Tag: Industrial Goods

A wall of debt rolling over: Here’s what’s scaring Bridgewater’s co-CIO

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A weak session is setting up for Tuesday, with oil under pressure after unexpectedly downbeat China export data. So the preference is for bonds this morning, as stock futures tilt south.

Onto our call of the day, which deals with another worry — a wall of government debt that will be with us for decades. It comes from Bridgewater’s highly regraded co-chief investment officer Bob Prince, who was speaking at the Global Financial Leaders’ Investment Summit on Tuesday, hosted by the Hong Kong Monetary Authority.

Prince touches on asset liability mismatches, such as what was seen during the banking crisis earlier this year. He explains that one big factor behind a crisis is when a certain economic regime exists for an extended period of time and “people extrapolate that into the future on the basis of leverage and asset liability mismatches. Then you get a shift in that regime.”

The events of March, which saw the collapse of SVB, Signature Bank and Silvergate, were a perfect example of that, Prince says. Then he turns to what he calls the “broader effects of a transition from 15 years of abundant free money,” that was first used to battle deleveraging pressures in the financial system in 2008 and then the pandemic.

One long-term effect of that gets particular attention by Prince, who points out how U.S. government Treasury debt to GDP was about 70% in 2008, around where it had been for decades.

“The after effects of offsetting deleveraging and pandemic, you’ve had a massive wealth shift from the public sector to the private sector and that’s left the government with debt to GDP up from 70% up to 120%. And the particular vulnerability of that is in the debt rollovers and the gross issuance that you’re going to see in the coming decades . You’re stuck with that debt until you pay it off and that means you have to roll it over like anybody else does,” said Prince.

“Gross debt issuance will be running at 25% for as far as the eye can see, that means every year you’re issuing 25% of GDP in debt. In 1960, the average amount of debt issuance was 12% of GDP,” he said.

Prince says most people really don’t pay attention to debt rollovers because they just assume those will get done, but notes that when countries have experienced balance of payments crisis in the past, mostly emerging markets, that is because they have been unable to roll over that debt.

In the U.S. case, it’s crucial to look at who is holding the debt, particularly the 27% held by foreign investors and 18% by central banks. “Foreign investors would normally be a reliable source of investment but it does heighten sensitivity to geopolitical risk, and so geopolitical risk converges with debt rollovers and gross issuance of the Treasury is an issue that you need to pay attention to in the coming years.

While not an “acute problem,” he says, it’s a lingering one, and when it comes to central banks it’s also unclear whether their holdings also present a “rollover risk.”

Prince also touches on the fact that that all that “abundant free money” has fueled a private-equity boom, but with interest rates now at 8% instead of 2% or 3%, “the pace and transaction cycle is bound to slow,” and they are starting to see that.

“When we talk to institutional investors around the world, many of them are experiencing liquidity issues right now and the liquidity issues result from the fact so much money was allocated to private assets and the transaction cycle is slowing,” he said.

MarketWatch 50: Forget U.S. stocks for now. Invest here instead, says Bridgewater’s co–investment chief

A team of analysts at Citigroup led by Nathan Sheets have also weighed in on government debt, telling clients in a new note that “it’s unwise for policy makers to experiment or test” where the threshold for too much debt lies. Here’s their chart showing the bleak trajectory:

Dirk Willer, head of global asset allocation at Citigroup, said a debt crisis scenario in the U.S. would likely mean a selloff of risk assets globally. He notes that bonds in rival countries may not be the best bet as they don’t always benefit. And both gold and bitcoin underperformed during the U.K. gilt crisis, so those may be out.

Also in attendance at the conference in Hong Kong, Deutsche Bank’s CEO is worried geopolitics could create another market event and Citadel’s Ken Griffin said investors should put money in China.

Read: ‘Stock-market correction is over’ after broad surge amid ‘epic’ market rallies

The markets

Stock futures
ES00,
-0.02%

NQ00,
+0.31%
are pointing to a weak to flat session ahead, while the 10-year Treasury yield
BX:TMUBMUSD10Y
eases back. U.S. crude
CL.1,
-2.20%
is under $80 a barrel after worse-than-forecast China exports signaled more economic bumps in the global growth engine. The dollar
DXY
is up.

The buzz

Planet Fitness stock
PLNT,
-0.27%
is surging on upbeat results and an improved growth outlook. Uber
UBER,
+0.82%
is up as earnings beat forecasts, but revenue fell short. D.R. Horton
DHI,
-0.96%
stock is also getting a boost from results. EBay
EBAY,
-0.44%,
Occidental Petroleum
OXY,
-2.00%,
Akamai Tech
AKAM,
-0.06%
and Gilead Sciences
GILD,
-0.55%
after the close.

Reporting late Thursday, Tripadvisor
TRIP,
+2.29%
delivered blowout results and the stock is surging, while Sanmina
SANM,
-1.03%
is down 14% after the manufacturing services provider’s disappointing results.

UBS
UBS,
-0.49%

UBSG,
+2.79%
swung to a $785 million quarterly loss on lingering effects of its Credit Suisse takeover, but it pulled in $33 billion in new deposits and shares are up.

After a decade of turmoil, office-sharing group WeWork
WE,
-24.73%
filed for Chapter 11 bankruptcy protection on Monday.

The U.S. trade deficit climbed 5% in September to $61.5 billion as imports rebounded. Still to come is consumer credit at 3 p.m. Fed Vice Chair for Supervision Michael Barr speaks at 9:15 a.m., followed by Fed Gov. Christopher Waller at 10 a.m.

The International Monetary Fund boosted its China outlook for 2023 and 2024.

Best of the web

Big banks are cooking up new ways to offload risk.

Retirees continue to flock to places where climate risk is high.

How to know when it’s time to retire

The chart

According to this recent JPMorgan survey, two-thirds of investors are ready to start pumping more money into equities, while just 19% plan to increase bond exposure. Also, note that 67% also said they did not expect performance of the Magnificent 7 stocks — Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla and Meta — to “crack before the end of the year.”

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:

TSLA, -0.31%	Tesla
AMC, +2.15%	AMC Entertainment
NVDA, +1.66%	Nvidia
AAPL, +1.46%	Apple
NIO, -3.16%	NIO
GME, -2.45%	GameStop
AMZN, +0.82%	Amazon.com
PLTR, -1.85%	Palantir Technologies
MULN, +3.88%	Mullen Automotive
MSFT, +1.06%	Microsoft
NVDA, +1.66%	Nvidia

Random reads

Fifteen people ended up with eye pain and sight issues after a Bored Ape NFT event.

A death metal band asked for singers on social media. A choir responded.

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November 7, 2023

Here’s why you might not have to pay a 6% commission next time you sell a home

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Going back decades, if you wanted to buy or sell a stock on the open market, you had to pay a 2% commission to buy and a 2% commission to sell. Then the advent of discount brokerage, led by Charles Schwab Corp.
SCHW,
+1.64%,
made lower commissions available until eventually, with improved technology and efficiency, the entire industry changed to enable the average investor to avoid commissions completely.

But the internet hasn’t done much to reduce the cost of selling a home in the U.S. Sellers typically pay a 6% commission to a real-estate agent to list and sell a home, with the seller’s agent splitting that commission with the buyer’s agent. But all of that may change because of a verdict this week in a class-action lawsuit in federal court against the National Association of Realtors.

