|Day's Range||5.85 - 5.85|
Shares of General Electric Co. surged Thursday, to achieve a technical breakout that would confirm a bullish technical tone, after the industrial conglomerate said its aviation unit announced record orders at the Paris Air Show this week.
General Electric Co said on Friday it plans to demolish a large power plant it owns in California this year after only one-third of its useful life because the plant is no longer economically viable in a state where wind and solar supply a growing share of inexpensive electricity. The 750-megawatt natural-gas-fired plant, known as the Inland Empire Energy Center, uses two of GE’s H-Class turbines, developed only in the last decade, before the company’s successor gas turbine, the flagship HA model, which uses different technology. The closure illustrates stiff competition in the deregulated energy market as cheap wind and solar supply more electricity, squeezing out fossil fuels.
(Bloomberg Opinion) -- Clouds of worry have been gathering over the commercial aviation industry, but the sun was shining in Paris this week as planemakers and suppliers gathered for the biennial Air Show.I mean that both literally — it was hot — and figuratively, with every executive I talked to adopting the same tone of cautious optimism. They conceded the market is slowing: Amid sputtering air traffic growth, weakening airline profits and a slowing global economy, orders at the Paris Air Show trailed the tally from last year’s Farnborough Air Show on both a unit and dollar basis, according to an analysis by Bloomberg Intelligence’s George Ferguson and Francois Duflot. And the orders that were announced weren’t always written in stone. Vertical Research Partners analyst Rob Stallard counted about 610 commitments for new planes between Boeing Co. and Airbus SE (short of his forecast for 800), but only about 160 of those are firm orders for large aircraft and all of those belong to Airbus.(1) Some orders for Airbus’s new A321XLR — a longer-range version of its top-selling narrow-body jet that was unveiled as expected this week — were converted from existing commitments for previous A320-family models. But there were orders, including a surprise bid from British Airways parent IAG SA for Boeing’s embattled 737 Max jets (more on that later). While everyone no doubt would have preferred a stronger showing, no one was panicking, either.Global growth in demand for commercial aviation is likely to slow to a pace of about 5% this year from around 7.5% to 8% in the past few years, according to the International Air Transport Association. “That’s still a pretty good place to be — look at what many other industries are doing,” Tony Wood, CEO of aircraft braking and fire-protection equipment maker Meggitt Plc, said in an interview. “It’s certainly quicker than the world is growing.” Tim Mahoney, CEO of Honeywell International Inc.’s aerospace unit, pointed out that airlines are filling the capacity they lost when two fatal crashes prompted a global grounding of Boeing’s Max through leases and older aircraft that are staying in service longer than planned. Jet Airways India Ltd. suspended operations in April after running out of cash and is heading to bankruptcy court, but some of its fleet has already been reallocated, Mahoney said. “It’s a validation that the demand from the flying public is there and it continues to grow,” he said. Boeing, meanwhile, now expects the commercial aviation market to need 44,040 new jets and $9.1 trillion of services over the next 20 years. That compares with last year’s prediction of 42,730 jets and $8.8 trillion of services.So, Boeing and Airbus’s backlogs are likely safe in their robustness for the time being. But as I said going into the show, the question is whether they’ve already saturated the market and whether those backlogs will continue to grow. Executives from CFM International, the engine joint venture between General Electric Co. and Safran SA, weren’t super enthusiastic about production rate increases for Airbus’s A320 family. It’s not clear that the supply chain is capable of handling a more aggressive pace, particularly the forging and casting companies, which have been the primary source of delays over the past few years. At a media briefing on Saturday, CFM executives said they also want to be sure any production rate increase is sustainable and will serve the market over the long-term — not just at its peak. The relative dearth of orders at this year’s Air Show would seem to support their cautious stance.ALL’S FAIR IN LOVE AND THE MAXBoeing’s Air Show order tally fell about $10 billion short of Airbus’s haul, but IAG’s commitment to buy 200 Max jets means more for the company than the final total. IAG CEO Willie Walsh, a former 737 pilot, said he would feel comfortable boarding a Max tomorrow. He can’t actually do that because the planes remain grounded globally, but it was a huge vote of confidence when Boeing needed one desperately. That kind of endorsement most likely didn’t come cheap: the list price for the planes IAG intends to buy is $24 billion, but the true price is likely much lower after adjusting for standard discounts and probably a few extra incentives. It’s not a done deal just yet. IAG only signed a letter of intent, which gives it an out in case the Max runs into more problems or if Airbus comes up with a better offer. Airbus sales chief Christian Scherer said his company was never invited to bid on the deal but would very much like to. Either way, IAG’s willingness to back the Max gets Boeing out of the aviation industry’s version of timeout. This was always inevitable. Customers have been resolute in their confidence that Boeing will make the fuel-efficient Max safe to fly again. IAG had previously relied largely on Airbus models for its shorter hauls, so the fact that it’s the one stepping up with a Max order is a testament to airlines’ desire to maintain competition between the two companies. But I do wonder whether that kind of dynamic properly incentivizes Boeing to address the transparency, communication and oversight issues that allowed the Max’s shortcomings to morph into a full-blown crisis. Meanwhile, a good chunk of Airbus’s orders were for the freshly rolled-out XLR, with American Airlines Group Inc. agreeing to buy 20 of the planes and convert existing orders into 30 more. Boeing’s sales chief Ihssane Mounir said in a closing press conference that the XLR addressed only a “sliver” of the middle market and that there’s still an untapped opportunity for a rival offering it’s contemplating. That was backed up by comments from the CEOs of JetBlue Airways Corp. (which ordered 13 XLRs) and Norwegian Air Shuttle ASA (which is thinking about buying the Airbus jet), with both advocating for the range advantages of a possible Boeing new middle-market aircraft. But while Boeing CEO Dennis Muilenburg said there was no plan to accelerate the development of a successor to the 737 model, the Max crisis and advances in manufacturing and engine technology may force it to give that kind of project precedence over a middle-market jet. MEGADEAL SHOWCASEFor all the optimism about continuing growth, I thought it was interesting that Raytheon Co.’s CEO Tom Kennedy and CFO Toby O’Brien chose to cast their company’s merger with United Technologies Corp. as a bet on the long-term value of resiliency. Eventually, the booming growth the aerospace and defense sector have enjoyed simultaneously the past few years is going to come to an end; it’s rare that the two sectors move in tandem. Revenue for the combined United Technologies-Raytheon will split nearly equally between commercial and defense products and between domestic and international markets. “We didn’t have to do this,” O’Brien said. But the combination “makes for a really resilient company through all cycles. If you’re in it for the long haul, why wouldn’t you want that?” Kennedy said he’s not concerned about a slowdown in defense spending in the near-term, given governments’ continuing concerns about geopolitical turmoil. He pointed to backing from both the U.S. House of Representatives and the Senate for more increases in the Defense Department’s budget for research, development, test and evaluation. The deal with United Technologies will help Raytheon compete more aggressively for the next generation