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Technology Stocks Semi Equipment Analysis

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To: Return to Sender who wrote (88688)	7/19/2022 10:01:52 PM
From: kckip	1 Recommendation of 89941

Absolutely! Honor, duty, commitment to those we owe everything to...and on whose shoulders we stand on, similar boat here. From an EW perspective, SPX, DJI support a decent bounce from the recent (mid-June) lows, but financials (and others) made a new low - in three waves.....odds are new lows all around are on deck after this bounce....JMO and EW can be highly subjective <g>

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To: kckip who wrote (88691)	7/19/2022 10:09:52 PM
From: Elroy	2 Recommendations of 89941

My random no TA guess agrees this is a bounce on the way down. On the horizon more large interest rate increases. OK. If things are REALLY slowing down, even just a bit, then Q3 guidance and perhaps Q3 Q4 actual are going to be modestly disappointing.....maybe. Inflation, recession, yeah I think there is another leg down. But that's my version of TA! In reality, I haven't got a clue. All I know is ADI and TXN will survive and do just fine....

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From: Sam	7/19/2022 11:53:33 PM
	1 Recommendation of 89941

Micron releases DDR5 DRAM ready for next-gen servers The memory chips are here, we're just waiting on Intel and AMD Dan RobinsonThu 7 Jul 2022 // 11:31 UTC Memory maker Micron has announced availability of DDR5 server DRAM components in preparation for server and workstation platforms from Intel and AMD that are due to support the faster memory standard. Micron said its DDR5 server memory parts are now available through commercial and industrial channel partners in support of qualification for next-generation server and workstation systems based on Intel and AMD CPUs. In other words, the memory chips are here, but the servers are not yet ready for them. Intel's Sapphire Rapids Xeon Scalable processor family will support the new memory standard, but Intel has repeatedly delayed this platform and volume production is not expected until later this year. AMD's Genoa, the first of its fourth-gen of Epyc server chips, is also expected to arrive in the fourth quarter of this year with support for DDR5. continues at theregister.com

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From: Sam

7/20/2022 6:56:02 AM

Google, Oracle Data Centers Suffer Outages Hit By Record Heat Wave In Britain
BENZINGA 6:47 AM ET 7/20/2022

Symbol Last Price Change

GOOG	114.62	0 (0%)
ORCL	72.24	0 (0%)
MSFT	259.53	0 (0%)
AAPL	151	0 (0%)
QUOTES AS OF 04:00:00 PM ET 07/19/2022

Alphabet Inc (NASDAQ:GOOG)(NASDAQ:GOOGL)Google and Oracle Corp's (NYSE:ORCL)London data centers buckled on July 19 after a record-setting heat wave hit Britain, knocking some websites offline, Bloomberg reports.
Both companies cited problems with "cooling systems" for causing the outages.
Google acknowledged powering down some parts of its cloud services "to prevent damage to machines and an extended outage."
Several hours later, Google still listed some of its cloud services as down in the region.
The WordPress web-hosting service held the Google outage responsible for knocking out its service in Europe.
Temperatures topped 40 degrees Celsius (104 degrees Fahrenheit) in the U.K. when fires broke out across London.
Lately, reports indicated that global Microsoft Corp (NASDAQ:MSFT) Azure data centers operated with limited server capacity amid a worldwide supply crisis.
Microsoft's struggle to fill its data centers with hardware follows a surge in cloud demand at the outset of the pandemic.
In December, Amazon.com Inc (NASDAQ:AMZN) Amazon Web Services suffered its third major outage in a matter of weeks last month, affecting millions of people.
Apple Inc (NASDAQ:AAPL) iCloud, Microsoft Azure, and Google Cloud were among the technology vendors to experience major cloud outages in 2022.
Price Action: ORCL shares closed higher by 3.22% at $72.47 on Tuesday. GOOG shares traded higher by 0.03% at $114.65 in the premarket on the last check Wednesday.