Aarthi Swaminathan covers the case, what may happen next and the implications for home sellers and buyers:

Real-estate advice from the Moneyist

MarketWatch illustration

Quentin Fottrell — the Moneyist — works with three readers to answer tricky real-estate questions:

Economic outlook

On Wednesday, Federal Reserve Chair Jerome Powell may have bolstered the case that the central bank is finished raising interest rates for this economic cycle. The federal-funds rate was left in its target range of 5.25% to 5.50%.

Jon Gray, the president of Blackstone Group, spoke with MarketWatch Editor in Chief Mark DeCambre and said he expected the Fed to succeed in bringing down inflation without pushing the U.S. economy into a deep recession.

Friday employment numbers: Jobs report shows 150,000 new jobs in October as U.S. labor market cools

Bond-market trend switches again

The U.S. Treasury yield curve has been inverted for nearly a year.

FactSet

Normally, longer-term bonds have higher yields than those with short maturities. But the yield curve has been inverted for nearly a year, with 3-month U.S. Treasury bills
BX:TMUBMUSD03M
having higher yields than 10-year Treasury notes
BX:TMUBMUSD10Y.

There has been elevated demand for long-term bonds, as investors have anticipated a recession and a reversal in Federal Reserve interest-rate policy. When interest rates decline, bond prices rise and vice versa.

As you can see on the chart above, the yield curve was narrowing until mid-October. Yields on 10-year Treasury notes were close to 5% on Oct. 19, but they have been falling the past several days as the three-month yield has remained close to 5.5%.

In this week’s ETF Wrap, Christine Idzelis reports on where all the money is flowing in the bond market.

In the Bond Report, Vivien Lou Chen summarizes the action as investors react to the Federal Reserve’s decision not to change its federal-funds-rate target range this week and to other economic news.

For income-seekers looking to avoid income taxes, here’s a deep dive into municipal bonds, with taxable-equivalent yields and a deeper look at those within four high-tax states.

Ford’s good news — in the bond market

Ford Motor Co.’s debt rating has been lifted by S&P to investment-grade.

Getty Images

Ford Motor Co.’s
F,
+4.14%
credit rating was upgraded to an investment-grade rating by Standard & Poor’s on Monday. This takes about $67 billion in bonds out of the high-yield, or “junk,” market, as Ciara Linnane reports.

A stock-market warning based on history

The original Magnificent Seven.

Courtesy Everett Collection

By now you have probably heard the term “Magnificent Seven” used to describe stocks of the tremendous tech-oriented companies that have led this year’s rally for the S&P 500
SPX
: Apple Inc.
AAPL,
-0.52%,
Microsoft Corp.
MSFT,
+1.29%,
Amazon.com Inc.
AMZN,
+0.38%,
Nvidia Corp.
NVDA,
+3.45%,
Alphabet Inc.
GOOGL,
+1.26%

GOOG,
+1.39%,
Meta Platforms Inc.
META,
+1.20%
and Tesla Inc.
TSLA,
+0.66%.
With Tesla’s recent decline, that company is now the ninth-largest holding in the portfolio of the SPDR S&P 500 ETF Trust
SPY,
which tracks the benchmark index. Here are the top 10 companies held by SPY (11 stocks, including two common-share classes for Alphabet), with total returns through Thursday:

Company	Ticker	% of SPY portfolio	2023 total return	2022 total return	Total return since end of 2021
Apple Inc.	AAPL, -0.52%	7.2%	37%	-26%	1%
Microsoft Corp.	MSFT, +1.29%	7.1%	46%	-28%	5%
Amazon.com Inc.	AMZN, +0.38%	3.5%	64%	-50%	-17%
Nvidia Corp.	NVDA, +3.45%	3.0%	198%	-50%	48%
Alphabet Inc. Class A	GOOGL, +1.26%	2.1%	44%	-39%	-12%
Meta Platforms Inc. Class A	META, +1.20%	1.9%	158%	-64%	-8%
Alphabet Inc. Class C	GOOG, +1.39%	1.8%	45%	-39%	-11%
Berkshire Hathaway Inc. Class B	BRK.B, +0.80%	1.8%	13%	3%	17%
Tesla Inc.	TSLA, +0.66%	1.7%	77%	-65%	-38%
UnitedHealth Group Inc.	UNH, -0.98%	1.4%	2%	7%	9%
Eli Lilly and Company	LLY, -2.15%	1.3%	60%	34%	115%
Sources: FactSet, State Street (for SPY holdings)

Five of these stocks (including the two Alphabet share classes) are still down from the end of 2021. SPY itself has returned 14% this year, following an 18% decline in 2022. It is still down 7% from the end of 2021.

Mark Hulbert makes the case that a decade from now, the Magnificent Seven are unlikely to be among the largest companies in the stock market.

A different market opportunity: India is seeing a multidecade growth surge. Here’s how you can invest in it.

The MarketWatch 50

The MarketWatch 50 series is back, with articles and video interviews starting this week, including:

PayPal soars after earnings report

PayPal CEO Alex Chriss.

MarketWatch/PayPal

After the market close on Wednesday, PayPal Holdings Inc.
PYPL,
+1.89%
announced quarterly results that came in ahead of analysts’ expectations, and the stock soared 7% on Thursday even though the company lowered its target for improving its operating margin.

In the Ratings Game column, Emily Bary reports on the positive reaction to PayPal’s new CEO, Alex Chriss.

A less enthusiastic earnings reaction: EV-products maker BorgWarner’s stock suffers biggest drop in 15 years after downbeat sales outlook

Consumers drive mixed reactions to earnings results

Apple Inc. reported mixed quarterly results.

Mario Tama/Getty Images

Here’s more of the latest corporate financial results and reactions. First the good news:

And now the news that may not be so good:

Harsh verdict for SBF

It might seem that some legal battles never end, but it took only a year from the collapse of FTX for the cryptocurrency exchange’s founder, Sam Bankman-Fried, to be convicted on all seven federal fraud and money-laundering charges brought against him. The charges were connected to the disappearance of $8 billion from FTX customer accounts.

Here’s more reaction and coverage of the virtual-currency industry:

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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November 3, 2023

Sluggish EV and auto sales could continue next year, based on what these chip makers just said

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A couple of lesser-known chip companies and a battery maker have confirmed growing fears among investors about the slowdown in electric-vehicle and overall auto sales, which appears likely to continue into next year.

Monday was loaded with bad news from companies that make industrial chips for the auto industry, as earnings reports from On Semiconductor Corp.
ON,
-21.77%
in the morning and Lattice Semiconductor Inc.
LSCC,
-4.05%
in the afternoon disappointed Wall Street with their forecasts.

If inflation and high interest rates continue into next year, which is feasible, the slump in auto sales is expected to continue.

“We think it will carry through into the first part of next year, with most cycles running six to nine months,” said David Williams, an analyst with Benchmark who had predicted that the outlook for On Semi would have to be tempered. “However, the reduced consumer buying power and overall macro backdrop will likely keep buyers on the sidelines for the next couple of quarters.”

On Semi said that because of the shortfall in an order from one unnamed automotive customer in Europe, it now expects to ship $200 million less this year of its silicon carbide chips, which are used in EVs. The company did not give further details on its customer, but pointed out that at $800 million, its 2023 revenue will still be four times higher than 2022.

