing Company
    TSM,
    +10.52%
    jumping 7.7% on news Warren Buffett had bought a $5 billion stake, underpinned European bourses, which closed higher for a fourth session in a row.

    Read also: Warren Buffett’s chip-stock purchase is a classic example of why you want to be ‘greedy only when others are fearful’

    Analysts increasingly expect stocks to enjoy a positive end to the year. “The near-term picture still looks positive for U.S. benchmark indices and while momentum has reached intra-day overbought levels, this doesn’t imply a selloff has to happen right away,” said Mark Newton, head of technical strategy at Fundstrat.

    Philadelphia Federal Reserve President Patrick Harker said Tuesday that he favored a 50 basis-point hike to the Fed’s benchmark rate in December. Atlanta Fed President Raphael Bostic said more rate hikes will be needed, even through there have been “glimmers of hope” on inflation.

    Fed Vice Chairman for Supervision Michael Barr said Tuesday that the U.S. economy is likely to slow in coming months, and more workers will lose their jobs, in Senate testimony. The Fed is working with regulators to assess risks tied to cryptocurrency markets, following the collapse of FTX and its associated companies.

    In other U.S. economic data, the New York Empire State manufacturing index for November showed a gauge of manufacturing activity in the state rose 13.6 points to 4.5 this month.

    The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.774%
    was down 6.7 basis points at 3.798%. Bond yields move inversely to prices.

    Companies in focus
    • Walmart
      WMT,
      +6.54%
      shares jumped after the giant retailer swung to a net third-quarter loss, due to $3.3 billion in charges related to opioid legal settlements, but reported adjusted profit, revenue and same-store sales that were well above expectations and a full-year outlook that was above forecasts. Walmart shares opened Tuesday at $145.61 and closed at $147.48, or 6.57% higher.

    • Home Depot
      HD,
      +1.63%
      rose after the home improvement retailer reported fiscal third-quarter earnings that beat expectations, citing strength in project-related categories, but kept its full-year outlook intact. Home Depot shares opened Tuesday at $304.06 and closed at $311.99.

    • Chinese-listed technology traded sharply higher on Tuesday, including U.S.-traded ADRs for Alibaba Group Holding
      BABA,
      +11.17%      ,
      Baidu Inc.
      BIDU,
      +9.02%
      and JD.com Inc.
      JD,
      +7.14%
      The KraneShares CSI China Internet exchange-traded fund
      KWEB,
      +9.56%
      also traded substantially higher.

    —Jamie Chisholm contributed reporting to this article

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  • Hong Kong stocks suffer worst single-day rout since 2008 as Xi consolidates power

    Hong Kong stocks suffer worst single-day rout since 2008 as Xi consolidates power

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    Hong Kong stocks suffered their worst single session since the 2008 financial crisis after Chinese leader Xi Jinping tightened his grip on power.

    The Hang Seng
    HSI,
    -6.36%
    ended more than 6% lower to a new 13-year low, with tech giants including JD.com
    9618,
    -13.17%

    JD,
    -0.02%    ,
    Baidu
    9888,
    -12.20%

    BIDU,
    -2.29%    ,
    Tencent
    700,
    -11.43%
    and Alibaba
    9988,
    -11.42%

    BABA,
    +0.22%
    dropping between 11% and 13% each.

    The local Shanghai Composite
    SHCOMP,
    -2.02%
    index fell a less dramatic 2%.

    Over the weekend, the 69-year-old Xi secured his third term as general secretary of the Chinese Communist Party. Reporters captured video of former Chinese President Hu Jintao getting escorted out of the closing ceremony. Four of the seven standing committee members were replaced, all of whom are at least 60 years old.

    Analysts at Goldman Sachs say most of the new appointees worked with Xi at earlier stages of their careers. “We note that incoming leaders could arguably be more focused on ideological and political subjects while the retiring policymakers appear more economy/market-oriented,” they said.

    They added that for valuations to improve, more clarity on the zero COVID policy, stabilization of the property markets, and de-escalation of both cross-straits and U.S.-China tensions would be needed.

    China also reported delayed data, saying its economy grew at a 3.9% year-over-year rate in the third quarter, up from 0.4% in the second quarter.

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