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To: Return to Sender who wrote (88690)	7/20/2022 9:44:48 AM
From: Return to Sender	2 Recommendations of 89941

ASML Stock Is Dropping. The Chip Supplier Slashed Its Sales Outlook Amid Delays. ASML beat expectations for second-quarter earnings, but shares in the critical supplier of manufacturing equipment to the semiconductor industry were tumbling Wednesday after the group slashed its full-year sales forecast. ASML (ticker: ASML) reported second-quarter net income of €1.4 billion ($1.4 billion) on sales of €5.4 billion, delivering earnings per share of €3.54. “Some customers are indicating signs of slowing demand in certain consumer-driven market segments, yet we still see strong demand for our systems, driven by global megatrends in automotive, high-performance computing, and green energy transition,” Peter Wennink, the group’s president and chief executive, said in a statement. finance.yahoo.com

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To: Return to Sender who wrote (88685)

7/20/2022 6:13:35 PM

From: Return to Sender

BPNDX Rose 13 to 78 PnF Buy Signals - [ANSS DDOG DOCU DXCM EBAY HON ILMN INTU KLAC ODFL TEAM ZM ZS added]

Mon	Tues	Wed
AAPL	AAPL	AAPL
ABNB	ABNB	ABNB
ADBE	ADBE	ADBE
ADI	ADI	ADI
ALGN	ADSK	ADSK
AMAT	ALGN	ALGN
AMD	AMAT	AMAT
AMGN	AMD	AMD
AMZN	AMGN	AMGN
ASML	AMZN	AMZN
AZN	ASML	ANSS
BIIB	AVGO	ASML
BKNG	AZN	AVGO
CDNS	BIIB	AZN
CHTR	BKNG	BIIB
COST	CDNS	BKNG
CPRT	CHTR	CDNS
CRWD	COST	CHTR
CTAS	CPRT	COST
DLTR	CRWD	CPRT
EA	CTAS	CRWD
FISV	DLTR	CTAS
FTNT	EA	DDOG
GOOGL	FISV	DLTR
IDXX	FTNT	DOCU
ISRG	GOOGL	DXCM
JD	IDXX	EA
KDP	ISRG	EBAY
KHC	JD	FISV
LCID	KDP	FTNT
LRCX	KHC	GOOGL
MAR	LCID	HON
MCHP	LRCX	IDXX
MELI	LULU	ILMN
META	MAR	INTU
MNST	MCHP	ISRG
MRNA	MELI	JD
MRVL	META	KDP
MU	MNST	KHC
NFLX	MRNA	KLAC
NVDA	MRVL	LCID
OKTA	MU	LRCX
ORLY	NFLX	LULU
PEP	NTES	MAR
PYPL	NVDA	MCHP
QCOM	NXPI	MELI
REGN	OKTA	META
ROST	ORLY	MNST
SBUX	PEP	MRNA
SGEN	PYPL	MRVL
SIRI	QCOM	MU
SNPS	REGN	NFLX
SPLK	ROST	NTES
SWKS	SBUX	NVDA
TEAM	SGEN	NXPI
TMUS	SIRI	ODFL
TSLA	SNPS	OKTA
TXN	SPLK	ORLY
VRSK	SWKS	PEP
VRSN	TMUS	PYPL
VRTX	TSLA	QCOM
	TXN	REGN
	VRSK	ROST
	VRSN	SBUX
	VRTX	SGEN
		SIRI
		SNPS
		SPLK
		SWKS
		TEAM
		TMUS
		TSLA
		TXN
		VRSK
		VRSN
		VRTX
		ZM
		ZS

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To: Return to Sender who wrote (88686)

7/20/2022 6:16:08 PM

From: Return to Sender

BPSOX Rose 1 to 25 PnF Buy Signals - [KLAC added]