Last year, On Semi touted a new plant in Hudson, N.H., to make chips out of silicon carbide, an energy-efficient semiconductor material made of silicon and carbon, and predicted those chips would exceed $1 billion in sales in 2023.

“EVs are going to grow,” On Semi Chief Executive Hassane El-Khoury said Monday. “They’re going to grow for us in the fourth quarter as well. It’s just not going to grow in the fourth quarter at the rate that we expected… I think EVs are a long-term growth opportunity — even with the backdrop of a lot of the headlines that we’re seeing, customer designs have not slowed down.”

Even as company executives spun the positives, investors were rattled and On’s shares tumbled nearly 22%. Lattice Semiconductor also disappointed Wall Street with its outlook for the fourth quarter. Lattice sells chips that are used in advanced driver-assistance systems in cars, and shares tumbled 13% in extended trading after its fourth-quarter outlook came in lower than expected, due to fewer customers in Asia.

“In the last kind of four to six weeks of Q3, we started to see demand soften from our industrial and automotive customers,” Lattice CEO Jim Anderson told analysts. “I would say that it was really localized to the Asia geography, and we expect that softness we started to see at the end of Q3 extend into the current quarter.”

In addition, Tesla Inc.’s battery partner, Panasonic Holdings
6752,
-8.35%
of Japan, said it was slashing its production by 60% due to slower sales of some models to Tesla. That fueled a 4.8% drop in Tesla stock
TSLA,
-4.79%,
to its lowest close since late May. Investors have been nervous about the EV market, especially after Ford
F,
-1.91%
executives said last week that consumers were unwilling right now to pay a premium for EVs.

Semiconductor companies are often harbingers of future end-product demand in a wide variety of industries. Now that automakers use so many semiconductors, they can also be a big indicator of auto demand, especially in the hot arena of EVs. And those indicators don’t look good in the short term.

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October 30, 2023
Big Tech earnings have been strong, but Apple is about to answer the thousand-dollar question

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While the stock market reactions may not prove it, Big Tech is four-for-four so far this earnings reporting season.

Alphabet Inc.
GOOG,
-0.03%

GOOGL,
-0.09%,
Amazon.com Inc.
AMZN,
+6.83%,
Meta Platforms Inc.
META,
+2.91%
and Microsoft Corp.
MSFT,
+0.59%
all beat earnings and revenue expectations for the latest quarter, showing, among other things that the advertising market was healthy in the latest quarter and that software spending is holding up.

But one more major test looms in the week ahead. Apple Inc.
AAPL,
+0.80%
is due to deliver September-quarter results on Thursday and those earnings will answer a key question: Are consumers still so willing to purchase thousand-dollar iPhones in the current economy?

Results from other companies in recent weeks have painted a mixed picture of consumer spending. Visa Inc.
V,
-0.87%,
Mastercard Inc.
MA,
-0.14%
and American Express Co.
AXP,
-1.42%
say that spending remains resilient, but there are also signs that cracks are starting to form in categories deemed non-essential. Just look at Align Technology Inc.
ALGN,
+0.20%,
the maker of Invisalign orthodontic aligners, which saw its stock plunge last week after noting that people seem to be putting off dental and orthodontic visits.

Read: Invisalign maker’s stock craters after soft earnings, but analysts still say it’s a buy

Granted, some might say that iPhones are glorified necessities these days for Apple fans, even with their high price tags. But Apple conducted an effective price increase on its iPhone 15 Pro model when it rolled out its new phones in September, all while delivering a mostly incremental suite of feature upgrades across all its latest models. Will the new phones prove enticing enough in a period of stretched budgets?

Just judging by S&P 500
SPX
results so far in the aggregate, the odds would seem to be in Apple’s favor for a beat this quarter. About half of index components have already reported, and 78% have posted earnings upside, while 62% have surprised positively on the top line, according to FactSet.

Revenue will be the key item for Apple, as consensus expectations call for a small decline on the metric, which would mark the fourth consecutive year-over-year drop. It’s also worth noting that companies on the whole haven’t been topping revenue estimates by their usual margin. S&P 500 components in aggregate have reported revenue 0.8% above expectations, which compares with a five-year average of 2.0%, FactSet Senior Earnings Analyst John Butters wrote in a recent report.

Apple’s report could also highlight the impact of currency on corporate results, as the company generates more than half of its revenue internationally.

“Given the stronger U.S. dollar in recent months, are S&P 500 companies with more international revenue exposure reporting lower (year-over-year) earnings and revenues for Q3 compared to S&P 500 companies with more domestic revenue exposure?” Butters asked. “The answer is yes.”

This week in earnings

Many U.S. investors in financial-technology companies likely hadn’t heard of European payments player Worldline SA
WLN,
+9.06%
before last week, but a warning from the French company about deteriorating conditions in Europe helped send shares of PayPal Holdings Inc.
PYPL,
-2.63%
and Block Inc.
SQ,
-3.98%
sharply lower Wednesday, in a selloff one analyst deemed an overreaction. Those companies will look to reassure Wall Street about the health of their businesses with their own reports this week. Plus, while not a payments name, SoFi Technologies Inc.
SOFI,
-0.43%
will provide another read on the fintech sector. Investors will be watching to see how the end of the student-loan moratorium impacted student lending volumes.

The week ahead will also shed light on how consumers’ dining preferences have evolved in the current economy. Starbucks Corp.
SBUX,
-0.70%,
Dine Brands Global Inc.
DIN,
-0.12%,
Cheesecake Factory Inc.
CAKE,
-0.47%
and Sweetgreen Inc.
SG,
+0.59%
are among names on the docket. Plus, amid concerns about the impact of GLP-1 drugs such as Ozempic and Wegovy on eating habits, Kraft Heinz Co.’s management will be in the spotlight.

Don’t miss: What exactly are patients taking new weight-loss drugs eating and what are they avoiding? Bernstein asked them.

The call to put on your calendar

You can’t spell Advanced Micro Devices without AI (sort of): Nvidia Corp.
NVDA,
+0.43%
has been ruling the chip world this year thanks to its dominance with the sort of hardware needed to power the corporate AI fervor. Investors will be watching Tuesday afternoon to see how quickly Advanced Micro Devices Inc.’s
AMD,
+2.95%
own AI story is coming together. “The AMD narrative feels all about their data center (and, particularly, their AI story) right now,” Bernstein analyst Stacy Rasgon wrote in a note to clients. “In the near term the achievability of their 2H data-center growth (guided to 50% half-over-half) will be the question.” Rasgon expects AMD to discuss recent customer wins for its MI300X chip, though he thinks it will take time for the company to see “real volume.”

The number to watch

PayPal transaction margins: Shares of the one-time investor darling are trading at their lowest levels since May 2017, and the latest source of anguish for Wall Street is the company’s transaction margins. PayPal’s lower-margin unbranded checkout business has been growing more quickly than its higher-margin branded checkout product, a trend that’s been weighing on overall transaction margins. Barclays analyst Ramsey El-Assal expects the third quarter to mark a bottom on the metric before trends stabilize in the fourth quarter. “We do not believe the stock is crowded on the long or short side into earnings, as investors lack conviction regarding the magnitude of transaction margin headwinds in Q3,” he wrote in a recent preview. “In any case, we view Q3 as a potential clearing event.” PayPal posts results Wednesday afternoon.

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October 29, 2023
Intel cheers foundry wins, AI traction, and its stock is roaring after earnings

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Intel Corp. shares were popping nearly 8% in Thursday’s extended session after the chip maker delivered a rosy forecast, while talking up new customers for its foundry business and traction related to artificial intelligence.