of military franchises by giving it new technological capabilities, Kennedy and O’Brien said. The potential for advancements in compact, high-energy power generation, thermal management and hypersonics is intriguing, and the combined company’s $8 billion annual R&D budget will give it an exorbitant amount of money to play with. But revenue synergies are notoriously more fungible than cold hard cost cuts. So the companies’ willingness to share about half of the $1 billion-plus in annual cost savings they’re targeting with the U.S. government may prove the bigger competitive advantage.The synergies number struck analysts as quite low at only about 1% of the combined company’s $74 billion in sales. O’Brien acknowledged the figure is conservative but said the deal was light on integration work because the Raytheon businesses will continue largely as their own units rather than having their contents strewn about between existing United Technologies operations. While that limits the cost savings, it also makes it harder for United Technologies to foul up the deal as it juggles the Raytheon purchase with the continuing integration of Rockwell Collins Inc. and a pending three-way split. With plenty of time and opportunity for something to go wrong here, United Technologies’ wager on scale is relatively untested and GE and Honeywell aren’t so sure that a bigger aerospace and defense company is necessarily going to be a better one. Both argue they have technology advantages that will keep them competitive. But GE again made interesting noises about possible M&A, with aviation head David Joyce noting that he didn’t feel compelled to act by the United Technologies-Raytheon tie-up but “wouldn’t rule out anything.” SOMETHING TO PROVEWith the United Technologies-Raytheon merger looming large and questions mounting about cash flow for GE’s aviation unit, Joyce used the Paris Air Show to strike back at critics. GE Aviation and its CFM engine joint venture tallied $55 billion orders for engines and services at the event. Not all of that was technically new, but the haul was anchored by a legitimately impressive $20 billion order for Leap engines and services from Indian budget carrier IndiGo, which had previously relied exclusively on United Technologies jet engines to power its Airbus A320neo fleet. Joyce also laid out the most in-depth road map for a unit’s free cash flow that I’ve ever seen GE provide. But in what has become an unfortunate pattern for GE, what was probably a well-intentioned attempt at transparency sparked only more questions. Analysts continued to pick apart whether the aviation unit’s $4.2 billion in free cash flow last year reflects the full tax, pension and overhead cost burden it would bear if the business were to stand alone. While GE hasn’t voiced any plans to spin off the aviation unit — and I’m highly doubtful it would be able to do that given continuing challenges in the power and long-term care insurance operations — many investors rely on a sum-of-the-parts analysis to determine the stock’s appropriate valuation. So the legitimacy of that $4.2 billion number as the basis for an independent aviation unit is at the crux of the debate over where the share price goes from here. After walking through the numbers with GE, I feel more comfortable about how they arrived at the $4.2 billion number. But no one knows for sure how all the numbers would shake out if aviation was ever detached from the mothership and the financial benefits inherent in that structure. United Technologies is taking about 18 months to split itself into three parts, and its structure is arguably less difficult to untangle. So I don’t think this debate is going away.QUICK NOTE ON GECASGE’s jet-lessor arm announced a deal to lease 15 additional Boeing 737-800 converted cargo aircraft to Amazon.com Inc., expanding on an earlier agreement to provide the retail giant with five planes. Amazon aims to have 70 aircraft flying on its network by 2021 in just the latest reminder that its logistics aspirations are a real and growing threat to FedEx Corp. and United Parcel Service Inc. In a presentation announcing the latest deal with Amazon, GECAS executives said it costs about $8 million to convert a Boeing 737-800 into a cargo plane. In a separate conversation, Sarah Rhoads, the director of Amazon Air, said the company put out requests for proposals to other lessors and that its ultimate choice had to be cost-effective. She said she felt good about partnering with GECAS. In a meeting with analysts this week, Alec Burger, who heads GECAS, acknowledged that the forecast for the air-cargo market was flat in 2019 amid escalating trade tensions but said the continuing shift to online shopping will continue to support demand in the long term and he’s looking to “modestly grow” the share of the lessor’s portfolio that’s devoted to that market. He said Amazon is not a “must-win account.”DEALS, ACTIVISTS AND CORPORATE GOVERNANCECrane Co. is following through on its threat to take its $45-a-share takeover offer directly to Circor International Inc.’s shareholders. It’s rare to see a true hostile tender offer, so for the M&A nerd in me, this is exciting. Circor’s board said on Monday that it would review the offer and make a recommendation to shareholders within 10 business days. It had previously rebuffed Crane’s offer as opportunistic and said it undervalued the company, a point of view that some shareholders pushed back on, given the choppy — and lately lower — stock price. Mario Gabelli, whose Gamco Investors Inc. is the largest shareholder of Circor, has also criticized the company’s lack of transparency in disclosing Crane’s interest. We are still awaiting the release of a business plan that Circor promised would show a path to greater valuation creation, but Crane’s willingness to go hostile forces Circor into an even tighter corner. Delta Air Lines Inc. bought a 4.3% stake in Hanjin Kal Corp., the largest shareholder in Korean Air Lines Co. Delta and Korean Air have a trans-Pacific joint venture that allows the two carriers to coordinate on flights in Asia and the U.S. Delta expects to boost its stake to 10% over time. The stake purchase is the latest in a string of similar deals with other partners including Brazil’s Gol Linhas Aereas Inteligentes SA and China Eastern Airlines Corp. But the deal also puts Delta in the middle of an activist shareholder’s campaign to push Hanjin Kal to provide more transparency and improve corporate governance. Shares of Hanjin Kal, whose operations also span logistics services, plunged on news of Delta’s investment in an apparent sign that investors see the company’s stake as a roadblock to the activists’ goals. Mitsubishi Heavy Industries Ltd. appears to be moving forward with its interest in acquiring Bombardier Inc.’s CRJ regional jet program. A takeover “would make a lot of sense,” Steve Haro, vice president in charge of global marketing and strategy at Mitsubishi Aircraft Corp., told Bloomberg News at the Paris Air Show. He said news about “new strategic partnerships” would be forthcoming. Recall that Nikkei had reported earlier this month that Mitsubishi wanted to only carve out the aircraft maintenance network of the CRJ program, but Bombardier had insisted on the unit being sold in its entirety.BONUS READING New York Fed Factory Gauge Drops by Record to Two-Year Low Siemens to Cut 2,700 Jobs at Energy Unit Due for Listing Fight for Survival on Doomed Jet Came Down to Two Cockpit Wheels Southwest Pilots to Seek Recovery of 737 Max Costs From Boeing Airbus Says It Must Slash A350 Costs to Win Wide-Body Price War Craft Breweries Are Booming Even as Americans Drink Less BeerIf you’d like to get these weekly industrial insights delivered to your inbox, please email me directly at firstname.lastname@example.org, and ask to join the list. Thanks!(1) Stallard excludes announcements for options or future purchase rights and planes that will be taken throughaircraft lessors.To contact the author of this story: Brooke Sutherland at email@example.comTo contact the editor responsible for this story: Daniel Niemi at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
As the Trump administration puts tariffs on a range of imported goods and pushes a replacement deal for Nafta, lobbying on trade-related issues could set a new record this year.