Mon	Tues	Wed
ADI	ADI	ADI
AMAT	AMAT	AMAT
AMD	AMD	AMD
ASML	ASML	ASML
CRUS	AVGO	AVGO
ENTG	CRUS	CRUS
LRCX	ENTG	ENTG
MCHP	LRCX	KLAC
MKSI	MCHP	LRCX
MPWR	MKSI	MCHP
MRVL	MPWR	MKSI
MU	MRVL	MPWR
NVDA	MU	MRVL
ON	NVDA	MU
QCOM	NXPI	NVDA
QRVO	ON	NXPI
SLAB	QCOM	ON
SWKS	QRVO	QCOM
TER	SLAB	QRVO
TSM	SWKS	SLAB
TXN	TER	SWKS
WOLF	TSM	TER
	TXN	TSM
	WOLF	TXN
		WOLF

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To: Return to Sender who wrote (88687)	7/20/2022 6:17:53 PM
From: Return to Sender	1 Recommendation of 89941

No New 52 Week Highs or Lows Again Today on the NDX!

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To: Return to Sender who wrote (88698)

7/20/2022 6:19:00 PM

From: Return to Sender

Market Snapshot

briefing.com

Dow	31876.72	+47.79	(0.15%)
Nasdaq	11897.62	+184.50	(1.58%)
SP 500	3959.97	+23.21	(0.59%)
10-yr Note

NYSE	Adv 2108	Dec 986	Vol 938 mln
Nasdaq	Adv 2840	Dec 1385	Vol 5.3 bln

Industry Watch

Strong: Consumer Discretionary, Communication Services, Information Technology, Industrials, Materials, Financials

Weak: Health Care, Consumer Staples, Utilities, Real Estate

Moving the Market

-- Concerns about gas supplies to Europe

-- Festering rate hike angst

-- Relative strength in mega-cap stocks

Closing Summary
20-Jul-22 16:20 ET

Dow +47.79 at 31876.72, Nasdaq +184.50 at 11897.62, S&P +23.21 at 3959.97
[BRIEFING.COM] Today, the stock market was able to build on yesterday's gains with added interest in the higher growth areas. The market opened modestly lower before finding momentum to the upside. There was a quick dip when a report came out suggesting Alphabet's Google (GOOG 114.70, +0.08, +0.1%) is going to pause hiring for two weeks. The market took the news in stride and the knee jerk selling interest soon shook off with the indices moving back to the highs by late afternoon.

The mega caps did some heavy lifting today with the Vanguard Mega Cap Growth ETF (MGK) closing up 1.5% versus a 0.6% gain in the S&P 500 and a 0.7% gain in the Invesco S&P 500 Equal Weight ETF (RSP).

The interest in high growth areas could be seen in the S&P 500 sector performance. Communication services (+1.0%), information technology (+1.6%), and consumer discretionary (+1.8%) were some of the best performers on the day thanks, in part, to their respective mega cap components: Meta Platforms (META 183.09, 7.31, +4.2%), Apple (AAPL 153.04, +2.04, +1.4%), and Amazon.com (AMZN 122.77, +4.56, +3.9%).

Communication services was also bolstered by Netflix's (NFLX 216.46, +14.83, +7.4%) outsized gains after the company had better-than-expected Q2 results and lost "only" 970,000 subscribers, which was half the estimated amount.

As for the laggards, the countercyclical sectors, utilities (-1.4%), consumer staples (-0.7%), and health care (-1.1%), led the underperformers.

The health care sector had a rough go today after a few components, which reported earnings this morning, sold off heavily. Elevance Health (ELV 459.54, -37.89, -7.6%), Biogen (BIIB 207.49, -12.77, -5.8%), and Abbott Labs (ABT 108.23, -1.70, -1.6%) were all down big despite beating earnings and revenue estimates and issuing above-consensus guidance.

With buyers favoring growthy areas, the Russell 3000 Growth Index (+1.2%) outpaced the Russell 3000 Value Index, which closed up 0.4%.

The 2-yr note yield rose two basis points to 3.24% and the 10-yr note yield rose two basis points to 3.04% after testing 2.94% in early morning action.

The earnings reports ahead of tomorrow's open will be headlined by American Airlines (AAL), AT&T (T), AutoNation (AN), Blackstone (BX), D.R. Horton (DHI), Danaher (DHR), Dow (DOW), Freeport-McMoRan (FCX), Nucor (NUE), SAP SE (SAP), Tractor Supply (TSCO), Travelers (TRV), Union Pacific (UNP).

