How Is Tesla Stock Faring After the Musk-Trump Breakup?
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WASHINGTON (Reuters) – U.S. President Donald Trump on Wednesday called on Federal Reserve Governor Lisa Cook to resign, citing a call by the head of the U.S. Federal Housing Finance Agency urging the Department of Justice to probe Cook over alleged mortgage fraud. Representatives for Cook could not be immediately reached for comment on the allegations posted by FHFA Director Bill Pulte on X earlier on Wednesday. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
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Consumer Strength Signal Flashing Short-Term Caution Sign
Comparing the Consumer Discretionary Select Sector SPDR Fund (XLY) to the Consumer Staples Select Sector SPDR Fund (XLP) is a popular way to measure the strength of the consumer. The XLY is a consumer discretionary exchange-traded fund (ETF). Its two biggest holdings by far are (AMZN) and Tesla (TSLA), followed by Home Depot (HD) and Booking Holdings (BKNG), which provides online reservations for travel and restaurants. These companies will thrive only if consumers have enough to spend after their basic needs are met. The XLP is a consumer staples ETF whose biggest holdings are Walmart (WMT), Costco (COST), Procter & Gamble (PG), and Coca-Cola (KO). These companies provide basic groceries and everyday hygiene products, which are considered necessities. Invest in Gold Priority Gold: Up to $15k in Free Silver + Zero Account Fees on Qualifying Purchase Thor Metals Group: Best Overall Gold IRA American Hartford Gold: #1 Precious Metals Dealer in the Nation The theory is the XLY will outperform if consumers have plenty of money left over after necessities. This has been the case over the past four months. The relative strength of the XLY to the XLP has spiked above 1.20, its biggest reading since the beginning of the year. The chart below shows just a few instances of similar spikes over the past 10 years. The market, according to this measure, is indicating healthy consumer strength. Next, I look at historical instances of pops in the XLY/XLP relative strength to see how stocks performed going forward. When XLY Outperforms XLP I want to know if this spike in the consumer strength indicator has tended to lead to bullish stock returns. I went back to 1999, the first full year we have data on the two ETFs, and found times that the XLY/XLP four-month relative strength moved above 1.20. There have been 9 past occurrences. The table below summarizes the S&P 500 returns after them. The second table shows typical S&P 500 returns for comparison. Stocks tend to do poorly in the short term. The S&P 500 averaged a loss of 0.82% over the next month, with just 33% of returns positive. Over the next three months, the index gained just 0.44% on average, with 44% of the returns positive. The typical three-month return for the index was 1.82% with 67% of returns positive. The longer-term returns look better than the short-term returns. The six- and 12-month average returns are close to the market average. Looking at the individual signals is interesting. The table below shows the dates of each signal and subsequent S&P 500 returns. There's reason for optimism, as the first few signals were very bearish for stocks, especially in the long term. The recent signals have been much more bullish for the six and 12 month windows. The last five times this has signaled, the S&P 500 was positive every time over the next year, with a minimum return of 11.8% and an average of 26%. Above, we saw how the S&P 500 tended to perform after these XLY/XLP relative strength signals. The tables below summarize the returns of the two ETFs. The first table has the returns of the consumer discretionary ETF (XLY). The second table shows the consumer staples (XLP). You can't make a strong conclusion with only nine data points, but based on the data below, the XLY (consumer discretionary) stocks have done better after these stocks than the XLP (consumer staples) stocks. The XLY has also outperformed the S&P 500 after these signals. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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Trump thinks owning a piece of Intel would be a good deal for the US. Here's what to know
SAN FRANCISCO (AP) — President Donald Trump wants the U.S. government to own a piece of Intel, less than two weeks after demanding the Silicon Valley pioneer dump the CEO that was hired to turn around the slumping chipmaker. If the goal is realized, the investment would deepen the Trump administration's involvement in the computer industry as the president ramps up the pressure for more U.S. companies to manufacture products domestically instead of relying on overseas suppliers. What's happening? The Trump administration is in talks to secure a 10% stake in Intel in exchange for converting government grants that were pledged to Intel under President Joe Biden. If the deal is completed, the U.S. government would become one of Intel's largest shareholders and blur the traditional lines separating the public sector and private sector in a country that remains the world's largest economy. Why would Trump do this? In his second term, Trump has been leveraging his power to reprogram the operations of major computer chip companies. The administration is requiring Nvidia and Advanced Micro Devices, two companies whose chips are helping to power the craze around artificial intelligence, to pay a 15% commission on their sales of chips in China in exchange for export licenses. Trump's interest in Intel is also being driven by his desire to boost chip production in the U.S., which has been a focal point of the trade war that he has been waging throughout the world. By lessening the country's dependence on chips manufactured overseas, the president believes the U.S. will be better positioned to maintain its technological lead on China in the race to create artificial intelligence. Didn't Trump want Intel's CEO to quit? That's what the president said August 7 in an unequivocal post calling for Intel CEO Lip-Bu Tan to resign less than five months after the Santa Clara, California, company hired him. The demand was triggered by reports raising national security concerns about Tan's past investments in Chinese tech companies while he was a venture capitalist. But Trump backed off after Tan professed his allegiance to the U.S. in a public letter to Intel employees and went to the White House to meet with the president, who applauded the Intel CEO for having an 'amazing story.' Why would Intel do a deal? The company isn't commenting about the possibility of the U.S. government becoming a major shareholder, but Intel may have little choice because it is currently dealing from a position of weakness. After enjoying decades of growth while its processors powered the personal computer boom, the company fell into a slump after missing the shift to the mobile computing era unleashed by the iPhone's 2007 debut. Intel has fallen even farther behind in recent years during an artificial intelligence craze that has been a boon for Nvidia and AMD. The company lost nearly $19 billion last year and another $3.7 billion in the first six months of this year, prompting Tan to undertake a cost-cutting spree. By the end of this year, Tan expects Intel to have about 75,000 workers, a 25% reduction from the end of last year. Would this deal be unusual? Although rare, it's not unprecedented for the U.S. government to become a significant shareholder in a prominent company. One of the most notable instances occurred during the Great Recession in 2008 when the government injected nearly $50 billion into General Motors in return for a roughly 60% stake in the automaker at a time it was on the verge of bankruptcy. The government ended up with a roughly $10 billion loss after it sold its stock in GM. Would the government run Intel? U.S. Commerce Secretary Howard Lutnick told CNBC during a Tuesday interview that the government has no intention of meddling in Intel's business, and will have its hands tied by holding non-voting shares in the company. But some analysts wonder if the Trump administration's financial ties to Intel might prod more companies looking to curry favor with the president to increase their orders for the company's chips. What government grants does Intel receive? Intel was among the biggest beneficiaries of the Biden administration's CHIPS and Science Act, but it hasn't been able to revive its fortunes while falling behind on construction projects spawned by the program. The company has received about $2.2 billion of the $7.8 billion pledged under the incentives program — money that Lutnick derided as a 'giveaway' that would better serve U.S. taxpayers if it's turned into Intel stock. 'We think America should get the benefit of the bargain,' Lutnick told CNBC. 'It's obvious that it's the right move to make.' Michael Liedtke, The Associated Press