For the first time in a long time, General Electric (GE) news isn’t about its restructuring process.The company on Tuesday made headlines from the Paris Air Show, as many in the aircraft industry are saying Boeing’s (BA) 737 Max will be ready to fly soon. The Max was grounded earlier in 2019 after two fatal crashes came within six months of each other, with blame pointed to the MCAS safety system. With the grounding, Boeing announced it would seriously cut production of the Max aircraft, which had a ripple effect down the supply chain, including with GE who manufactures its LEAP engine. But with the Max expected back in the air soon, production — and sourcing from GE — should ramp up.Analyst Andrew Obin of Merrill Lynch isn’t changing his tune, though, as he keeps his Neutral rating on General Electric stock, with $12 price target. (To watch Obin's track record, click here)GE saw good news in the form of increased orders of its LEAP engine, manufactured by the company through a joint venture with Safran. Indian carrier IndiGo ordered $20 billion of the LEAP engines to be used on its Airbus A320 and A321 aircraft. GE also picked picked up a victory with IAG placing 200 orders for the Boeing 737, which uses the CFM56 engine, also manufactured by GE through its joint venture.On the Max, Obin says GE management was “more optimistic than other suppliers...at the show about 737 MAX re-certification ‘sooner rather than later.’” But while optimistic, the analyst says GE “expects about $300 million of working capital outflow in 2Q due to the grounding.” As cash flow is a major challenge for GE and focus for investors, many will keep an eye on this moving forward.Overall, the 737 Max is providing GE with an external challenge, one that isn’t too common for the company right now. The main focus for GE is restructuring. CEO Larry Culp is being praised for his efforts to this point, as the company has rebounded from a terrible 2018 and is showing promise that it is returning to a stable stock. The Boeing challenge is expected to be short-term, as many on Wall Street continue to focus on the bigger picture of restructuring.All in all, with the Max airplane expected to return to service soon and restructuring moving well, analysts are becoming more confident with GE stock. TipRanks analysis of 10 analyst ratings shows a consensus Moderate Buy rating, with four analysts rating Buy, four rating Hold and two suggesting Sell. However, the average price target of $10.86 suggests a slight upside from current levels.Read more on GE: * Not Out of Woods Yet, But Is General Electric (GE) Stock a Buy? * General Electric (GE) Stock Is Still Poised for a Comeback * Wall Street Remains Divided on Buying General Electric (GE) Stock * Putting General Electric Management Under the Microscope Is Bad News for GE Stock More recent articles from Smarter Analyst: * Facebook's (FB) Libra Could Be the Next Big Thing * General Electric (GE): Important Lessons on Valuation * Chinese Government Setting Tone of Support Towards Apple (AAPL) * With Tesla (TSLA) Stock Rising, Will Production Challenges Bring It Back Down?
BOSTON, June 21, 2019 -- The Board of Directors of GE (NYSE: GE) today declared a $0.01 per share dividend on the outstanding common stock of the Company. The dividend is.
(Bloomberg) -- Zimbabwe and Zambia chose General Electric Co. and Power Construction Corp. of China to build a $4 billion hydropower project straddling their border, Zimbabwean President Emmerson Mnangagwa said.The 2,400-megawatt Batoka Gorge plant has been planned for years by the two southern African nations, both of which are struggling with electricity shortages after a drought curbed hydropower output. General Electric and Power China are in a consortium that was shortlisted in February to build the facility.“Zambia and Zimbabwe have agreed on this project. We have all agreed that we give it to GE -- China Power and GE together,” Mnangagwa said in an interview in Maputo, Mozambique’s capital, where he attended this week’s U.S.-Africa Business Summit. “It’s critical that we move fast on that front because it’s necessary that as we industrialize that we need electricity.”While the project will address electricity shortages, it’s on the same river -- the Zambezi -- that has left the downstream Kariba hydropower dam at less than 30% storage capacity and producing less than half its intended electricity. The Zambezi’s water flows in 2019 are near the lowest in half a century, and even worse than during the last severe drought in 2014-15.Because Batoka Gorge will have a much smaller storage capacity than Kariba -- which is the world’s biggest man-made freshwater reservoir -- droughts could pose greater risks to the planned project.While a formal contract has not been signed, GE said that the Zambezi River Authority, which manages power plants on the river, has said it would appoint a final developer for the project by September. As part of the consortium, GE would have a “material role in the development and execution of the project,” including the design and supply of hydropower technologies, it said by email.Zambian Energy Minister Matthew Nkhuwa said he wasn’t available to comment. The project will be based on a build-operate-transfer financing model and won’t put any fiscal strain on the two nations’ governments, Nkhuwa said in February.The $4 billion cost of the project includes amounts for civil works, construction and power turbines, among other things, GE said on Thursday. The contract would be split among the companies in the consortium. The African Development Bank said in September it has begun mobilizing funds for the plant.Other bidders that had been shortlisted included Salini Impregilo SpA of Italy and a joint venture comprising China Three Gorges Corp., China International Water & Electric Corp. and China Gezhouba Group Co., according to Nkhuwa.(Updates with detail on drought risks in fourth paragraph.)\--With assistance from Taonga Clifford Mitimingi and Richard Clough.To contact the reporters on this story: Matthew Hill in Maputo at email@example.com;Prinesha Naidoo in Johannesburg at firstname.lastname@example.orgTo contact the editors responsible for this story: Antony Sguazzin at email@example.com, Paul Richardson, Pauline BaxFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
General Electric (GE) stock has made a remarkable run in 2019. So far, the stock has risen 46%. General Electric has beaten all of the major US indexes and its industrial peers.