Thursday's economic data includes weekly initial jobless claims (Briefing.com consensus 240,000; prior 244,000), continuing claims (prior 1.331 million), and July Philadelphia Fed Index (Briefing.com consensus -1.2; prior -3.3) at 8:30 ET; June Leading Economic Index (Briefing.com consensus -0.5%; prior -0.4%) at 10:00 ET; and Weekly EIA Natural Gas Inventories (prior +58 bcf) at 10:30 ET.

Today's economic data includes:

Existing home sales decreased 5.4% month-over-month in June to a seasonally adjusted annual rate of 5.12 million (Briefing.com consensus 5.40 million) versus 5.41 million in May. Total sales in June were down 14.2% from a year ago.
- The key takeaway from the report is that the supply of available homes for sale remains extremely tight, yet higher mortgage rates and home price inflation are contributing to a slowdown in buyer demand rooted in affordability pressures that are expected to persist.
Crude oil inventories had a draw of 446K barrels
- Prior week showed a build of 3.25 mln barrels
Gasoline inventories had a build of 3.50 mln barrels
- Prior week showed a build of 5.83 mln barrels

Dow Jones Industrial Average: -12.3% YTD
S&P 400: -15.6% YTD
S&P 500: -16.9% YTD
Russell 2000: -18.6% YTD
Nasdaq Composite: -24.0% YTD

Market trends higher into the close
20-Jul-22 15:30 ET

Dow +81.27 at 31910.20, Nasdaq +206.79 at 11919.91, S&P +30.54 at 3967.30
[BRIEFING.COM] The stock market is continuing a steady incline ahead of the close.

Earnings reports to watch after the close include Alcoa (AA), CSX (CSX), Discover Financial Services (DFS), Las Vegas Sands (LVS), Tesla (TSLA), and United Airlines (UAL).

The earnings reports ahead of tomorrow's open will be headlined by American Airlines (AAL), AT&T (T), AutoNation (AN), Blackstone (BX), D.R. Horton (DHI), Danaher (DHR), Dow (DOW), Freeport-McMoRan (FCX), Nucor (NUE), SAP SE (SAP), Tractor Supply (TSCO), Travelers (TRV), and Union Pacific (UNP).

Thursday's economic data includes weekly initial jobless claims (Briefing.com consensus 240,000; prior 244,000), continuing claims (prior 1.331 million), and July Philadelphia Fed Index (Briefing.com consensus -1.2; prior -3.3) at 8:30 ET; June Leading Economic Index (Briefing.com consensus -0.5%; prior -0.4%) at 10:00 ET; Weekly EIA Natural Gas Inventories (prior +58 bcf) at 10:30 ET.

Energy sector has a strong day on rising oil prices
20-Jul-22 15:00 ET

Dow +8.54 at 31837.47, Nasdaq +170.36 at 11883.48, S&P +20.98 at 3957.74
[BRIEFING.COM] The major indices have climbed higher in the last half hour. The Nasdaq has a lead on the others, up 1.5%.

The S&P 500 energy sector has been steadily rising this session, up 1.1%. Most of its components trade in positive territory with the biggest gains in Conocophillips (COP 90.64, +2.16, +2.4%), Coterra Energy (CTRA 28.82, +0.68, +2.5%), and Diamondback Energy (FANG 118.72, +2.18, +1.9%).

Notably dragging down the sector is Baker Hughes (BKR 26.27, -1.95, -6.9%) after reporting below-consensus earnings and revenue.

On a related note, WTI crude oil futures settled the session down 0.9% to $99.86/bbl. Unleaded gasoline futures fell 1.2% to $3.27/gal. Natural gas futures rose 9.6% to $7.88/mmbtu.

Generac outperforms on JPM tgt bump, Northern Trust slides after earnings
20-Jul-22 14:25 ET

Dow -65.50 at 31763.43, Nasdaq +134.40 at 11847.52, S&P +11.31 at 3948.07
[BRIEFING.COM] The S&P 500 (+0.29%) sits in second place to this point on Wednesday.