For the fourth quarter, Intel
INTC,
-0.94%
anticipates $14.6 billion to $15.6 billion in revenue, whereas analysts were looking for $14.4 billion. The company is also modeling 44 cents in adjusted earnings per share, while the FactSet consensus was for 33 cents.

“While the industry has seen some wallet share shifts between CPU and accelerators over the last several quarters, as well as some inventory burn in the server market, we see signs of normalization as we enter Q4,” Chief Executive Pat Gelsinger said on the earnings call.

Gelsinger expressed confidence about Intel’s positioning — and the future of central processing units — as AI becomes more dominant in the technology world.

“Training of these large models is interesting, but the deployment of those models, the inferencing use of those models is what we believe is truly spectacular for the future,” he said. “And…some of that will run on the accelerators, but a huge amount of that is going to run, right, on Xeons.”

He also shared that Intel now has three customers for its 18A foundry process technology that have made commitments. The company previously disclosed one customer made prepayments, but Gelsinger added Thursday that Intel has two other customers.

“The other thing that we saw this quarter, which was a little bit unexpected, was this huge surge in interest for AI customers and Intel’s advanced packaging technology,” he said.

Intel is in the midst of a big push to build a foundry business through which it would manufacture chips for other companies, though not all on Wall Street are sold yet on the move.

The company also delivered an upbeat third-quarter report, easily clearing Wall Street’s bar on profit and topping expectations on revenue as well.

The company reported net income of $297 million, or 7 cents a share, compared with $1.0 billion, or 25 cents a share, in the year-earlier period. On an adjusted basis, Intel earned 41 cents a share, down from 59 cents a share a year prior, while analysts were looking for 22 cents a share.

Revenue dropped to $14.2 billion from $15.3 billion, while the FactSet consensus called for $13.6 billion.

The company saw revenue from its personal-computer segment, known as client-computing, drop 3% to $7.9 billion, whereas analysts were looking for $7.3 billion. Data-center and AI revenue fell 10% to $3.8 billion, narrowly missing the FactSet consensus, which was $3.9 billion.

Intel recorded a 45.8% adjusted gross margin, compared with 39.8% in the second quarter. The company’s forecast had been for about 43%.

Intel shares have climbed 24% so far this year, as the Dow Jones Industrial Average
DJIA
has lost about 1%.

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October 26, 2023
Louisiana Rep. Mike Johnson nominated for speaker by House Republicans

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House Republicans on Tuesday night voted for Rep. Mike Johnson to become their latest nominee for speaker of the U.S. House of Representatives, with the Louisiana congressman’s selection capping a tumultuous day in which Rep. Tom Emmer was briefly the nominee.

Johnson, vice chair of the House Republican Conference, picked up support in two rounds of voting and drew a majority votes in a third ballot, topping the number of votes cast for Rep. Byron Donalds of Florida. That’s according to posts on social media by Rep. Elise Stefanik of New York, who as chair of the conference is the No. 4 House Republican.

The GOP-run House wasn’t due to hold a floor vote on the speaker position on Tuesday night, but the chamber could do that Wednesday.

Analysts have been warning that the long process of picking a new speaker is preventing the Republican-run House from addressing crucial matters, such as supporting Israel and passing a budget to avoid a government shutdown next month that could rattle markets
SPX.

It has been three weeks since the historic ouster of former Speaker Kevin McCarthy, a California Republican.

The selection of Johnson marks the the fourth time that House GOP lawmakers have picked a speaker nominee this month. Emmer of Minnesota, the No. 3 House Republican, was nominated around mid-day Tuesday, beating out Johnson, but bowed out about four hours later after some colleagues and former President Donald Trump refused to support him.

Rep. Jim Jordan of Ohio secured the nomination on Oct. 13, but was dropped as the nominee last Friday as GOP opposition to him grew over three rounds of voting on the House floor. House Majority Leader Steve Scalise, a Louisiana Republican, was tapped for the post on Oct. 11 but ended his speaker bid a day later due to opposition from fellow Republicans.

McCarthy on Tuesday floated a plan that would reinstall him as speaker and set up Jordan as the assistant speaker, according to an NBC News report citing unnamed sources.

In the third ballot on Tuesday night, Johnson scored 128 votes, Donalds got 29 votes, and 44 lawmakers backed people who weren’t on the ballot, according to multiple published reports. Most of those Republicans supported McCarthy, while one supported Jordan.

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October 24, 2023
Jim Jordan dropped as speaker nominee by House Republicans, who plan for new pick next week

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House Republicans voted Friday in a secret ballot against keeping Rep. Jim Jordan as their nominee for speaker, and they planned to determine a new nominee next week.

The Ohio congressman had been facing resistance in his bid to become speaker, with the number of fellow Republicans voting against him rising to 25 in a third round of voting Friday on the House floor, up from 22 in a prior ballot.

House GOP lawmakers were expected to meet Monday evening for a new forum for speaker candidates. Rep. Kevin Hern of Oklahoma said in a post on X that he was running for the job, and Rep. Jack Bergman of Michigan has indicated he’ll seek the post as well.

The GOP opposition to Jordan stemmed from a range of concerns, including that his speakership could lead to cuts in defense
ITA
spending, as well as the view that he didn’t provide enough support for the speaker bid of House Majority Leader Steve Scalise, a Louisiana Republican. Jordan’s Republican opponents also said they’ve faced death threats for their stance, with Rep. Drew Ferguson of Georgia saying Thursday that the House GOP “does not need a bully as the Speaker.”

Analysts have been warning that the process of picking a new speaker is preventing the Republican-run House from addressing crucial matters, such as supporting Israel and passing a budget to avoid a government shutdown next month that could rattle markets. It has been 17 days since the historic ouster of former Speaker Kevin McCarthy, a California Republican.

Related: Israel, Ukraine aid could run up against House dysfunction, making for ‘tragedy,’ analyst says

And see: Biden seeks $14 billion for Israel, $61 billion for Ukraine in request to Congress

With the House looking rudderless for more than two weeks, the chamber’s temporary speaker, GOP Rep. Patrick McHenry of North Carolina, has faced calls to take on the job more permanently. But a measure that would have McHenry serve in the post until January stalled on Thursday afternoon due to objections from a number of Republicans, even as Jordan offered his support for it.

U.S. stocks
SPX

DJIA

COMP
were losing ground Friday, as rising bond yields
BX:TMUBMUSD10Y
and geopolitical tensions continue to take a toll.

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October 20, 2023
Jim Jordan dropped as speaker nominee by House Republicans, who plan for new pick next week

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House Republicans voted Friday in a secret ballot against keeping Rep. Jim Jordan as their nominee for speaker, and they planned to determine a new nominee next week.

The Ohio congressman had been facing resistance in his bid to become speaker, with the number of fellow Republicans voting against him rising to 25 in a third round of voting Friday on the House floor, up from 22 in a prior ballot.

House…

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October 20, 2023
‘Nobody in their right mind would do it.’ Nvidia CEO Jensen Huang says he wouldn’t start a company if he had a do-over.