Following through on the gains made earlier this week, the S&P 500 rallied another 0.95% on Thursday, just touching record-highs as a result. Although impressive, the rally is also fragile and may actually be setting up a sizeable wave of profit-taking.Source: Allan Ajifo via Wikimedia (Modified)Whatever it was, pot stocks set the tone. Canopy Growth (NYSE:CGC) was up more than 2% on news that shareholders had approved its impending acquisition of Acreage, while Tilray (NASDAQ:TLRY) popped more than 9% on some renewed industry-wide sentiment.PG&E (NYSE:PCG) was the day's biggest major-name winner though, up nearly 15% after California Governor Gavin Newsom suggested the state's government help facilitate a way for the utility company to pay for the fire damage it contributed to last year. The organization continues to find itself in a more manageable position.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 6 Stocks Ready to Bounce on a Trade Deal None are names that are great trading prospects as we head into the final day of the workweek, however. Instead, take a look at the stock charts of Verizon Communications (NYSE:VZ), General Electric (NYSE:GE) and Ventas (NYSE:VTR) for trading possibilities. Ventas (VTR)It was only a few days ago Ventas was knocking on the door of a big breakout move. The only line left to cross was a modestly important technical ceiling right around $65. And, given the momentum already in place by that time, which was backed by a long-term support line, the odds of that move taking shape were high.That breakout move did end up taking shape. But, consider this a cancellation of that call, and even a reversal of it. VTR stock is up 10% since that last look, and had been up as much as 13%. But, yesterday's high and a couple of other clues all suggest the effort has run its course and is now out of gas. Click to Enlarge * While trends need volume to remain in place, volume surges like the one Ventas dished out on Thursday often indicate a final flushout of would-be buyers. The way VTR peeled back from the intraday high also says the profit-takers are already starting to take over. * Zooming out to the weekly chart we see two immediate red flags. One of them is the way yesterday's peak aligns with all the major highs going back to 2013. The other is the fact that the RSI indicator has just entered overbought territory. General Electric (GE)For months now, General Electric have been working on a recovery move, but it always seems to be up-ended right before it solidifies. Those months have been spent in vain, however. The bulls and bears have inadvertently drawn key lines in the sand that, if crossed, would likely flag a longer-lived move rather than more choppiness.The buyers finally -- albeit quietly -- pushed GE stock over what had become a well-established ceiling. Better yet, it happened with solid support behind the move, and has brought another bullish trigger within reach. * 7 S&P 500 Stocks to Buy With Little Debt and Lots of Profits Click to Enlarge * The ceiling that was hurdled on Thursday is the $10.49 level, marked in yellow on both stock charts. GE shares had been unable to move above that line despite three attempts since March. The fourth one yesterday worked. * Just as impressive is the buying volume that's taken shape with the recent advance. Tuesday's and Thursday's gains were both made on above average volume, hinting there may be a lot of would-be buyers waiting in the wings for a victory like yesterday's. * It's not happened yet, but the purple 50-day moving average line is about to cross above the white 200-day moving average line. This so-called golden cross is viewed as a buying trigger for many investors, and could accelerate the effort. Verizon Communications (VZ)Finally, with nothing more than a passing glance it would look as if Verizon Communications shares are just going through a patch of volatility that can be expected as part of a longer-term uptrend. And, perhaps that's all this is.A lengthier and more critical look, however, also shows that distinct possibility that VZ shares are slowly winding their way into a bit of technical trouble. Although it will still take a few days to know for sure, and any problems wouldn't be terribly devastating, the threat is significant enough to start watching out for now. Click to Enlarge * The looming red flag is the potential death cross, where the purple 50-day moving average falls below the white 200-day moving average line, spurring algorithm-based selling as well as spooking casual chart watchers. * At the same time, note there has already been a string of lower highs since November's peak, and the weekly chart's MACD lines continue to sink. The momentum is already downward. * For better or worse, should Verizon shares stumble, the daily chart shows a likely support area around $52.50, while the weekly chart's big floor is the rising support line that has tagged all the major lows going back to mid-2017.As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Blue-Chip Stocks to Buy for a Noisy Market * 5 Strong Buy Biotech Stocks for the Second Half * 6 Stocks Ready to Bounce on a Trade Deal Compare Brokers The post 3 Big Stock Charts for Friday: Verizon, General Electric and Ventas appeared first on InvestorPlace.
General Electric (GE) emerged as the winner at the 53rd International Paris Air Show. The company's aviation business unit secured record multibillion-dollar deals.
GE Aviation and and its CFM joint venture won a record $55 billion in new orders and commitments at the Paris Air Show, topping Boeing and Airbus. GE rose, along with Boeing and Airbus.
The S&P 500 gapped up to new all-time highs on Thursday, but quickly found responsive sellers up at that level. That's not too surprisingly, although it did sap some of wind from the bulls' sails. The question now is, will longs step up and continue buying or will we top out yet again near current levels? Top Stock Trades for Tomorrow 1: S&P 500 Click to EnlargeThe chart shows the S&P 500 banging its head up against the 2,950 level, while investors can also use the SPDR S&P 500 ETF (NYSEARCA:SPY) to follow the index if they prefer.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIt's crazy to think about the market we've had over the past nine or ten months. And amid all that drama -- trade wars, rate hikes, a 20% selloff in Q4 -- the SPX is right back to where it was in September. * 6 Stocks Ready to Bounce on a Trade Deal For me, it's hard to imagine that we end yesterday's Fed day stable (and still up big over the past two days), then gap up to new all-time highs today, only to see the whole thing fall apart. That doesn't mean we can't see some selling pressure up here or that a pullback won't happen.It's only to say that the market has had enough time to digest the Fed's comments to decide whether its good or bad for stocks. So far, they're voting that it's good. Let's see how we end the week and whether a triple top ends the run or if 3,000 on the S&P 500 is possible. Top Stock Trades for Tomorrow 2: General Electric Click to EnlargeGeneral Electric (NYSE:GE) is breaking out, as the stock continues to push higher and is technically through resistance. It's now above $10.50, a level we've been watching closely in the name. If this level again acts as resistance, see that the stock doesn't fall below its 200-day moving average. If it holds $10 and its 20-day moving average, all the better.From here though, let's see if $10.50 can turn from resistance into support. Staying above this mark could pave the way to $11.25+ now. Especially considering that the stock is not yet overbought. Top Stock Trades for Tomorrow 3: Netflix Click to EnlargeThe setup above may look familiar in Netflix (NASDAQ:NFLX). That's because not all that long ago we called NFLX a buy at $340 range support.Shares have since rallied $26 apiece and pushed through both the 20-day and 50-day moving averages, as well as short-term downtrend resistance (blue line). If it can clear $370, $380 range resistance is possible. Below $355 -- the 20-day -- and a retest of $340 range support is back on the table.Keep it simple, until NFLX stock makes it harder. Top Stock Trades for Tomorrow 4: Kroger Click to EnlargeShares of Kroger (NYSE:KR) are down about 2% after the company reported earnings, as this name continues its unhealthy trend lower.Not only is the 10-week moving average acting as clear resistance, but shares remain stuck in a clear trend. Short-term downtrend resistance (blue line) continues to squeeze KR lower, while longer term resistance (purple lines) isn't doing Kroger any favors either.Now what?$23 has proven to be a key level. Below this and channel support just below this week's lows are on the table. Below that and KR could fall into no man's land, with multi-year lows lingering between $19 and $20. If it holds, a retest of the 10-week moving average is on the table. Over the 10-week moving average and downtrend resistance, and KR can garner some upside momentum. Top Stock Trades for Tomorrow 5: Gold Click to EnlargeInterestingly, gold is making a powerful move to multi-year highs at the same time the stock market is. That's as the Fed appears set to cut rates in the not-too-distant future. That devalues the U.S. dollar and typically gives a boost to commodity prices.That's why the SPDR Gold Trust ETF (NYSEARCA:GLD) is bursting higher. It's also why we said Barrick Gold (NYSE:GOLD) could breakout, which is adding to its gains on Thursday. * Check Out These 5 Fast-Growing Stocks to Buy Today So now what? I want to see GLD stock hold the $128 to $130 breakout range. For really patient investors, above $126 is still technically okay. Still, I'd rather see it hold a multi-year breakout level rather than just a 2019 breakout level. Over $130 and more gains are possible.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Blue-Chip Stocks to Buy for a Noisy Market * 5 Strong Buy Biotech Stocks for the Second Half * 6 Stocks Ready to Bounce on a Trade Deal Compare Brokers The post 5 Top Stock Trades for Friday: SPY, GE, NFLX, Gold appeared first on InvestorPlace.