S&P 500 constituents Ceridian HCM (CDAY 54.39, +3.32, +6.50%), Generac (GNRC 245.30, +14.72, +6.38%), and Royal Caribbean (RCL 38.36, +2.00, +5.50%) peppered atop the index. Software firm CDAY outperforms alongside general strength in the group, JP Morgan raised their tgt on GNRC, while RCL benefits again from broader strength in consumer discretionary (+1.25%).

Meanwhile, Chicago-based finance firm Northern Trust (NTRS 96.67, -4.55, -4.50%) is one of today's top laggards following earnings.

Gold lower as dollar gains
20-Jul-22 13:55 ET

Dow -82.06 at 31746.87, Nasdaq +129.26 at 11842.38, S&P +9.16 at 3945.92
[BRIEFING.COM] With about two hours to go the tech-heavy Nasdaq Composite (+1.10%) holds a firm lead among the major averages.

Gold futures settled $10.50 lower (-0.6%) to $1,700.20/oz as the greenback recovers on Wednesday.

Meanwhile, the U.S. Dollar Index is up about +0.5% to $107.20.

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To: Return to Sender who wrote (88698)

7/20/2022 6:21:48 PM

From: Return to Sender

Market Snapshot

briefing.com

Dow	31876.72	+47.79	(0.15%)
Nasdaq	11897.62	+184.50	(1.58%)
SP 500	3959.97	+23.21	(0.59%)
10-yr Note

NYSE	Adv 2108	Dec 986	Vol 938 mln
Nasdaq	Adv 2840	Dec 1385	Vol 5.3 bln

Industry Watch

Strong: Consumer Discretionary, Communication Services, Information Technology, Industrials, Materials, Financials

Weak: Health Care, Consumer Staples, Utilities, Real Estate

Moving the Market

-- Concerns about gas supplies to Europe

-- Festering rate hike angst

-- Relative strength in mega-cap stocks

Existing home sales decreased 5.4% month-over-month in June to a seasonally adjusted annual rate of 5.12 million (Briefing.com consensus 5.40 million) versus 5.41 million in May. Total sales in June were down 14.2% from a year ago.
- The key takeaway from the report is that the supply of available homes for sale remains extremely tight, yet higher mortgage rates and home price inflation are contributing to a slowdown in buyer demand rooted in affordability pressures that are expected to persist.
Crude oil inventories had a draw of 446K barrels
- Prior week showed a build of 3.25 mln barrels
Gasoline inventories had a build of 3.50 mln barrels
- Prior week showed a build of 5.83 mln barrels

Dow Jones Industrial Average: -12.3% YTD
S&P 400: -15.6% YTD
S&P 500: -16.9% YTD
Russell 2000: -18.6% YTD
Nasdaq Composite: -24.0% YTD

Other headwinds from the quarter are also possibly playing a role in today's unfavorable reaction. Along with negative FX impacts, which dented total sales by 4.2%, the baby formula shortage drove a 4.5% decline in Nutrition organic sales yr/yr to $1.9 bln. The good news is that ABT has resumed partial production at one of its US facilities and is already beginning to notice some share recovery in its retail channels over the past couple of months.
China lockdowns also posed a challenge for ABT in Q2, particularly in its Medical Device segment. Nevertheless, organic sales still jumped 7.5% yr/yr to $3.8 bln, driven by an ongoing recovery in cardiovascular procedure trends. However, ABT commented that these trends are still not where the company predicted in April as the health care industry continues to struggle with staffing challenges and COVID surges. The silver lining is that ABT expects these dynamics to improve in the second half of FY22.
Other positive developments include ABT's robust headline figures in Q2, growing adjusted earnings 22% yr/yr to $1.43 and total organic revs 14.3% yr/yr to $11.26 bln. Alongside exceptional organic growth of 36.9% in Diagnostics, which includes COVID testing, Established Pharmaceuticals (EPD) also helped overall organic growth, jumping 9.2% yr/yr.
ABT's FY22 guidance was also sound, expecting EPS of at least $4.90, up from $4.70. The company also still expects to grow organic sales, excluding COVID testing, in the mid to high single-digits yr/yr.