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“ ‘You have to get yourself to believe that it’s not that hard, because it’s way harder than you think. If I go taking all of my knowledge now and I go back, and I said, I’m going to endure that whole journey again, I think it’s too much. It is just too much.’ ”

— Nvidia CEO Jensen Huang

That was one of the world’s most visionary tech-sector leaders, Nvidia
NVDA,
-1.86%
CEO Jensen Huang, who explained that building Nvidia was “a million times harder than I expected it to be” as he theorized that “nobody in their right mind would do it” if they were aware of the true personal toll.

The Taiwan-born 60-year-old, whose family relocated to Thailand and then the U.S. in his youth and is said to have co-founded Nvidia in 1993 following a meeting at a Denny’s restaurant in San Jose, Calif., after stints at AMD
AMD,
-0.49%
and LSI Logic, wouldn’t start his own company today, he said, if he were 30 years old.

The tech titan, however, posited in a recent interview with the podcast Acquired that a “superpower” among entrepreneurs is the ability to trick themselves into believing “it’s not that hard.”

Huang said that his biggest fear remains, as it has been since Nvidia’s early days, is failing to facilitate success among workers. “I’m afraid of the same things today that I was in the very beginning of this company, which is letting the employees down.”

Huang, who according to FactSet owns a 3.5% stake in Nvidia (market cap: $1.04 trillion), explained in the podcast interview that workers joining a company end up believing in its vision and taking on its aspirations as their own.

“You have a lot of people who joined your company because they believe in your hopes and dreams, and they’ve adopted it as their hopes and dreams,” Huang said. “You want to be right for them. You want to be successful for them. You want them to be able to build a great life. … The greatest fear is that you let them down.”

In explaining how he persevered, despite doubts and challenges, in building Nvidia into the company it is today, Huang credited a “support network” of people who never gave up on him during the three-decade journey.

He explained that the experience of leading Nvidia during those periods when its share price has been in seeming free fall was almost “too much to endure,” after the company was first listed on public markets in 1999. “It’s embarrassing no matter how you think about it.”

His comments come as Nvidia’s share price has, again, been in retreat, losing ground following a major 245% surge over the previous 12 months.

More recently, the Santa Clara–based company’s stock was hit by the Biden administration’s decision to introduce tougher controls on the export of semiconductors to China.

Read: One semiconductor company is expected to grow sales nearly as quickly as Nvidia through 2025

Looking ahead, Huang said developments in artificial intelligence now pose an “enormous” opportunity for companies like Nvidia. “The market opportunity has grown by probably a thousand times,” he said.

He said AI will “create more jobs” in the near term, but he also warned that the creation of those jobs doesn’t mean certain other jobs will not be lost to automation. “If you become more productive and the company becomes more profitable, usually they hire more people to expand into new areas,” Huang said.

“Now, obviously, net generation of jobs doesn’t guarantee that any one human doesn’t get fired. That’s obviously true. It’s more likely that someone will lose a job to someone else, some other human that uses an AI,” he added.

He advised people to “learn how to use AI” as he argued that “jobs will change.”

As to Nvidia itself, Huang explained, the company — in a reflection of the products it sells — is structured like a “computing stack.”

He said “Nvidia’s not built like a military” with a top-down command and control system. Instead, Huang said, the company is organized like a “neural network” with a decentralized structure, reflecting a belief that “your organization should be the architecture of the machinery of building the product.”

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October 20, 2023
Solar Stocks Plunge After Demand Warning in Europe

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Solar power stocks fell hard in after-hours trading on Thursday following a warning from solar-equipment maker SolarEdge Technologies that demand in Europe has slumped significantly.

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October 20, 2023
ASML Holding Sees Flat 2024 Revenue on Demand Uncertainty

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ASML Holding said it expects revenue next year to be similar to 2023 given uncertainty around demand recovery in the semiconductor industry but posted better-than-expected net income for the third quarter.

Copyright ©2023 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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October 17, 2023
AI stole the show this year, but earnings will drag Wall Street back to reality

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Nearly a year ago, OpenAI released ChatGPT 3 into the world, and investors got visions of dollar signs in their heads as they imagined the ways that artificial intelligence could make big money for businesses.

Wall Street’s now coming to terms with the fact that those sorts of paydays are going to take time. As investors have already seen from the past two quarters of earnings, AI has only really delivered financial benefits for a select few hardware companies so far — while spurring new costs for many others.

“The AI boom has already bifurcated into the contenders and pretenders,” said Daniel Newman, chief executive and principal analyst of Futurum Research. And while Advanced Micro Devices Inc., Intel Corp. and Arm Holdings PLC
ARM,
+0.38%
have stirred up interest, Nvidia Corp.
NVDA,
-4.68%
has established itself as far and away the greatest “contender,” with AI driving strong demand for its chips tuned for AI training.

Nvidia last quarter reported record earnings, including a 141% jump in revenue for its graphics chips used in AI infrastructure building up data centers. Nvidia, which reports near the end of earnings season on Nov. 21, posted record revenue of $13.5 billion last quarter and is expected to easily top that with $16 billion in the most recent quarter, a surge of 170% versus a year ago. Those estimates include $12.3 billion of revenue coming from data-center sales.

Other chip companies could post gains from AI as well, but to far lesser extents. Candidates include Broadcom Corp.
AVGO,
-2.01%
and system maker Super Micro Computer Inc.
SMCI,
+2.35%,
as well as Marvell Technology Inc.
MRVL,
-0.91%,
which last quarter told analysts that it expects to end the year at a revenue run rate of about $800 million this year from cloud/data-center chips related to AI.

“This is well above what we had outlined last quarter. Put this in perspective: This would put us at the run rate we had previously communicated for all of next year,” Marvel Chief Executive Matthew Murphy told analysts.

Super Micro is also riding the AI wave with its customized data-center servers that are designed to consume less power. But revenue in the September quarter is forecast to rise just 15% from a year ago and drop on a sequential basis, as supply constraints from Nvidia likely hampered Super Micro’s ability to meet all its demand.

Much as Advanced Micro Devices Inc.
AMD,
-1.24%
and Intel Corp.
INTC,
-1.37%
want to be in the AI conversations with the graphics chips they hope will be used for AI data-center applications, they won’t see much of an impact yet from AI revenue. Plus, those companies are experiencing a slowdown in PC sales that may overshadow any small benefit from AI chips.

The AI boom in chips is clearly not providing enough of a boost to lift finances for the overall semiconductor sector, which is forecast to see earnings fall 3.3% in the third quarter and post a revenue decline of 0.6%, according to FactSet. The industry is being dragged down in part by Micron Technology Inc.
MU,
-0.12%,
which reported a 40% drop in revenue and a whopping fiscal fourth-quarter loss in late September for the quarter ended Aug. 31, which is included in FactSet’s third-quarter data. Even so, the company called a bottom to the memory-chip downturn.

Read also: Micron’s AI focused chip won’t help financial results anytime soon.

“Most of the consumer-based tech is still struggling, [including] PCs, laptops and to a certain extent smartphones,” said Daniel Morgan, senior portfolio manager at Synovus Trust Co. Wall Street has tempered expectations related to the impact of Apple Inc.’s
AAPL,
-0.88%
iPhone 15 launch on the quarter, as estimates call for an overall 1% drop in September-quarter revenue. Last quarter, Apple executives forecast that both Mac and iPad sales would be down by double-digits and that revenue performance would be similar to its June quarter, when revenue fell 1.3%

In addition, when asked about AI, Apple CEO Tim Cook said the company views AI and machine learning “as core fundamental technologies that are integral to virtually every product that we build.” Those comments, though, can also apply to the bulk of tech companies, where AI is built into software as another layer to improve a product. Internet companies such as Meta Platforms Inc.
META,
+0.89%
and Alphabet Inc.
GOOG,
+0.36%

GOOGL,
+0.45%
incorporate AI into their software and algorithms but don’t treat it as a specific, revenue-generating product.