How many steps does it take to reset a GE smart bulb? Apparently, 12 to 14. Creating a step-by-step video illuminating GE (GE) customers on how to do a factory reset on their C by GE bulbs probably seemed like a bright idea at the time.
(Bloomberg Opinion) -- Aviation has long been considered General Electric Co.’s crown jewel, but with the company’s free cash flow turning negative this year, “crown jewel” is a relative term and the business is coming under increasing scrutiny. Some of it is deserved; some isn’t.GE Aviation CEO David Joyce seemed to be on a mission at this year’s Paris Air Show to prove his division’s worth. He arrived armed with more financial detail than GE had ever previously provided for the business, came out swinging against suggestions he was sacrificing price to score revenue wins, and announced some notable orders. And yet questions remain about what the business’s true financial profile would be if it was reconstituted as a stand-alone company and cut off from the tax and working-capital benefits that have historically come with being part of the mother ship. That matters, because many investors continue to value GE based on the sum of its parts, the argument being that the aviation unit alone can offset trouble spots in GE’s power, renewables and long-term care insurance operations and support a higher valuation for the stock.First, the positives: GE Aviation and its CFM International engine joint venture with Safran SA booked $55 billion in orders for engines and services at the Air Show, exceeding the $35 billion target Joyce laid out at a media briefing at the start of this week.(2) Like most order tallies from the event, not all of that is technically new business. The number includes an order from AirAsia that had initially been announced in 2016 and entails 200 of GE’s LEAP engines. The purchase was finalized at this year’s event and AirAsia also expanded a servicing agreement, bringing the total value of the deal to $23.1 billion before customary discounts. But there was also a significant new win: Indian budget carrier IndiGo agreed to a $20 billion order for Leap engines, spares and overhaul support.The deal is a blow to United Technologies Corp.’s Pratt & Whitney arm, which had been the sole provider of engines for IndiGo’s Airbus SE A320neo jets. As with Boeing Co.’s face-saving win of an order for its embattled 737 Max jet, some analysts have wondered what GE had to give up in order to convince IndiGo to abandon Pratt. They were encouraged in this thinking by comments from Pratt President Bob Leduc, who said “GE was willing to be more aggressive than we were” on pricing. That may just be Leduc talking his book, though.(4) Unlike in the depressed gas turbine market, where every revenue win likely comes at a cost to GE’s margins, GE shouldn’t need to sacrifice profit to chase market share in aviation – both in general and in the case of this particular deal. Pratt’s GTF engine has had a series of glitches that ultimately proved fixable and relatively minor, but as one of the largest buyers, IndiGo has borne the brunt of the fallout, including in-flight engine shutdowns and grounded planes. Earlier this year, India mandated weekly inspections of certain engine parts and restricted some operations for Airbus planes powered by the GTF. GE has engine headaches of its own. Boeing’s CFO Greg Smith put GE on the hot seat earlier this month, saying its GE9X engine was holding up the aerospace giant’s new 777X plane. At a media briefing this week, Joyce said GE discovered a part of the engine was showing more wear than anticipated and because of the extensive testing required to prove it had fixed the issue, the 777X’s first flight likely won’t happen until the fall. Investors are understandably jittery over any product setbacks after the uncovering of durability issues with GE’s flagship H-class gas turbine. But given the GTF’s history of bugs, I find it hard to fault GE for making tweaks to its engine. In the wake of the voluminous criticism directed at Boeing and the FAA for not realizing the potential impact of a software system linked to the Max’s two fatal crashes, rigorous testing – before the planes start flying – would seem to be in everyone’s best interest.GE has argued it has a technology advantage that will continue to give it an edge even as United Technologies increases its R&D budget through a blockbuster merger with defense contractor Raytheon Co. That remains to be seen, and I don’t think GE’s order wins at the Air Show tilt the scale one way or another. A smart R&D budget is worth more than a big one, but United Technologies will have a lot of money to work with and that will make it difficult for GE and others to stand pat. GE Aviation’s ability to respond to that competition ultimately boils down to how much cash flow it generates – and that’s where confusion continues to reign supreme. At Tuesday’s analyst event, Joyce laid out the various inputs behind the unit’s reported $4.2 billion in free cash flow last year. It was a sign the company is taking investors’ demands for more transparency seriously, although it remains disappointing that these disclosures come in fits and starts. There were some positive takeaways: Citigroup Inc. analyst Andrew Kaplowitz noted the improvement in inventory turns in 2018 even as GE ramped up production of the Leap. But one sticking point was the allocation of corporate costs including pension, interest and taxes, with JPMorgan Chase & Co. analyst Steve Tusa and Gordon Haskett’s John Inch debating whether the unit was carrying its fair share.On the subject of taxes, GE didn't do itself any favors as far as illuminating what's really happening in the aviation unit. The presentation included a line that indicated taxes and other operating expenses deducted $100 million from the aviation unit’s cash flow, which seems quite low on the face of it. But the aviation unit actually pays more than that in taxes. And GE isn't hiding that burden from its calculation of the free cash flow. You just have to know where to look for it.The starting point for GE’s explanation of how it calculated the aviation unit’s free cash flow – $5.8 billion in net earnings after adjusting for depreciation and amortization – had already been adjusted for taxes accrued, based on its operations, according to a company representative. GE confirmed the aviation unit pays a tax rate in the low 20% range that CFO Jamie Miller has guided to for the entire company. The $100 million number for taxes and other operating expenses in the Air Show presentation is something different. That is the difference between taxes paid and accruals in 2018. Are you still with me?The fact that this is all so confusing underscores one of the issues I’ve had with GE’s efforts to be more transparent. Disclosures come in fitfully and often leave people with only more questions. I don’t think GE always does this on purpose; it’s partly a reflection of the fact that this remains an incredibly complex company and any given number is going to require a half-hour explanation. But you can’t have it both ways. Is GE Aviation a crown jewel? Yes. Is GE very good at explaining that? It could use some work in that department. (1) The total doesn't include engines for the 200 737 Max jets that British Airways owner IAG SA ordered at the Air Show. CFM is the sole engine provider for that plane.The list price for those engines is $5.8 billion.(2) The flip side of Leduc's comments was Rolls-Royce Holdings Plc CEO Warren East's description of GE as a "very savvy commercial operator."To contact the author of this story: Brooke Sutherland at firstname.lastname@example.orgTo contact the editor responsible for this story: Beth Williams at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
