① Retail Sales Data Exceeds Expectations, Dow Hits New Historical High, US Stock Market Risk Increases, European Central Bank Cuts Interest Rates for the Third Time This Year
US stocks closed mixed on Thursday, with the Dow Jones Industrial Average hitting new intraday and closing historical highs, and the S&P 500 Index reaching a new intraday historical high. Nvidia led the way among chip stocks. Data released by the US Department of Commerce on Thursday showed that retail sales in September increased by 0.4% month-on-month on an unadjusted basis for inflation, higher than the 0.1% increase in August. Excluding sales of automobiles and gas stations, retail sales grew by 0.7%. US retail sales in September slightly exceeded expectations, highlighting that consumption continues to support the economy. Signs of economic recovery may not prevent the Federal Reserve from cutting interest rates again next month, but they will reinforce expectations of a 25 basis point rate cut. According to the CME Group's FedWatch tool, the market currently estimates a 92.1% chance of a 25 basis point rate cut at the Fed's next meeting, with only a 7.9% chance of keeping rates unchanged. The European Central Bank cut interest rates for the third time, in line with expectations. The market has increased bets on further easing. Investors now expect that the European Central Bank's 25 basis point rate cuts will continue until April 2025, rather than the previously assumed March. Some traders have also started betting on a 50 basis point rate cut by the European Central Bank in December.
The growth in retail sales data indicates that US consumer spending still has a certain level of resilience, which supports strong economic growth in the third quarter. Consumer spending is an important pillar of the US economy, and the growth in retail sales means that economic activity remains relatively active, increasing the possibility of the economy "landing" (i.e., not falling into a recession but maintaining relatively stable growth). After the data was released, traders lowered their expectations for the Fed's rate cut. Although the Fed has already started a rate-cutting cycle, strong retail sales data may make the Fed more cautious in subsequent rate-cutting decisions. Recently, the US has continuously released better data, implying that the market should have confidence in US dollar assets. Long-term high interest rates and the US stock market reaching new highs, but the risks are actually increasing.
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The latest US retail data shows a strong growth momentum, reflecting the resilience of the US economy and the strengthening of consumer confidence. However, there is still some uncertainty in the market's expectations for Fed policy, and investors need to closely monitor future economic data and the Fed's policy statements to adjust their investment strategies in a timely manner.
② BlackRock: Focus on Investment Opportunities in Japan, China, and the UK Due to Relatively Attractive Valuations
BlackRock, the world's largest asset management company, said it is focusing on investment opportunities in the stock markets of Japan, China, and the UK, as these markets currently have relatively attractive valuations: 1) It will "moderately increase" its holdings in Chinese stocks, believing that there are signs of China introducing significant fiscal stimulus policies, but still paying attention to China's long-term structural challenges. 2) It remains optimistic about the Japanese stock market, as Japan's macroeconomic outlook is improving, and corporate reforms are enhancing corporate profits and shareholder returns. 3) It continues to increase its holdings in UK stocks, but confidence in the UK stock market has weakened due to economic stagnation and the upcoming release of a new budget by the government.
The current valuation of A-shares is very attractive, and what is needed now is confidence and market activity. Rapid increases require time to digest. Market information spreads quickly, and even if individual stocks fall, their activity levels have greatly improved, enhancing the efficiency of making profits. Currently, the exchange rate and asset values in the A-share market are moving in the same direction. The Japanese stock market appears to be rising, but the yen is depreciating. Overall, the attractiveness to overseas markets is limited.
The Chinese stock market still has a significant valuation increase space under the support of multiple policies. After the first wave of increases, it is currently in the process of digesting floating chips. With sufficient turnover and adjustments in place, the A-share market will welcome a second wave of increases.
③ TSMC's Third-Quarter Performance and Fourth-Quarter Guidance Both Exceed Expectations, Stock Price Hits New High, Market Value Exceeds One Trillion
Due to strong sales of Nvidia's artificial intelligence chips offsetting the sluggishness in the mobile chip sector, TSMC's third-quarter profit soared by 54% to 325.3 billion New Taiwan dollars (approximately $10.1 billion), higher than expected, with revenue increasing by 39% to 759.69 billion New Taiwan dollars (approximately $23.62 billion), and a gross margin of 57.8%. TSMC expects its capital expenditure for this quarter to more than double to about $11.5 billion, and next year's budget may further increase, as it anticipates healthy demand for its products and predicts a similar outlook for the next five years. In dollar terms, full-year revenue for 2024 is expected to grow by nearly 30%, while previous guidance was slightly above 20%. Revenue from artificial intelligence processors will account for about 15% of its total revenue this year. Additionally, TSMC expects fourth-quarter sales of $26.1 billion to $26.9 billion, exceeding the estimated $24.94 billion; it expects a gross margin of 57% to 59%, also exceeding the estimated 54.7%. TSMC's US ADR closed up 9.77% overnight, at $205.79, hitting a historical high, with a year-to-date increase of 100.03%, and its market value has broken through one trillion dollars.TSMC's performance exceeds expectations, relying on the rapid development of the global AI industry. However, the overall update speed of AI industry projects has recently slowed down significantly compared to the hottest period. It is expected that TSMC's year-on-year growth rate will decline significantly next year, especially when the client-side profits are lower than expected. Investors need to closely monitor the market and maintain a certain level of caution.