The main takeaway is that ABT's strong Q2 numbers were counterbalanced by lingering headwinds from factors outside the company's control. Still, even though it is not showing up in the stock price, ABT's outlook is healthy.

The company's headwinds should lose some steam in the near future, particularly surrounding baby formula shortages and supply chain disruptions sparked by lockdowns in China. COVID surges and staffing issues remain a concern. However, UNH mentioned that although hospitalization rates are drifting higher, patients' stays are significantly shorter than in the past. We should also have a clearer picture of the health of the labor market after major health care providers report earnings over the next couple of weeks, including Tenet Healthcare (THC), HCA Healthcare (HCA), Universal Health (UHS), and Surgery Partners (SGRY).

Bath & Body Works' reduced outlook not very soothing as inflation takes a toll on sales (BBWI)
Updated: 20-Jul-22 11:39 ET

Bath & Body Works (BBWI) had been showing some signs of life recently, rallying by 16% since last Thursday, but some of those gains are going down the drain today after the company sharply cut its Q2 and FY23 guidance. BBWI's downgraded Q2 EPS outlook of $0.40-$0.42 (prior was $0.60-$0.65) and its revised sales forecast for a decline of 6-7% (prior was low-single digit percent increase) both fall well below expectations. Likewise, its FY23 sales guidance for a mid-to-high single digit decline is also considerably lower than analysts' estimates.

BBWI, which was formerly known as L Brands before it spun off Victoria's Secret (VSCO) last July, has had anything but a relaxing year. In February, the company's CEO, Andrew Meslow, resigned due to health reasons. Sarah Nash, Chair of the Board of Directors, was then appointed Executive Chair and assumed the role of interim CEO on May 12. The business environment she inherited is challenging, to say the least, as inflationary pressures continue to take a toll on the scented candle, lotion, and soap maker.

Those inflationary headwinds are the primary culprit behind today's guidance cut as Nash noted that the company is "navigating a challenging operating and macroeconomic environment with inflationary pressure affecting our customers and our business." There are a few other key points as it relates to this issue.

BBWI joins a growing list of retailers that have recently experienced a slowdown in consumer spending, especially for discretionary products. Although Bed Bath & Beyond (BBBY) and Kohl's (KSS) aren't perfect comparisons, the well-documented struggles for those two companies provide solid evidence that consumers are reining in spending on non-essential home-related goods.
- In contrast, Ulta Beauty (ULTA) posted an impressive beat-and-raise Q1 earnings report in late May, illustrating that makeup and haircare products are more resilient during difficult economic conditions. ULTA is currently scheduled to report Q2 results on August 25.
Today isn't the first time that BBWI lowered its FY23 guidance due to inflation. When the company issued Q1 results on May 18, it slashed its EPS forecast to $3.80-$4.15 from $4.30-$4.70. At that time, the main concern was rising costs in raw materials, transportation, and wage rates. BBWI raised its full year inflation impact by $75 mln to $225-$250 mln, leading to a lower projected merchandise margin for FY23.
- On the positive side, approximately 85% of the company's supply chain is based in North America. This factor has allowed BBWI to stock its stores with a full line of product assortments.

BBWI has a solid and enduring business that has withstood tough economic conditions in the past, but demand for its specialty products is bound to soften if consumers tighten their budgets. The company is about to rollout a new loyalty program in August, so perhaps the launch will spark an upswing in sales. However, unless consumers start feeling better about their financial situations, BBWI is unlikely to see a meaningful and lasting improvement.