Other software companies are building AI into their products as separate features or add-ons, but they are still in the early stages of seeing whether or not customers will pay more for them. Take Microsoft Corp.,
MSFT,
-0.17%
which has showed off Copilot, an extra AI feature for customers of Microsoft 365.

“[Microsoft] can distinguish itself by providing more details around its AI revenue
ramp since we don’t expect much information from Google, who really doesn’t seem
to have the monetization plan for Bard and AI-assisted search (SGE) ready to
articulate yet,” Melius Research analyst Ben Reitzes said in a note to clients this week. He also noted that the cost of offering AI products to consumers is steep, and requires lots of investment.

“There are sophisticated issues to contend with for Microsoft, including balancing the potential for higher revenue from Copilots with the high costs per query and much-needed investment,” Reitzes said. “The balance of AI adoption vs. cost was implied when Microsoft guided to flat operating margins year over year for fiscal 2024.”

Earlier this year, the Information reported that OpenAI, the creator of ChatGPT and recipient of a hefty investment from Microsoft, has costs of up to $700,000 a day, because the massive amounts of computing power needed to run queries. In February, OpenAI launched ChatGPT Plus, for $20 a month, a service that will give subscribers access to its AI during peak times and faster response times.

Another example is Adobe Inc.
ADBE,
+1.70%,
which has a few AI offerings, including a subscription service called Generative Credits, tokens that let customers turn text-based prompts into images. Another is Firefly, a generative AI service for images, and an AI option in Photoshop, currently called Photoshop Beta AI, to help users fill in images and other collaborative tools. Adobe did not provide any forecasts on potential revenue generation during its analyst day earlier this month.

Toni Sacconaghi, a Bernstein Research analyst, said AI could drive a massive increase in enterprise productivity, and companies could dramatically increase IT spending on servers in order to invest in productivity-enhancing AI. “However, we note that enterprise adoption appears to be in early stages,” he said in a recent note to clients, adding that it was feasible that spending on AI infrastructure could take money away from other IT projects in process. “We do worry that projected AI infrastructure build out may be occurring too quickly, necessitating a digestion period, which could result in a commensurate stock pullback in AI-related names.”

Overall, the information-technology sector itself is expected to see anemic revenue growth this quarter. The consensus on FactSet forecasts a meager 1.35% revenue uptick in the third quarter, with earnings growth of 4.65%. FactSet’s estimates for IT companies exclude internet companies like Meta and Alphabet, which are under the category of communications/interactive media services. That sector is expected to see sales growth of 12%, and earnings growth of 51%, thanks to a 116% boost in Meta’s net income, after it hit a low point in the year-ago quarter.

Amazon.com Inc.
AMZN,
-0.81%,
in the category of consumer discretionary/broadline retail, is forecast to see earnings growth of 109%, and revenue growth of 11%. Amazon’s cloud services business, AWS, is expected to also see a potential uplift from customers spending money on AI projects, according to a TD Cowen & Co. survey, in which 41% of respondents said they were “highly considering” allocating a budget for generative AI.

“This trend could bode well for Amazon’s AWS,” TD Cowen analyst John Blackledge said in a recent report, adding that he expects AWS revenue growth to reaccelerate in the second half of this year and in 2024, boosted by the move of additional workloads to the cloud, possibly including generative AI.

As companies build up their infrastructure, or their spending on cloud computing to add or improve AI capabilities, they are seeing higher costs, which is affecting margins — especially if revenue has slowed down, as it has in some sectors. Across both the broader S&P 500
SPX,
and the IT sector, earnings are lower than a year ago.

As Newman of Futurum pointed out, “AI stole the budget this year.” And that is a mixed bag for tech.

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October 17, 2023
United Airlines’ stock falls after bleak outlook for end of the year

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United Airlines Holdings Inc. reported third-quarter earnings late Tuesday that were better than Wall Street expected, but the airline’s stock fell as the company called for lower profits later in the year.

United
UAL,
+1.49%
earned $1.1 billion, or $3.42 a share, in the quarter, compared with $942 million, or $2.86 a share, in the same quarter a year earlier. Adjusted for one-time items, the airline earned $3.65 a share.

Sales rose to $14.5 billion from $12.9 billion a year ago.

Analysts polled by FactSet expected United to report adjusted earnings of $3.38 a share on sales of $14.4 billion.

United said it expects fourth-quarter earnings of about $1.80 a share if flights to Tel Aviv are suspended through October, and of around $1.50 a share if the Tel Aviv flights are suspended through the end of the year. The Israel-Hamas war has raged for a little over a week.

Wall Street forecast fourth-quarter earnings of $2.09 a share. United’s stock dropped more than 4% in the extended session Tuesday after ending the regular trading day up 1.5%.

The airline also called for pricier jet fuel for the fourth quarter, seeing a gallon going for $3.28 on average by that time. That compares with a third-quarter fuel average price of $2.95 a gallon.

Fourth-quarter operating revenues are seen 10% higher year-on-year, and 9% higher if the Tel Aviv flights are still halted through the end of 2023. The FactSet analysts are calling for fourth-quarter revenue of $13.6 billion, from $12.4 billion in the fourth quarter of 2022.

United earlier this month said it placed orders for an additional 110 new jets from Boeing Co.
BA,
+0.36%
and Airbus SE
AIR,
+3.55%
as it expected air-travel demand to continue unabated.

The airline in 2021 launched its United Next plan, promising more savings by using newer, more fuel-efficient jets. These newer planes often offer premium seating, allowing the airline to sell more profitable, rarely discounted first-class and business seats.

United’s stock has gained 7% so far this year, compared with an advance of about 14% for the S&P 500 index
SPX.

United is slated to hold a conference call to discuss the third-quarter results and the update through the end of the year on Wednesday at 10:30 a.m. Eastern.

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October 17, 2023
House speaker election: Jim Jordan isn’t a lock for the post before vote this afternoon

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It wasn’t clear Tuesday if Rep. Jim Jordan would be successful in his push to become the next speaker of the U.S. House of Representatives, with a floor vote drawing near and the Ohio Republican needing the support of a majority of the chamber.

The narrowly divided chamber is expected to vote in the early afternoon to select a speaker, with the move coming after former Speaker Kevin McCarthy was ousted two weeks ago and after No. 2 House Republican Steve Scalise ended his bid for the post last Thursday.

An ally of former President Donald Trump who secured his party’s nomination for the role on Friday, Jordan needs to have 217 votes in his favor, so he can only afford to have four fellow Republicans vote against him as no Democrats are expected to support him. The House has 221 Republicans and 212 Democrats, with two vacancies.

While Jordan racked up significant endorsements Monday, more than four House Republicans are on record as being against him and others are leaning toward “no” votes, as shown in the chart below that comes from a CNN producer.

McCarthy needed 15 rounds of voting in January to secure the speakership. The California congressman repeatedly saw around 20 fellow Republicans vote against him before finally prevailing.