The U.S. Senate on Thursday voted to block the sale of billions of dollars in military sales to Saudi Arabia, the United Arab Emirates and other countries, rejecting President Donald Trump's decision to sidestep Congress' review of such deals by declaring an emergency over Iran. Trump has promised to veto the Senate action in order to proceed with the deals, worth some $8.1 billion. Senators would need 67 votes to override his veto, which looked unlikely after Thursday's votes.
Currently, long-embattled industrial giant General Electric (NYSE:GE) is an enigma. Indeed, I'd say it's a perfect enigma. Since this January's opening price, GE stock has performed admirably, gaining over 44%. That's a very solid return, especially considering the horrific losses the company has endured over the past few years.Source: Shutterstock On the other hand, General Electric stock really hasn't moved much since early February. For instance, on the Feb. 5 session, shares closed at $10.21. At the time of writing, GE finished a mildly disappointing midweek session at $10.34. To save you the calculating time, that's a pedestrian gain of 1.3%.Naturally, investors seek clues as to where GE stock will go next. Bullish speculators have a compelling case that the worst is behind the company. Management has secured substantive deals that make shares attractive, especially at this price.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Value Stocks to Buy for the Second Half But the bears also have their counterpoints; namely, that General Electric stock has much to prove. After significant divestments designed to keep the organization afloat, GE has succeeded. But without some of its previous assets, it's hard to imagine a realistic turnaround story.Anytime you talk about GE stock, it's never an easy discussion. Nevertheless, here are three pros and three cons to consider: Pros: Wheeling and Dealing Should Lift GE StockSeveral analysts argue that General Electric stock is a "show me" investment. Simply, this means that GE will receive minimal, if any benefit of the doubt. Some companies can ride high on an interesting narrative. In contrast, General Electric must deliver the goods.It's a bit early to make strong pronouncements but they're doing exactly that. At the world-renowned Paris Air Show, General Electric secured $50 billion of orders for its highly demanded engines. This includes two big contracts: one with Indigo Airlines for $20 billion and another with Air Asia for $23 billion.It's a sizable leap from GE's deals from the 2017 edition, where the company booked $31 billion in orders. Pros: Aviation Has No Imminent Disruption ThreatAs I pointed out last month, aviation is a bright spot for GE stock. Therefore, it's no surprise that the company inked some deals.Better yet, I expect this trend to continue. Along with its highly respected expertise in this sector, another factor bolstering GE is the airline industry itself. It has moved from emphasizing large jumbo jets to smaller, fuel-efficient airplanes. That allows management to compete on volume.And speaking about show me, how about the Amazon (NASDAQ:AMZN) deal? GE's aircraft-lending unit will lend Amazon 15 Boeing (NYSE:BA) 737-800 freighters. Of course, AMZN intends to control more of its supply chain, which potentially jump-starts General Electric stock longer term.I also think it's very noteworthy that Amazon is working with GE in the first place. The e-commerce giant is a massive disruptor, and it has many options. Yet it went with the embattled organization, which is something to consider. Pros: General Electric Stock Needs "Power"One of the main criticisms against GE stock is that the underlying company is still holding onto its irrelevant legacy businesses. Arguably, the Power division represents a serious risk on paper. That's because the world is supposedly moving to clean-energy sources at a brisk pace.But let me drop a truth-bomb: the global economy is the entity that's decisively rising at a brisk pace. And growing economies require energy, lots of it. Sure, clean-energy plants can meet some of the demand. But the appetite would likely be so voracious that the world cannot depend on any one platform.That brings us back to the Power division. It might not look like it now, but once we get over some of the political overhangs regarding "non-clean" energy sources, General Electric stock could take off. Cons: Aviation Isn't Without HeadwindsOverall, I believe aviation will turn out to be a net positive for GE stock. However, I must point out some turbulence that directly impacts GE's recent bullish news.According to the International Air Transport Association, cargo-tonnage growth slowed to a worrying pace near the end of 2018. This data came out before the current round of retaliatory tariffs between the U.S. and China.If the trade war continues, retailers including vaunted Amazon will surely feel the pain. Ultimately, that detracts from the bull case for General Electric stock. Moreover, tensions between the top-two world economies could hurt consumer sentiment. That bearishness may trickle down to the airliner industry, which also hurts the company. Cons: GE Is Swimming in DebtThe above is a fairly granular argument. But with General Electric, bears don't need to scrounge for details. Instead, they can just pick out some broad financial metrics.One of those is debt. General Electric is swimming in it. From the most recent read, the organization is holding nearly $92 billion in this liability. * 6 Stocks Ready to Bounce on a Trade Deal Of course, debt isn't the end-all, be-all for assessing a stock. However, GE must stage an almost-unprecedented turnaround to make itself attractive again. Anything less and the once-iconic industrial giant will fall decisively into penny stock territory.Unfortunately, for management to generate positive traction will require investments. Again, with that "show me" environment, the markets don't have any patience. Cons: Management Must Overcome an Indefinite Credibility CrisisSuppose General Electric produces an outstanding earnings result for its second-quarter report: how will that move GE stock?On the surface, you'd expect shares to fly for a few sessions. For one thing, General Electric stock benefits from the law of small numbers. A second factor is that a positive earnings result plays into human psychology: investors will get excited about playing a turnaround story early in the game.But then reality will hit. Not too long ago, GE stock traded for around $30. Eventually, the markets may fade the company because after all, it's just one quarter.How many quarters must GE string together before it earns back its credibility? It might be a long list, which is why most investors are apprehensive. Conclusion: A Risky But Compelling OpportunityUnsurprisingly, GE stock has been rangebound the last few months. The company offers a compelling case for a revival. At the same time, it's impossible to forget GE's catastrophic losses.But because General Electric stock is rangebound, I believe the bad news is baked in. It's still crazy risky, but I definitely see a case for a speculative gamble. Just don't go in with money you can't afford to lose.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Value Stocks to Buy for the Second Half * 7 Hot Stocks to Buy for a Seemingly Sleepy Summer * 6 Chip Stocks Staring At Big Headwinds in 2019 Compare Brokers The post 3 Pros, 3 Cons for Buying General Electric Stock Right Now appeared first on InvestorPlace.
