Here is a sampling of the headlines this week – AMD Stock Crashes On Revenue Miss, Silicon Labs and STMicroelectronics Latest Chipmakers To Guide Lower, Texas Instruments Warns Of Slowing Demand, Amazon Stock Down As Results Miss On Top Line, Google Stock Falls As Revenue Misses, Snap Stock Down As Earnings Beat Estimates But Outlook Falls Short.
Caterpillar which signaled a slowdown as well, was the first one to acknowledge an increase in manufacturing costs in the latest quarter due to elevated freight costs, and higher steel prices and import tariffs. It said tariffs will cost it about $40 million in the latest quarter. GE will likely report next week that tariffs are negatively impacting its business as well. And there is more to come next week as Apple, Facebook and Alibaba among others report their Q3 results.
What awaits us next week after the bloodbath over the past few weeks in October?
Future Wealth’s View
At the risk of sounding like a broken record, at Future Wealth, we had expected the volatility and even predicted the sell off last week in our note on Oct 20 (link is here https://futurewealthllc.com/
Nasdaq is already in correction territory and we believe, the S&P and the Dow will follow it in the next few weeks. Our advice from Future Wealth, for those who have not moved out to defensive positions and are still holding out on the hope of a comeback in growth is – throughout the bull market, earnings season was a refuge for investors, a quarterly reassurance that all is well in corporate America. This time around, the cracks are showing and bigger gaps are forming.
While Trump is blasting the Fed for the sell off in stock markets, we opine that the one with real insight is not the Fed Chief – Powell but is Kanye West, who in a profanity laced tirade in the Oval Office in early October, was actually begging us to help him and the President check-in to a local mental health care facility. And no one listened.