Things are moving quickly (and ugly to the downside) in the stock market such that we cannot report news in a timely manner and adequately write detailed analysis. That's why today we would like to provide really unorganized news, thoughts, and some portfolio actions. Feel free to reach out for conversations by emailing us at wicphiladelphia@gmail.com

Stock Market News On April 25, 2022

The worldwide sell-off in stocks, with China’s Shanghai composite dropping more than 5% on Monday, Europe down across the board, and S&P500 down close to 10% in the past 3 trading days, is based on two things: 1) Covid-related nation-wide lockdown coming in China; 2) Inflation and the uncertainty from aggressive rate hikes in United States.

• China’s capital city of Beijing reported a spike in Covid cases over the weekend, and its business district began three days of mass testing. But China’s vaccine doesn’t last as long and offers little protection at this point versus the U.S. vaccines and the mix-and-match booster doses.

• U.S. inflation is now just out of control, period. Company conference calls with investors — other than tech — all show persistent problems and a lack of a desire to build plants to fix them. The U.S. is getting better at supply chain, but economy needs to slow down.

• Ford (F) announced they will be able to produce 150,000 F-150 in the next year or so. Said they're confident about it. Report earnings this Wednesday.

• Shares of Twitter (TWTR) jumped more than 5% in premarket trading Monday on reports the social media company is nearing a deal with Elon Musk.

• Advanced Micro Devices (AMD) upgraded to a “strong buy” from a buy at Raymond James. Shares traded at $160 not that long ago … now around $90. 

• Deere (DE) cut to hold from buy at Bank of America. It is odd given that the agricultural cycle is so powerful. Not top of cycle, but cautious due to slowdown in fertilizer orders. The common theme that we hear from analysts is "slowdown."

• Starbucks (SBUX) price target cut to $108 from $125 at Barclays, but analyst maintains its buy rating. I think numbers are too high as denominator of share count grows.

• Credit Suisse says stick with Microsoft (MSFT) despite headwinds. We are as well. Itching to buy more. Shares topped out in November with all the growth stocks.

• Recent portfolio addition Coterra Energy (CTRA) downgraded to hold at Susquehanna. Crucial company for liquefied natural gas. We choose to take the other side of the trade given it was a very small starter position. Susq. also raised price targets raised for E&P companies such as Devon Energy (DVN), EOG Resources (EOG), Pioneer Natural (PXD), Occidental Petroleum (OXY), and Diamondback Energy (FANG). We're buying more DVN using today's weakness. We're also using today's weakness to start a position in Halliburton (HAL), an oil services company.

• Bernstein analyst Toni Sacconaghi saying there could be an upside surprise to sales and earnings when Apple (AAPL) reports later this week? Does not mean stock will do well. Apple shares have been arguably the best mega-cap tech stock to hold through this period, meaning people have been expecting it to be good. 

• Coca-Cola (KO) beat analysts’ expectations on sales and earnings in recent quarter. We used the post-earning strength to exit the position altogether, capturing a ~10% gain in this name.

• Activision Blizzard (ATVI) misses — collapse in gaming? Implications for our chip and tech stocks?

• Bank of America lowers estimates for homebuilders, which is sort of a late move. Homebuilder valuations have come down to recession levels, meaning people have been expecting crash in housing. Lennar (LEN), Pultegroup (PHM), Toll Brothers (TOL), KB Home (KBH).