TSMC's good performance comes from the AI industry's strong demand for high-end chips. Capacity expansion and technological innovation will affect TSMC's future development.
Netflix's third-quarter sales increased by 15%, raising performance guidance.
Netflix's financial report released this morning shows that the company's streaming media paid subscribers increased by 5.07 million in the third quarter, with sales increasing by 15% to $9.83 billion, both exceeding expectations. The company expects its annual revenue to grow by 15%, while analysts expect a growth of 14.9%, and the company previously expected growth between 14% and 15%. The expected annual operating profit margin is 27%, higher than expected. The expected annual free cash flow is between $6 billion and $6.5 billion, while analysts expect $6.38 billion, and the company previously expected about $6 billion. The expected earnings per share for the fourth quarter is $4.23, with revenue of $10.13 billion, both higher than analysts' expectations. The expected revenue for the fiscal year 2025 is between $43 billion and $44 billion, while analysts expect $43.4 billion. The expected operating profit margin for the fiscal year 2025 is 28%, while analysts expect 27.9%.
Netflix's third-quarter revenue and net profit continued to grow, with North American user growth lower than expected but strong in the Asia-Pacific region. The net increase in streaming media paid subscribers in the third quarter was 5.07 million, higher than analysts' expectations but a year-on-year decrease of 42%, indicating a slowdown in overall growth. This shows that the competition in the US streaming media industry is becoming more intense.
Netflix's US stock price rose by more than 5% after the market closed, reflecting the market's expectations for the future development of Netflix. Only by continuously innovating and increasing revenue will the market give the company a higher valuation.
A nuclear energy investment boom is sweeping the globe, and "uranium," which has been forgotten by the market for a long time, is returning to the investment horizon.
To accelerate the expansion and construction of data centers to meet the explosive growth in artificial intelligence and cloud service computing power demand, US technology giants such as Amazon, Microsoft, and Google have all set their sights on nuclear energy, which is both clean, efficient, and stable, to provide uninterrupted power 24 hours a day for their expanding data centers. This has driven the stock prices of nuclear power concepts and uranium mining companies in the global stock market to continue to rise. In the US stock market, the price of the Global X Uranium ETF (URA.US), which tracks top uranium mining and enrichment companies worldwide, has risen by more than 7% as of Wednesday's US stock market close, with a cumulative increase of up to 26% since September. Before this, the price of this ETF had been in a long-term slump. Uranium is one of the most important fuels in nuclear power production, especially uranium-235, which releases an enormous amount of energy through nuclear fission. In nuclear reactors, the fission chain reaction of uranium is precisely controlled to generate stable thermal energy for power generation. The investment heat of nuclear energy and enriched uranium is basically on par with "artificial intelligence," which has been at the top of the capital market since 2023. In the eyes of investors, 2024 will be a "super harvest" year for nuclear energy stocks and uranium resource stocks.
Because the imagination of AI is infinite, in fact, to a large extent, it is the accumulation of energy in the later stage, and only nuclear energy-level energy can meet its high energy consumption. Nuclear energy, as an efficient and clean form of energy, is closely related to the physical properties of uranium and fission reactions. Therefore, with the development of artificial intelligence, nuclear energy and uranium-related sectors are sought after.
The high power demand of data centers has driven the rapid development of the nuclear power industry, and the demand for uranium materials, the core fuel upstream, has increased significantly. Attention should be paid to investment opportunities in the uranium mining industry and supporting industries.General Motors to Form Joint Venture with Lithium Americas to Develop and Operate a Lithium Mine
General Motors and Lithium Americas have agreed to establish a joint venture for the development and operation of a lithium mine, which is expected to produce enough lithium to supply 800,000 electric vehicles. Specifically, General Motors will invest $625 million in Lithium Americas, including $430 million in cash and $195 million in credit loans, to hold a 38% stake in the Thacker Pass project, while Lithium Americas will hold the remaining 62%. Consequently, General Motors has increased its overall investment commitment to Lithium Americas from $650 million to $945 million, a 45% increase, making it the largest investment by an American automaker in a lithium mine project.
The impact of the collaboration between Lithium Americas and General Motors is relatively small. Although Lithium Americas' stock price rose by 23.22% on the day of the news, it cannot change the fact that it has fallen from a historical high of $41 to the current price of over $3, with a drop of more than 90%. Currently, the new energy sector remains sluggish globally, while artificial intelligence and smart driving are the core of the future.
General Motors invests $625 million to form a joint venture to mine electric vehicle battery raw materials in the United States. The current global automotive competition landscape has undergone significant changes. Focus on enterprises with technological advantages in the context of intelligence.