Chart update:
stockcharts.com
Double bottom at $25.00ish? Todays marginal new low of $24.86 vs. previous bottom at $25.06.
Note MACD which is a notorious laggard reversed literally on its average, just as price reached the Keltner mid line.
MU's announcement of memory softness really weakened all chip makers.
It always amazes me as semi's get painted with such a broad brush.
Cohu has never made handlers for testing memory. They do make a small amount of burn in boards.
With GM announcing 95,000 vehicles parked due to chips needed, I suspect the testing of auto chips still has equipment demand.
GM 95,000 vehicles is a pimple problem. That equates to less than 20 vehicles per dealership address. Our Chrysler dealership is 100 units below it prepandemic stocking level!
Chip demand for autos and industrials is still strong.
Lap tops and desk tops are soft from pandemic surge in working at home. Not the case in the cloud or AI.
Post pandemics business is slowly going back to norm.
Interest rates are still historically cheap. Lot's of panic headlines battering the investors sentiment.
This recession is being predicted based on those industries that prospered from the pandemic, now cooling off and now finding the pandemic would surely not last forever - thus excessive inventory in those industries who over ordered.
Recessions often occur when the supply channels are stuffed and orders get shut off. We see that in a small subset of businesses.
Normalization of rates and lean inventories is a set up for a very sharp and short recession as other industries continue to rebuild inventoriesTOWARDS NORMAL STOCKING LEVELS.
When normal levels are reached, those who hoarded during the shortage period will work down supply - which could create a soft sales period.
Hard to estimate how much hoarding went on!
Good friend of mine who has a plumbing business, told me he bought every pump and pipe he needed for his summer work, as he feared shortages and price increases. Made me wonder how widespread that has occurred?
If that makes a sales sag, prices will be discounted to move excess inventory. That will give the Fed relief and short cut the increases.
I suspect this bad market will be a second half event, and may extend into early 2023. The Fed will be slow to cut rates. They've been criticized for being late. Most likely not want to get caught flip flopping on loose money again.
It just may be a great time for savers, getting a better return on their cash, and owners of dividend paying stocks reinvesting in discounted share prices and investing to make a pay raise in 2023.
It is time for quality balance sheets in every stock you own.
Money making companies that have their stock price decline during bearish market downturns do become exceptional long term investments.
Buying them at discounted prices is the safest buy there is.
Selling inflated puts from fear of market declines, is a great way to invest in great companies at below market prices and at higher dividend yields when /if assigned.
Wait for the price to go sideways, sell a below market put and then another put below it to help you pay for it as it expires to zero.
Dividends plus put premium is a great way to grow dividend revenue into the future.
It is these weak periods where your account takes a hit, that allows faster growth in the future. It also causes most not to act on the discount - funny how that works. Almost everyone likes a sale except in stocks - check you fear and ego at the door. If it ois a good buy slowly add some and boost your income. Its just investing in your wealth.
Counter intuitive or contrarian, it does work over the long run!
Note to file, I do not see a quick fix on the energy and its associated costs.
I believe the bloom has come off EV's and renewables. Fossil fuels have been so beat up from ESG and regulations, that even the EU has found out the hard way that fossil fuels and nuclear are well into the future fix. Europe will have a much worse recession. The price they are paying for their electricity is now 5 times what we pay in the US. Based on a BTU conversion, Europe and the UK are paying an equivalent price for LNG that equates to $300.00 a barrel for Brent crude.
On the other side of the coin, it is the US and shale drilling that will create the LNG to save Europe from freezing this winter. KMI just received a quick commitment from its Permian Highway pipeline partners that is boosting its pumping capabilities by 25% (adding more compression plants). Much of the new natural gas and liquids will go to the Gulf Coast LNG liquefaction plants.
Biden promised more Fossil Fuels to help our Allies. Strange but True. He just can't admit it to his base.
Bob
Now if only Biden would take the tragic energy cost debacle in Europe as a clue to stop the hard headedness of his platform.
Elections and their consequences will surely come before they pivot.
Only four months and days before we pivot to America First common sense and a pro business view being able to stop business from being punished by bureaucrats! |