J.B. Hunt Transport's Q2 results were strong, but so were the headwinds (JBHT)
Updated: 20-Jul-22 11:21 ET

J.B. Hunt Transport (JBHT -1%) is struggling to make it over the hill today despite delivering earnings and revenue upside in Q2. Shares of the intermodal and trucking transportation company were steadily increasing over the past month, climbing roughly 13% from June lows. However, despite signs of an improving economic backdrop that emerged during the quarter, current conditions still pose a challenge to JBHT. In fact, they worsened in some instances from the previous quarter.

Headline numbers were solid; adjusted EPS expanded over 50% yr/yr to $2.42, partly fueled by broad-based 31.9% growth in revs to $3.84 bln. Although both metrics topped estimates, the size of JBHT's earnings beat in Q2 was significantly below its Q1 beat.
A major thorn in JBHT's side continues to emanate from the rail freight market, which remains filled with evolving challenges, including labor availability and reduced network velocity. Particularly frustrating to investors was that following improvement in rail velocity and customer activity in Q1, rail performance deteriorated throughout Q2. Meanwhile, demand continues to outstrip JBHT's ability to serve this demand, leaving sales on the table.
That said, JBHT's Intermodal segment, which remains its largest business by far (~48% Q2 revs), still soared 42% yr/yr to $1.83 bln. Volumes accelerated throughout the quarter on a yr/yr basis. JBHT is continuing to invest in capacity to meet the elevated levels of demand and remains optimistic that rail performance and velocity will pick up in subsequent quarters.
- Worth noting is that beginning in FY23, new capacity becomes available to JBHT on BNSF Railway, one of the largest freight railroads in North America.
JBHT's other segments saw similar robust growth. However, one notable laggard was Integrated Capacity Solutions (ICS), which grew revs only 3% yr/yr to $623 mln due primarily to a 3% drop in volumes. The volume decline can be mainly attributed to specific trends carrying over from Q1, such as a softer transactional spot market. On the bright side, JBHT noticed improved spot-rated freight trends as the quarter progressed, setting up Q3 to be less cloudy in this department.

JBHT's Q2 numbers were strong, but so were the headwinds. After peer Marten Transport (MRTN) delivered upbeat Q2 numbers earlier this week, investors were optimistic that JBHT's woes were, at the very least, improving from prior quarters. Although certain economic challenges, such as the labor market, stabilized to a degree, other areas worsened, such as rail performance. Adding to these headaches is unabated inflation. Labor remains JBHT's greatest inflationary pressure, while other costs, like tires, parts, and maintenance, continue to climb. At the same time, the equipment market remains tight, forcing JBHT to utilize an aging fleet that carries a higher frequency of repairs.

Bottom line, JBHT's long-term future remains bright, but the near term is ripe with headwinds. However, we believe these issues will slowly ease, particularly in Intermodal, since there is no incentive to keep rail velocity low, and JBHT has additional capacity coming online in FY23.

Netflix streams modestly higher after Q2 net add beat, to roll out ad tier in early 2023 (NFLX)
Updated: 20-Jul-22 10:59 ET

Netflix (NFLX +4%) is streaming higher today after reporting Q2 results last night. It beat on EPS, missed on revenue and operating margin. It also guided Q3 EPS well below consensus. Revenue would have been in-line with guidance, adjusting for FX (US dollar strengthened more quickly than expected). Also, backing out restructuring costs, operating income was above guidance. NFLX's results are a bit messy every quarter.

Management is great about providing a lot of details about its business, but not great in terms of laying out the financials and providing non-GAAP numbers. As a result, the main focus in the report was Q2 upside to global streaming paid net adds. The metric was still negative at -0.97 mln, but that was better than the -2.00 mln prior guidance. The new season of Stranger Things was a big hit and helped net adds in Q2.
NFLX also guided to Q3 at +1.00 mln. Street estimates for Q3 were a bit higher than that, so if you net Q2 and Q3, it was still better than expected overall but not the blowout numbers people were initially saying. However, it is good to see NFLX get back to growing net adds in Q3 after declines in Q1 and Q2. As more time passes since its price increase, that helps net adds as churn subsides.
We also got more color on its upcoming ad-supported tier. The plan is to launch this tier around the early part of 2023. NFLX will likely start in a handful of markets where ad spend is significant. To its credit, the plan is to roll it out, listen and learn, and iterate quickly to improve the offering. As such, its ad business will likely look different in a few years. The company believes advertising can fuel substantial incremental membership (through lower prices) and profit growth (through ad revenues).
The other big topic was how NFLX plans to tackle account sharing. The first model is pay a little bit more to add a member and share with those additional members. The second model is pay a little bit more to add an additional home and share the account with the additional homes. It is still in the early stages, but NFLX expects to roll it out in 2023. NFLX is currently testing strategies in some Latin America countries.