What a difference strong leadership can make for a company, as shown by General Electric (NYSE:GE) stock. Larry Culp, who came on board as CEO in October 2018, had the unenviable task of leading the company's turnaround.But his moves has been decisive and strategic. More importantly, he has brought realism to the company. Then again, Culp demonstrated those abilities while he was the CEO of Danaher (NYSE:DHR), which generated standout results for shareholders during his tenure. * 6 Stocks Ready to Bounce on a Trade Deal Source: Shutterstock GE stock has done great during Culp's brief time with the company. Since December, the shares have gained 55%.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut turnarounds often take a long time. And that will certainly be the case with GE's efforts. There is still lots of heavy lifting to be done, and GE is facing some tough headwinds. In other words, investors should be cautious, as the easy gains of GE stock may be over.In fact, there are already signs of that. Keep in mind that GE stock has been in a persistent range of $9 to $11 since February.So what issues is GE facing? Let's take a look at three risks of investing in General Electric stock. Risk Facing GE Stock: GE's FinancialsOne of the biggest changes at GE has been Culp's transparency with Wall Street. To this end, he says that 2019 will be a "reset" year. But the fact is that GE has a tremendous amount of debt and contingent liabilities. Cumulatively, GE owes a staggering $107.5 billion. So for quite some time, Culp will be mostly focused on finding ways to generate cash. To help accomplish that goal, he's already agreed to sell GE's biopharma business to Danaher and divest its locomotive segment, which was acquired by WabTec (NYSE:WAB).But given that GE is cyclical and that the global economy appears to be slowing, GE could easily report negative earnings surprises in the months ahead. Risk Facing GE Stock: GE's Aviation BusinessThe aviation business has been positive for General Electric stock for some time. As seen at this week's Paris Air Show, the unit is snagging plenty of orders. Note that it recently signed its biggest deal ever, agreeing to sell $20 billion of engines to an India-based airline.But unfortunately, the aviation business is still facing headwinds. For example, Boeing's (NYSE:BA) 777X widebody jet will not meet its deadline because of a problem caused by GE's engines. The problem is likely temporary, but it's still worrisome and will cause a meaningful amount of GE's revenue to be delayed.It's far from clear what will happen with the 737 MAX, which has been grounded because of two crashes. But again, this means loss of momentum for GE's engine business. Risk Facing GE Stock: GE's Power BusinessThe Power Business, which accounts for roughly 20% of GE's overall revenues, continues to be a problem for the company. The competitive environment of the sector is intense, demand for Power's products has been sluggish for some time, and it's been accused of being less than 100% forthright about its results. There are also signs that Chinese companies may make inroads in this industry.Here's what JPMorgan analyst Stephen Tusa has said about the situation: "We believe a full accounting of the situation with a closer look at the data, even a rudimentary review, supports our view that GE is indeed losing market share…"Keep in mind that Tusa was able to predict the implosion of GE stock. Consider that he currently has a $5 price target on the shares, implying a drop of more than 50% from their current levels.Tom Taulli is the author of the upcoming book, Artificial Intelligence Basics: A Non-Technical Introduction. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Blue-Chip Stocks to Buy for a Noisy Market * 5 Strong Buy Biotech Stocks for the Second Half * 6 Stocks Ready to Bounce on a Trade Deal Compare Brokers The post 3 Reasons GE Stock May Stall Out appeared first on InvestorPlace.
On June 20, GE Aviation published a press release stating that the company and CFM International had bagged $55 billion worth of new orders at the Paris Air Show—and with three more days to go before the closure of the show, there could be further additions to its orderbook.
According to Investor's Business Daily, Aurora Cannabis (NYSE:ACB) is the most widely held equity on Robinhood. That's the commission-free trading platform popular with millennials and Gen Z-ers.Source: Shutterstock So, does the fact that millennials and Gen Z-ers are bullish on ACB stock make it a buy?Here are arguments for and against this theory.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Millennial Ownership of ACB Stock Is a Big DealNo question, younger investors are going to be more open to investing in cannabis stocks. They're more familiar with the product itself and aren't nearly as concerned about the stereotypes surrounding its use.For example, the average age of Robinhood's six million users is 32, smack dab in the middle of the millennial generation. Specifically, this demographic includes those born between 1981 and 1996. * 7 Value Stocks to Buy for the Second Half Perhaps that's one reason why four of the top 20 stocks held by Robinhood users are cannabis stocks. The others are Cronos Group (NASDAQ:CRON), Canopy Growth (NYSE:CGC) and Hexo (NYSEAMERICAN:HEXO), ranked number six, 11, and 14, respectively.Interestingly, the latter three on Robinhood's list are my favorites. However, Aurora stock has piqued my curiosity recently.InvestorPlace feature writer James Brumley recently wrote a piece about ACB stock that highlighted the moves the company's making to diversify its holdings beyond Canada. Take for example its purchase of Uruguay-based ICC Labs in November.Aurora paid $290 million for the company which controls 70% of the Uruguayan recreational market. The deal also gives ACB access to other countries in Latin America. The longer-term potential there for Aurora Cannabis stock is readily apparent. With a combined population of more than 650 million, this is a very lucrative market.As Brumley wrote, the purchase of ICC Labs gives Aurora a platform for growth in Latin America.Millennials recognize Aurora's big-picture view of the cannabis industry. In their view, management's carefully selected bets on regions and companies enhances the profile of Aurora stock.At the end of the day, millennials understand pot, they aren't scared of it, and the growth potential they see excites them.For Aurora to be at the head of the class is excellent news for owners of ACB stock. Youthful Exuberance for Aurora Stock Is Also a RiskHere's the big problem with Aurora sitting on pole position for Robinhood's list: millennials may view the volatility of ACB stock and cannabis investments in general as a pathway to quick riches. You can't necessarily blame them, as the sector tends to move wildly on the smallest of news.Fortune recently reported on the millennials use of Robinhood. Not all of it was good.Financial planner Tara Falcone, founder of financial-wellness program provider ReisUP, suggested several reasons why Robinhood clients might be high on Aurora Cannabis stock and its ilk:"When you're talking about first getting into trades, you click on browse [on Robinhood] and one of the first things you see is the 100 most popular list," Falcone told Fortune. "To the untrained investor who has now decided to start buying individual stocks, thinking 'I haven't done any research on my own, what are other people investing in?'"The fact that Aurora Cannabis stock appears at the top of the list suggests a seal of approval. But as Falcone points out, that's not always the case.If you take another look at the list, you'll see that General Electric (NYSE:GE) and Ford (NYSE:F) are number two and three on Robinhood's list.Wall Street professionals would not consider these two as strong buys. The Bottom LineAs every day passes, I get more enthusiastic about Aurora stock. While I'm not entirely sold on its overall business, I appreciate its efforts to become a global player. This is a strategy that's right in line with Canopy Growth and some of the other large Canadian cannabis companies.And despite the negatives, at the end of the day, the fact that Robinhood users love ACB stock is further confirmation Aurora's making all the right moves.At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Value Stocks to Buy for the Second Half * 7 Hot Stocks to Buy for a Seemingly Sleepy Summer * 6 Chip Stocks Staring At Big Headwinds in 2019 Compare Brokers The post Robinhood's Users Love Aurora Stock: Should You? appeared first on InvestorPlace.