There are “plenty of reasons to think” House Judiciary Committee Chairman Jordan will “be able to grind it out once people are on record,” but the situation is still “unsettled,” said Liam Donovan, a former GOP operative who is now a principal at law and lobbying firm Bracewell, in a post on X.

One possible key is whether support for Jordan declines or not in a second round of voting, according to Matt Glassman, a senior fellow at Georgetown University’s Government Affairs Institute. He made that point in his post below.

Analysts have been discussing whether a Jordan speakership could mean a greater likelihood of a government shutdown that weighs on markets
SPX
in mid-November, when funding is due to run out from last month’s continuing resolution, or CR.

“Jordan voted against the CR a few weeks ago and has opposed most government spending bills in the past, so some people think he would be comfortable with a government shutdown next month. That view has some merit, however, as speaker, Jordan would be responsible for helping vulnerable House Republicans who represent competitive districts,” said Brian Gardner, Stifel’s chief Washington policy strategist, in a note.

“His new role could put Mr. Jordan in the position of having to make compromises with Democrats — new territory for him. The more likely outcome is that, if elected speaker, Jordan will support an extension of the CR.”

U.S. stocks
DJIA

COMP
were advancing Tuesday, helped by encouraging earnings from big banks. Investors also are weighing rising geopolitical risks and better-than expected retail sales.

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October 17, 2023

Rolls-Royce to Cut 2,000-2,500 Jobs Globally in Strategic Overhaul

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By Ian Walker and Joe Hoppe

Rolls-Royce Holdings is set to cut 2,000-2,500 jobs worldwide as part of a transformation program and strategy review.

The U.K.-based aircraft engine manufacturer, which announced the review plan in January, said Tuesday that the new structure will create a more agile business better able to serve customers, and help it improve its capabilities in areas such as procurement and supply-chain management.

Rolls-Royce currently employs 42,000 people worldwide.

Write to Ian Walker at ian.walker@wsj.com and Joe Hoppe at joseph.hoppe@wsj.com

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October 16, 2023

House speaker election: Jim Jordan racks up endorsements before vote at noon Tuesday

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Rep. Jim Jordan made progress Monday in his push to become the next speaker of the House of Representatives, winning endorsements from some fellow Republicans who just last week had refused to back him.

The narrowly divided chamber of Congress is expected to vote around noon Eastern Tuesday to select a speaker, with the move coming after former Speaker Kevin McCarthy was ousted two weeks ago and after No. 2 House Republican Steve Scalise ended his bid for the post last week.

GOP Rep. Ann Wagner of Missouri, who previously said a Jordan speakership was a non-starter for her, switched her stance on Monday. She said in a post on X that her colleague from Ohio “has allayed my concerns about keeping the government open with conservative funding, the need for strong border security, our need for consistent international support in times of war and unrest … as well as the need for stronger protections against the scourge of human trafficking and child exploitation.”

Similarly, GOP Rep. Mike Rogers of Alabama, who chairs the House Armed Services Committee, announced in a post on X that he was backing Jordan after saying last week that there was nothing that Jordan could do to win his support. Rogers pointed to an accord on an annual Pentagon bill, the National Defense Authorization Act, saying he and Jordan had “agreed on the need for Congress to pass a strong NDAA, appropriations to fund our government’s vital functions, and other important legislation like the Farm Bill.”

Republican Rep. Vern Buchanan of Florida offered his support for Jordan as well on Monday, though he noted that he’s “deeply frustrated by the way this process has played out.” Another endorsement came from GOP Rep. Ken Calvert of California, who chairs the House Appropriations Committee’s defense subpanel.

Jordan — who has been endorsed by former President Donald Trump — sent a letter to his colleagues in which he called for coming together after a chaotic two weeks, saying: “It is time we unite to get back to work on behalf of the American people.” The congressman, a co-founder of the hardline House Freedom Caucus and chairman of the House Judiciary Committee, also told CNN that he was confident about Tuesday’s vote, saying: “I feel good about it.”

Analysts have been warning that the process of finding a replacement for McCarthy is preventing the House from addressing crucial matters, such as avoiding a government shutdown next month and supporting Israel in its war against Hamas.

House Republicans made Jordan their nominee for speaker on Friday, but he drew just 124 votes while 81 lawmakers backed another candidate for speaker, GOP Rep. Austin Scott of Georgia. In another round of voting on Friday, Jordan still had 55 colleagues voting against him, but he now appears to be flipping some of them to his side.

One betting market, Smarkets, was giving Jordan a 33% chance of becoming speaker.

Spending cuts and shutdown coming?

Having Jordan as speaker could mean a 1% cut in defense
ITA
and non-defense spending, noted Philip Wallach, senior fellow at the American Enterprise Institute, a conservative think tank. That’s because this year’s debt-limit deal includes a provision that calls for such reductions if there aren’t bipartisan agreements on a dozen funding bills before Jan. 1 and instead a reliance on short-term measures known as continuing resolutions, or CRs.

“It is now clear,” Wallach said during an AEI event on Monday, that Jordan’s “plan is to have us live off continuing resolutions and implement this 1% cut.”

“That’s a concrete thing where he could say, ‘Well, we’re moving in the right direction. We’ve taken a hard stand,’” the AEI expert added.

The CEO of one financial advisory firm also sees standoffs in the future.

“We expect the next U.S. speaker will be less inclined to make deals than McCarthy; in many ways it makes more sense for them, politically, not to be a deal-maker in the current environment,” said deVere Group’s Nigel Green in a statement.

“We believe that a U.S. government shutdown is now more likely with a new speaker of the House, and this has the potential to create a domino effect in global financial markets
SPX.
”

BTIG analysts Isaac Boltansky and Isabel Bandoroff said the speaker drama suggests that next year’s election will also be full of twists and turns.

“We have followed every twist and turn of the speakership race, and there is only one takeaway we can share with absolute certainty: This confirms that the 2024 election cycle will be exhausting, volatile, and just downright weird from beginning to end,” they wrote in a note.

U.S. stocks
DJIA

COMP
closed higher Monday, as investors looked ahead to earnings season and unwound the flight-to-safety trades seen last week on fears the Israel-Hamas war could escalate into a wider conflict.

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October 16, 2023
Stocks Are Poised to Rise Monday

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U.S. stocks are poised to rise on Monday ahead of a week of earnings and economic data releases, including quarterly reports from Tesla, Netflix, and .

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October 15, 2023
Israeli exec who hired Palestinians in tech boom still hopes for peace while mourning slain daughter

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When Eyal Waldman thinks of his youngest daughter and her boyfriend, he sees them dancing.

“Danielle and Noam loved dancing, and I hope they continue dancing somewhere up there,” Eyal Waldman told MarketWatch.

Danielle Waldman and Noam Shay were killed at a music festival in southern Israel last week, part of a campaign by the Hamas terrorist group that has led to further bloodshed.

Danielle’s father — an Israeli tech executive who co-founded Mellanox, which became the largest acquisition in Nvidia Corp.’s
NVDA,
-3.16%
history — spoke with MarketWatch as Friday turned to Saturday in Israel, in hopes of increasing attention on the hostages who are still held in Gaza as well as to memorialize his daughter, who was 24, and Shay, who was 26.

“They loved to celebrate life,” Eyal Waldman said of his daughter and her boyfriend, before adding “they went down on Friday night to celebrate life, love and freedom, and they were massacred.”

