|Bid||0.00 x 3000|
|Ask||0.00 x 1000|
|Day's Range||40.94 - 41.81|
|52 Week Range||37.85 - 54.00|
|PE Ratio (TTM)||N/A|
|Beta (3Y Monthly)||1.34|
|Expense Ratio (net)||0.74%|
Trade tensions continue to run high in the Trump White House. Once source of the tense talk: advisor Peter Navarro. The Atlantic's Annie Lowrey profiled Navarro and joins Yahoo Finance's Julie Hyman and Adam Shapiro to discuss.
In the previous article, we learned that Qualcomm’s (QCOM) revenue has fallen and its operating expenses have risen in the last two years as Apple (AAPL) has halted royalty payments and filed lawsuits against it. The high cost of litigation and the removal of revenue from Apple caused Qualcomm’s non-GAAP (generally accepted accounting principles) operating margin to contract from 35% in the first quarter of fiscal 2017 to 22% in the fourth quarter of fiscal 2018.
Qualcomm’s (QCOM) fiscal 2018 fourth-quarter revenue beat analysts’ estimate, but its fiscal 2019 first-quarter revenue guidance missed analysts’ estimate. Because the quarter’s sales will be largely influenced by Apple (AAPL). In the first quarter of fiscal 2019, Qualcomm expects to report revenue of $4.5 billion–$5.3 billion, lower than analysts’ consensus estimate of $5.57 billion.
To help investors keep up with the markets, we present our ETF Scorecard. The Scorecard takes a step back and looks at how various asset classes across the globe are performing. The weekly performance is from last Friday’s open to this week’s Thursday close.
As we noted in the previous part, US-based aluminum producers including Alcoa (AA) and Century Aluminum (CENX) have seen a selling spree this year despite President Trump’s Section 232 tariffs. Aluminum prices have also come under pressure. In this part, we’ll see what has been impacting aluminum prices.
According to Reuters, citing unnamed US government sources, “China has delivered a written response to U.S. demands for wide-ranging trade reforms.” Notably, the US-China trade talks were on a virtual hold for a few months before mid-term elections. Earlier this month, President Trump and President Xi Jinping had a phone call. As we note in the previous part, the trade war seems to be taking a toll on consumer and business sentiments in China (FXI).
For instance, it withdrew from its acquisition of NXP Semiconductors (NXPI) and fended off its acquisition by Broadcom. Although these actions removed uncertainty from Qualcomm’s business, they had a negative impact on the company’s fiscal 2018 fourth-quarter earnings and guidance. In the fourth quarter of fiscal 2018, Qualcomm’s revenue fell 3.3% YoY (year-over-year) but rose 3.6% sequentially to $5.8 billion, higher than analysts’ consensus estimate of $5.5 billion and on the higher end of its guided range.
In the BAML (Bank of America Merrill Lynch) November 2018 survey, trade war concerns were again named as the top concern among global fund managers. About 35% of fund managers surveyed cited it as their top tail risk, which is the same as last month and lower than 43% in September. The trade risk is still fresh, and the recent trade escalations between the United States and China (FXI) have kept fund managers concerned about ongoing trade tensions.
On Qualcomm’s (QCOM) fiscal 2018 fourth-quarter earnings call, CFO George Davis stated that the handset market has weakened over the last year. The company is looking to diversify its revenue streams in two ways: firstly by offering different smartphone technologies, such as RFFE (radio frequency front-end) and fingerprint scanners to increase the number of components per device, and secondly by entering adjacent markets such as connected cars. Qualcomm continues to offer its Snapdragon 800 processors for premium phones and has added Snapdragon 700 for high-end phones.
China-based Alibaba (BABA) reported soft revenues in the second quarter of fiscal 2019, as the e-commerce giant struggled to gain momentum amid the growing tensions between the US and China (MCHI) (FXI). While Alibaba’s adjusted earnings of $1.40 per share surpassed the consensus estimates by 25% and were 14.8% higher on a YoY basis, revenues showed weakness in the second quarter. Alibaba’s second-quarter revenue of 85.15 billion Chinese yuan (or $12.4 billion) missed the Wall Street expectations of $12.7 billion.
