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River1 Asset Management
October 15, 2024

NYSE Ticker: RVER

Trading Observations

Little incremental as we await earnings, financials looked good this am.
Shrugging off China weakness
Chips lower on talk US may cap some NVDA AMD AI chips to some countries (my guess is quickly dismissed as just a headline)
The move yest on good breadth, though SPY lowest full day Oct volume since the year 2000
Some things of interest
- CTAs are net sellers this week Barchart [x.com]
- Put/buying remains non-existent gregrieben [x.com]
- Oscillators neutral but will push toward overbought into the weekend
- BOFA OCTOBER GLOBAL FUND MANAGER SURVEY: THE BIGGEST JUMP IN INVESTOR OPTIMISM SINCE JUNE 2020 ON FED CUTS, CHINA STIMULUS AND SOFT LANDING

Upgrades – AAP, AMBP, BOKF, ED, DHI, DOCS, DUK, FERG, MTH, RVTY, SM, WFC

Downgrades – AIG, ABNB, AWK, APPF, ALTM, BA, CIEN, CMS, CVLT, CRK, ENPH, ETSY, ITT, LII, MGY, MBLY, NE, PB, RIG, VAL

Futures

DOW -136

S&P +3

Nasdaq +18

CNN Fear/Greed Index

10-Year Yield

Oil

Consumer/Financial Healthcare

GS – Up 3% on a banking and markets beat. Equity sales and trading, which includes options, is really humming for the bulge brackets lately. Y/Y Q3 was +45% in earnings.

Citi – Up 2% on a banking and market beat. Loan growth remains meh.

SCHW – Up 9% on solid earnings and using cash flow to pay down costly debt related to funding costs (smart work CFO).

BAC – Up 2% on earnings that follow trends as investment banking remains strong.

Home building and related – DHI and MTH upgraded to neutral at Wedbush, LII (Lennox) but to sector weight at Key.

Baird Fin-Tech Earnings Preview – Expect a slight beat FI, solid results FIS, and in-line GPN.

WBA – Up 5% on decent earnings and news they would close 1000+ underperforming stores. WBA is levered to the hilt, and the equity needs some saving here.

UNH the healthcare giant beat third-quarter profit and revenue expectations but missed on the medical-care ratio and lowered its full-year outlook. They posted adjusted earnings of $7.15 a share on revenue of $100.8B, compared with expectations for earnings of $7 a share on revenue of $99.1B…The medical cost ratio—the share of premiums paid out to cover expenses—came in at 85.2%, compared with estimates of 84.4%.

Technology

NVDA: up 12 out 16; first record in ~4 mos as investors continue to anticipate strong long-term demand trends for AI ... Cleveland bullish ystrdy didnt hurt (GPU demand cont to improve as Hyperscale shifts to Blackwell and OEMs place upside Hopper orders; DC GPU unit f’casts of ~6-6.5m with upside potential to 8-9m; some suggest CoWoS capacity may have improved; H20 demand forecasts remain elevated with limited geopolitical disruption to date)

AAPL chain: DigiTimes - reins in Chinese suppliers amid quality issues, turning back to Taiwanese manufacturers for reliability

Chip Wars/AI: hit around 845pm ET - the US could impose country-specific caps on the sale of certain chips from AMD and Nvidia as the gov’t weighs national security considerations (Bloomberg) ...

QCOM: closed above range has been stuck in since early Aug ... Ming-Chi Kuo catalyst: "positive on new Snapdragon 8 Gen 4 shipments + ASP benefit with share at Samsung + China OEMs offsetting AAPL in-housing"

ETSY: -5% d/g to SELL at GS; prefers firms exposed to less discretionary categories with high repeat behavior, like subscriptions or essentials purchasing. Flags that spending patterns remain pressured at lower income households

WOLF wins $1.5B financing from Chips Act Biden admin to provide $750 million to North Carolina-based Wolfspeed for advanced computer chips | AP News [apnews.com]

Google orders 6-7 small modular nuclear reactors to power its data centers - FT

DELL - one of the biggest sellers of server computers, will soon begin shipping devices featuring Nvidia Corp.’s Blackwell artificial intelligence accelerators, demonstrating that production of the chip is back on schedule.

LYFT, UBER (Mscience) UBER: raising Q3 bookings ests driven by contd strength across Delivery in the US and stready growth in Europe. LFYT: raising Q3 bookings above consensus and at the high end of guide; pacing in Aug improved from a soft June/July while Sept trends trailed Aug

ADBE - Goldman bullish post Max – “increasingly confident in Adobe's ability to rapidly innovate and deliver meaningful productivity boosts to users, thus driving long-term sustainable user growth, higher retention, and pricing leverage”