Courtesy of Eyal Waldman

Danielle Waldman — who was born in Palo Alto, California, but moved back to Israel with her family at age 4 — and Israeli native Shay were students who met six years ago in the army, and her father said they had been inseparable since. They attended the Supernova music festival in early October with friends, and were killed while attempting to escape Hamas terrorists in a car that Eyal Waldman found bullet-riddled near the festival’s location.

“Danielle and Noam have done nothing bad to anyone, and they were murdered only because they were Israelis,” he said.

Eyal Waldman, a onetime Israeli combat fighter, founded Mellanox in 1999, and sold it 20 years later to Nvidia for $6.9 billion. He is known internationally for attempting to foster peace between Israelis and Palestinians through his work in technology — Mellanox hired Palestinian tech workers in Gaza, Nablus and the West Bank town of Rawabi, which led to a “60 Minutes” appearance.

“We wanted to make peace, to work together, to bring prosperity to the Palestinian people, the same as we have in Israel,” he said. “I brought even Apple
AAPL,
-1.03%
to open a design center in Rawabi and I brought other companies to open design centers in Rawabi.”

The death of his daughter and Shay and the scope of the attacks and counter-attacks dominating headlines in recent days have not changed Waldman’s hope for peace in the future, he said, but not the near future. He believes this time, the violence “took us back several years, if not decades.”

“We need time to build the trust, if at all, between the two nations and start working together to be able to talk about peace,” he said. “Until then, we will continue protecting ourselves in a very direct manner in Gaza and everywhere else around Israel.”

Waldman also said he would continue to try to hire Palestinians and work with them to be a part of the Israeli tech ecosystem, as long as they state “that they are working for peace, and they are not supporting — not financially and not in any other way — any terror actions, or any actions that are not civilian economics between the two nations.”

“Our hands are always reaching out for peace. But at the same time, before we do this, we need people to understand that Israel is strong, Israel is united, and we will never let anyone harm the citizens of the state of Israel again.”

Read: Israel-Gaza war scenarios: Here’s what might lift oil prices to $95, $100 and $115 a barrel

Waldman was thankful for U.S. aid and was forceful in discussing the need to find hostages that were still missing. One of Nvidia’s current employees was kidnapped, according to an email that Chief Executive Jensen Huang sent to employees that was obtained by Insider, which reported that the employee was also at the Supernova music festival.

Nvidia has more than 3,000 employees in Israel mostly working for Mellanox, which makes networking gear that connects Nvidia’s high-performance data-center products. In an emailed statement, an Nvidia spokesman said “our focus now is working with our Israel leadership to ensure our employees and their families are safe and well cared for. We will then turn our focus to shoring up [the company’s] execution if necessary to ensure continued operations of our business.”

Waldman said the return of hostages is top of mind.

“What’s important now is to focus on bringing back the hostages, and that is the No. 1 priority for the State of Israel and for the international community,” he said.

Continuing to worry about others while suffering his own tragedy is a trait that Eyal Waldman seems to have passed down to his youngest daughter. He said that he had received a note from another festival attendee who was wounded in the eye in the initial attack. That victim told him that Danielle Waldman had stopped to attend to her and make sure she was safe before attempting to escape in a car that was later believed to have been attacked by Hamas terrorists with rifles.

“They loved to celebrate life,” Waldman said of his daughter and her boyfriend.

“And they went down on Friday night to celebrate life, love and freedom, and they were massacred.”

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October 13, 2023
Jim Jordan nominated for speaker by House GOP amid worries over government shutdown and support for Israel

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Rep. Jim Jordan won the nomination Friday to be speaker of the U.S. House of Representatives after launching a fresh bid for the position, as analysts warned that the process of finding a replacement for former Speaker Kevin McCarthy was preventing the Republican-run chamber from addressing crucial matters.

Jordan, an Ohio Republican who chairs the House Judiciary Committee, said “yup” on Friday morning when he was asked if he was running again for speaker after House Majority Leader Steve Scalise, a Louisiana Republican, ended his bid late Thursday.

House Republicans voted in favor of Jordan in the afternoon, with 124 supporting him and 81 backing another candidate for speaker, GOP Rep. Austin Scott of Georgia, according to multiple reports. Republican lawmakers then left for the weekend and were expected to reconvene Monday.

Rep. Austin Scott, a Georgia Republican, also spoke to reporters about the House speaker position on Friday.

Getty Images

Scott, who has been in office since 2011, said in a post on X that he wanted to “lead a House that functions in the best interest of the American people.”

To become speaker of the GOP-led chamber, a candidate must earn the support of a majority of House Republicans. Jordan has crossed that hurdle but now must prevail in a vote on the House floor. Scalise bowed out of the running after it appeared he did not have sufficient support for a floor vote.

See: House speaker election — how it works

“[W]e need to be unified and get to the floor, and we want that to happen as soon as possible,” Jordan told Cleveland.com before the GOP vote on Friday.

Scalise’s decision to drop his bid “delays the resumption of meaningful legislative
business at least well into next week,” Benjamin Salisbury, director of research at Height Capital Markets, said in a note on Friday.

A similar warning came from Greg Valliere, chief U.S. policy strategist at AGF Investments. The House has had a temporary speaker — GOP Rep. Patrick McHenry of North Carolina — since Oct. 3, when McCarthy was ousted in a historic vote.

“This paralysis in the House is becoming a serious issue, as major legislation has stalled,” Valliere said in a note. “A government shutdown can’t be ruled out as the next deadline approaches on Nov. 17. More aid to Israel and Ukraine is widely supported in both parties and in both houses, but can this funding overcome procedural hurdles in the House?”

Related: Kevin McCarthy’s ouster means chance of government shutdown next month ‘just went up to 80%,’ analyst says

One betting market, Smarkets, was giving Jordan, a co-founder of the hard-line House Freedom Caucus, a 42% chance of becoming speaker. The Ohio congressman “faces difficult math,” as at least five Republican lawmakers are expected to vote against him on the House floor, and their ranks “may balloon by the time a floor vote is called,” Height’s Salisbury said.

Other options that have gotten attention include giving more power to McHenry, the temporary speaker, or making a bipartisan deal on a speaker.

U.S. stocks
SPX

DJIA

COMP
closed mostly lower Friday, with the selling blamed in part on the Israel-Hamas war.

Now read: What U.S. political dysfunction means for the stock market and investors

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October 13, 2023
Boeing Stock Drops. This Nagging Problem Is Growing.

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A persistent 737 MAX problem for is growing, which sent the stock lower in early trading Friday.

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October 13, 2023

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Economic outlook

Bond-market trend switches again

The U.S. Treasury yield curve has been inverted for nearly a year.

Ford’s good news — in the bond market

Ford Motor Co.’s debt rating has been lifted by S&P to investment-grade.

A stock-market warning based on history

The original Magnificent Seven.

The MarketWatch 50

PayPal soars after earnings report

PayPal CEO Alex Chriss.

Consumers drive mixed reactions to earnings results

Apple Inc. reported mixed quarterly results.

Harsh verdict for SBF

FTX founder Sam Bankman-Fried.

This week in earnings

The call to put on your calendar

The number to watch

Spending cuts and shutdown coming?

“They loved to celebrate life,” Eyal Waldman said of his daughter and her boyfriend, before adding “they went down on Friday night to celebrate life, love and freedom, and they were massacred.”

Rep. Austin Scott, a Georgia Republican, also spoke to reporters about the House speaker position on Friday.