We went into this report bracing for weak net add numbers for Q2 and Q3 guidance. We were a bit more pessimistic than the Street. But overall, Netflix performed pretty well in Q2 and the Q3 guidance was decent, especially considering it is lapping a tougher comp in Q3. However, when you net the two quarters, it was not the blowout people thought initially. We think that explains why the stock has pulled back after an initial +8% pop.

Netflix is going through a transition right now. It was early to the streaming game, dominated and defined it for years. However, its success has drawn others and now the competition is pretty intense. It is also working out an ad tier and figuring out how to combat account sharing. There are a lot of moving parts and the business model will look different in 2023.

Nothing assured about an encore performance
There are a lot of moving parts in the equity market each day, but yesterday there was a lot of attention on moving averages. It was for good reason, too, considering the Dow, Nasdaq, S&P 500, and Russell 2000 all moved back above their respective 50-day moving averages in what was a broad-based rally effort.

The roots of that rally were grounded in a contrarian mindset after BofA's Global Fund Manager Survey revealed the lowest equity allocation since the Lehman Bros. crisis and the highest cash levels since 2001.

Opportunistic market participants jumped on that news with a hopeful sense that it conveys a lot of pent-up buying potential that could drive some material gains for the major indices if it came to fruition.

Yesterday, then, was a predominately technical rally, and the market put on a good technical show. The limiting factor is that the fundamental show isn't that appealing, which is perhaps why the futures market this morning isn't teasing an encore performance.

Currently, the S&P 500 futures are down six points and are trading 0.2% below fair value, the Nasdaq 100 futures are down nine points and are trading 0.2% below fair value, and the Dow Jones Industrial Average futures are down 45 points and are trading 0.1% below fair value.

Some of the headline drags include the following:

The European Commission is proposing a plan that calls on 27 EU nations to cut their gas consumption by 15% between August 15 and March 31.
Russia is reportedly looking to annex more Ukrainian territory beyond the Luhansk and Donetsk regions.
The UK saw a 40-year high inflation rate in June (9.4% yr/yr) that has sparked calls for a more aggressive rate hike by the Bank of England at its next meeting.
The MBA's Mortgage Applications Index declined 6.3% week-over-week, driven by a 7% decline in purchase applications and a 4% decline in refinancing applications.

The good news (and it isn't indisputably good news) is that Netflix (NFLX) delivered better-than-expected Q2 results. The focal point there is that Netflix lost "only" 970,000 subscribers versus the company's guidance for a loss of 2.0 million subscribers.

In turn, Netflix thinks it will add 1.0 million subscribers in the third quarter. That's headed in the right direction, although CNBC reported that analysts had been expecting something closer to 1.8 million subscriber additions in the third quarter.

Shares of NFLX are up 4.6% in pre-market action, but they had been up more than 7%. It will be interesting to see how the stock trades today knowing it had rallied 19% off its low last Wednesday heading into the report.

Another report that will be in focus shortly is the Existing Home Sales Report for June (Briefing.com consensus 5.40 million; Prior 5.41 million). It will be released at 10:00 a.m. ET, and a close watch will be kept on the pace of home sales and the median selling price in the face of rising mortgage rates.

On a related note, the 10-yr note yield is back below 3.00%, down five basis points to 2.97%. The 2-yr note yield is down four basis points to 3.18%, leaving the 2s10s spread inverted and contributing to concerns about the fundamental growth outlook.

-- Patrick J. O'Hare, Briefing.com

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