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Catastrophizing Begins As Wall Street Bleeds Out
Stocks suffered some -- ummm -- losses in the wake of Friday's US jobs report. Material losses.
Regardless of how it turned out by the closing bell, Wall Street's reaction to an underwhelming headline US payrolls print and an "unexpected" uptick in the jobless rate underscored the extent to which bad news is now definitively bad news. The days of bad news being "good" due to the presumed dovish read-through for monetary policy are gone.
The S&P was on track for its worst day since October
If Intel is left to collapse, there will be little fab capacity outside of Taiwan to feed Nvidia, Apple, AMD and Qualcomm. That still to be fired up TSMC fab in Arizona would come nowhere close to covering the combined needs and Samsung’s Korean fabs are already running pretty much at capacity. So just a bit of supply chain risk for all of the fab-lite chip designers.
Intel does appear to be launching a series of competitive chips as well. But many investors do not want to trust Intel’s timelines. A Once Burned, Twice Shy mentality.
Good points, D. I agree that depending only on TSMC and Samsung leaves us vulnerable. However, Intel just can’t deliver regardless of large federal subsidies or however long they keep extending their timelines on their perpetual turnaround. I think its fair to say that Wishful thinking also leaves us vulnerable.
Mr H, Hilarious reference to the meteor that destroyed the dinosaurs. Both Boeing and Intel are failing and probably deserve to be broken up as a sort of liquidation. Perhaps something similar to what Larry Culp did with GE. . Boeing and Intel are both in industries that have robust demand and growth. They were icons of American industry but were destroyed over a couple of decades by incompetent management that was fat and happy, similar to GE. The managements were happy feasting on perpetual federal largesse/subsidies. I believe Intel received around $8 billion from Chips Act ? Will the cynics among us be surprised if Intel squanders all those $$ ??
With apologies to Ricky Bobby’s Dad, if you’re not a three trillion dollar company, you’re a zero dollar company.
Coincidentally, Intel was my first job out of college. It’s always been a very insular, promote-from-within culture. They should have cleaned house 20 years ago and brought in outside talent because it’s clear they completely lost the plot once PCs were no longer the primary way people went online.
A more apt corporate comparison for Intel is Kodak. At some point, a phone started taking good enough digital pictures and people didn’t need film or fancy cameras (unless they were professionals). Kodak didn’t see the writing on the wall until it was too late.
That being said, I have to imagine a more capable company might be interested in buying Intel and turning them into a useful resource at their current valuation. I’m certainly not going to bet my money on it though. It provided some great fodder on r/wallstreetbets this week though and isn’t that why we are all really here?
Those vxx calls are finally feeling good
Deja vu all over again?
In 1979 the US bailed out Chrysler, for a lot of reasons, but primarily because they built Sheman Tanks and we were still in the Cold War. We were leaving a period of high interest rates and headed towards a recession the following year. A Democrat was in the White House.
We bailed out Chrysler again, along with GM, in late 2008, under a Republican Administration this time, because the idea that the auto Industry might fail was deemed not good for the country. As we were slipping into GFC.
Chips today are certainly as important and strategic as tanks were in 1979. The US already is on the hook for $8.5 billion with Intel. Half the republican ticket is from the Ohio, and the other half doesn’t seem to care very much for Taiwan in general. Will it be “in for a penny, in for a pound”?