The $50 billion in new deals broke records for total engines and total value, and they were all secured this week at the Paris Air Show.
At the Paris Air Show this week, all eyes in the aviation industry are watching how recent turmoil will impact order performance. The past few years have been stellar for the industry, but may be about to change.
Citigroup said General Electric's core aviation unit is leading GE's transformation on the back of its stability and underlying growth.
Micron (NASDAQ:MU) is playing a game most investors won't be willing to concede. Indeed, it's a game most investors don't even know they're playing. But betting on MU stock isn't a value-minded play. It's not even a bet on rebounding DRAM prices. It's a bet on how other investors are going to perceive Micron's prospects at some point in the foreseeable future.Source: Shutterstock And that's a very tricky game to play.It was almost starting to make sense right before two curve balls were thrown.The first curve ball is, of course, a trade war that took dead aim at China's consumer-tech outfit Huawei, which by itself accounts for -- or accounted for -- 13% of Micron's revenue. The other curve ball is the advent of China's new DRAM maker Changxin Memory, which should be able to scoop up from Chinese business from MicronInvestorPlace - Stock Market News, Stock Advice & Trading TipsLargely lost in the discussion is the fact that MU stock is now trading at what can only be described as a stupidly low trailing P/E of 3.1. The forward-looking P/E of 8 makes it more than twice as expensive into its most plausible future, though that's still dirt cheap.According to Bank of America Merrill Lynch that valuation says the worst-case scenario is more than priced in. TheStreet's Tiernan Ray agrees, adding a psychological element to the matter:"With no remedy to DRAM's woes this year, it certainly seems the bears have been given just about everything they could hope for in terms of bad news. That may mean a pick-up in shares as the market discounts better times in 2020." * 7 Value Stocks to Buy for the Second Half It seems counterintuitive, at first, and perhaps it is. It'sa perfect synopsis of the headache at hand. The cyclical bottom for DRAM prices and the cyclical bottom in bearish sentiment surrounding MU stock aren't even close to being synchronized.The added trouble is, nobody truly knows how close we are to either bottom. It's entirely possible both are behind us. MU Stock Investors Have Selective VisionIt's not as if investors haven't struggled with erroneously estimating the depths of trouble before.When computer sales peaked in 2011, shares of the HewlettPackard arm that eventually became the consumer-oriented HP (NYSE:HPQ) initially tumbled, but turned around between 2013 and 2014. PC and laptop sales not only continued to fall, they began to slide in earnest in 2015, wiping away a huge chunk of that rebound.HPQ has since recovered, making a turnaround move in 2016 that persisted through most of 2018. The point isinvestors confused hope with results.Another case of misguided assumptions involves General Electric (NYSE:GE).Although shares of the iconic blue chip turned around in 2009 like most other stocks did, neither sales nor earnings have grown since 2008. And that's even after stripping out the impact of divestitures. Investors largely convinced themselves for years that GE would work its way out of trouble, until 2017 when it became clear that wasn't going to happen.The 80% rout suffered during the second half of 2018 essentially priced in eight years' worth of deteriorating results too few people were willing to see.Neither comparison is a carbon copy of what's making Micron stock so tough to handicap now, though the underpinnings are the same. Namely, investors see the facts they want to believe, and ignore the facts that might conflict with their established conceptions.The masses have largely convinced themselves that Micron is unsalvageable right now. They hold up Changxin Memory and the trade war as evidence, all the while ignoring the fact that Changxin's IP leaves something to be desired, and that the trade war could end at any time as long as an unpredictable President Donald Trump occupies the White House.Meanwhile, DRAM prices are still falling. That's leading many would-be buyers to assume they'll fall in perpetuity, though that's clearly not going to be the case.None of those factors are minor matters. Bottom Line for MU StockIt's not a bearish or a bullish call. It's just a much-needed reminder to not assume the rhetoric surrounding any stock at any given time is accurate. It might be, but it may well not be. And when that stock is a well-watched ticker like MU stock that inherently inspires emotional responses, the rhetoric is all the more skewed.There's no denying the stock's trading at bargain prices right now. Bank of America and Tiernan Ray are both right in that regard. The value argument holds water, even if the DRAM glut and the tariff standoff persist.Value isn't enough though. As irrational as the doubts working against Micron right now may be, as John Maynard Keynes told us decades ago, "the market can stay irrational longer than you can stay solvent."The best course of action here may be to not play the game at all but to find another stock that's proving more predictable.As of this writing, James Brumley held no positions in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter at @jbrumley. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Value Stocks to Buy for the Second Half * 7 Hot Stocks to Buy for a Seemingly Sleepy Summer * 6 Chip Stocks Staring At Big Headwinds in 2019 Compare Brokers The post Micron Stock Presents Too Much of a Trading Conundrum appeared first on InvestorPlace.