November marked the second straight month of investors’ bearishness with 44% of them believing that global economic growth will decelerate in the next 12 months. It believes that investor sentiment could take a sudden turn for the worse. While 16% of investors surveyed in October thought that the stock market has peaked, the number increased to 30% in November.
Qualcomm’s (QCOM) fiscal 2018, which ended in September, was an extraordinary year for the company, and it featured some headline-making events. The year started with Broadcom (AVGO) making a hostile takeover bid for Qualcomm in November 2017. In the next chapter, Qualcomm walked away from its acquisition of NXP Semiconductors (NXPI) in July 2018 after the deal got caught up in the US-China (FXI) trade war.
Concerns about the Chinese economy have been among the major risks spooking investors globally. Concerns about China’s growth outlook impact metal and mining companies (SPY) like Freeport-McMoRan (FCX). China (FXI) is also a major market for US giants like Ford (F) and Apple (AAPL). On November 14, China released several economic indicators.
While this sounds impressive, it still wasn’t enough to impress BABA stock investors. Although this year’s single day event beat last year’s numbers, Wall Street was still disappointed, so the stock fell on the news. Beyond this recent drop, 2018 has been a generally tough year for Alibaba stock: In fact, it is down 20% year-to-date. The iShares China Large-Cap ETF (NYSEARCA:FXI) is only down 13% for the same period, so even compared to that, BABA stock still lags.
As we discussed in the previous two parts of this series, rising interest rates and the US-China war (FXI) are two of the major reasons for investors’ pessimism. Meanwhile, President Trump seems to be playing the “blame game” regarding the ongoing market turmoil. According to a BBC report, in an interview with Fox & Friends in August, President Trump said, “I tell you what, if I ever got impeached, I think the market would crash, I think everybody would be very poor.” When the market crash started in October during his time in office, President Trump started blaming the Fed for the economic turmoil.
In the previous part of this series, we discussed how investors’ concerns about rising interest rates remain intact despite unchanged rates in the Fed’s recent meeting. The Fed continues to target a range of 2%–2.25% of the federal funds rate. The possibility of the Fed hiking interest rates in December, for the fourth time in 2018, remains open.
The fourth quarter started on a negative note for investors. US equities witnessed a sell-off. In October, the S&P 500 Index (SPY) lost ~6.9%, which marked the worst month for the index in the last seven years. Similarly, the Dow Jones Industrial Average (DIA) and the NASDAQ Composite Index (QQQ) ended October with ~8.1% and 5.1% losses, respectively. While the broader market saw a minor recovery in the last few weeks, it turned negative again this week. In the week ending November 9, the S&P 500 benchmark rose 2.1%, but fell 2.0% on November 12.
The last couple of months have been volatile for the markets in general and tech stocks in particular. For example, the NASDAQ Composite Index (QQQ), the proxy for the performance of technology stocks, has fallen ~10% since the beginning of October. In the rising interest rate scenario, investors are worried about whether high-flying tech stocks will be able to continue their growth.
As we saw in the previous part of this series, iron ore prices have stood their ground despite growing headwinds for China (FXI). As we discussed in the previous part, one of the factors driving iron ore’s resilience is the stocking up by mills ahead of winter production curbs. As restocking completes and winter cuts kick in, the demand for iron ore from China could take a hit.
China’s Slowdown: How Severe Is It This Time? As we noted previously, some of the recent data points from China don’t portray a rosy picture of the world’s second-largest economy. China has been steering its economy away from an investment-driven economy to a consumption-driven economy.
As the trade war between the United States (SPY) (VTI) and China (FXI) continues to escalate, China’s growth prospects are expected to be more affected than those of the United States. The impact is also visible in the country’s trade and economic data.
Concerns about China’s economic growth have been among the key factors that spooked investors in 2018. The country’s economic growth rates have cooled off. President Trump has slapped tariffs on $250 billion worth of goods from China.
Activision Blizzard’s (ATVI) Call of Duty, World of Warcraft, and Candy Crush continue to be major drivers of its revenue growth. These content releases have provided a strong foundation for the company’s second-largest revenue driver: its live operations.