00:00 Speaker A
It’s now time for some of today’s trending tickers. We are watching Nvidia, Apple, and Wall Street banks. First up, several Wall Street firms cutting their price targets on Nvidia stock after the chip maker disclosed that it anticipates a $5.5 billion charge from new chip curbs. The US government told Nvidia earlier this month it would need a special license to export certain chips to China. Analysts at BFA Global Research, Piper Sandler, and Raymond James all lowering their price targets on the news. And also, Steve, what I also thought was really interesting here is an analyst over at City talking about how it’s not just about Nvidia. This could also impact Broadcom. This could also impact other chip names in the space.
00:46 Steve
Well, you’re seeing them, you’re seeing them sell off today. I mean, you know, AMD announced an $800 million charge along in there. Um, you know, Broadcom was trading lower this morning as well. ASML was trading lower, although they released earnings, but, but they’re all, they’re all part and parcel of this. This is not good news for the chip sector, because, you know, I, I don’t mean to just sound like a broken record, but this is uncertainty, and uncertainty, the markets don’t love uncertainty.
01:28 Speaker A
Well, speaking, speaking of uncertainty, let’s get to another name we’re looking at. Apple’s main suppliers in India shipping roughly $2 billion worth of iPhones in March ahead of President Trump’s reciprocal tariffs announcement. That is according to new customs data. Smartphones have since secured a temporary reprieve from tariffs, but persistent tensions between the US and China threaten the iPhone maker’s China-focused supply chain in the longer term. The Wall Street Journal reporting Apple is investigating moving some iPhone production to the US, but the process could take years, and CEO Tim Cook has said in the past that it would be difficult to find the skilled labor in America that’s needed to build the smartphones. Treasury Secretary Scott Beson dismissed that comment and concern in an interview with Yahoo Finance.
02:20 Scott Beson
You don’t need a PhD in mechanical engineering to assemble an iPhone. So, I, I’m not sure why Tim Cook says that the skills aren’t here.
02:49 Speaker A
And Steve, I think what analysts who cover Apple might say and investors might say is that that skilled labor does take years to build up, and it’s certainly something that allows Apple to turn out these iPhones incredibly quickly.
03:08 Steve
Well, that’s it. I mean, every, you know, labor now is not just, you know, pounding a hammer or nail. There, there’s, there’s, there’s intricacies in the supply chain. You know, I, I know that, you know, the commerce secretary with his comment, you know, we’re going to have lots of people screwing tiny little screws into things. That’s not what people really want. You know, we want the high-tech value-added manufacturing because, quite frankly, our cost basis is higher. So, if there’s value-added stuff to be done, that’s great. If it’s just, if it’s just bringing low-skilled labor, bringing back low-skilled jobs, that’s not necessarily, you know, I understand the need for that, particularly maybe in some strategic industries, but overall, I think we want people bringing a skill set to it. You know, I saw a statistic, this was posted on, on, on Twitter by my friend Frank Luntz who I trust. Um, and he got the statistics from the Cato Institute. 80% of the people when asked, said, do you want more manufacturing in the US? 80% said yes. When asked, would you take a factory job? 75% said no. 23% said yes. The other two said I already have a factory job. So, it, it’s, you know, it’s one of these, it’s nice in theory, but in practice, um, you know, you need skilled, the people who are going to take these jobs, by definition, are really going to be skilled labor. Not, not just, you know, people, not just, you know, automatons screwing in screws.
05:26 Speaker A
Yeah. Right. The price that they’re requiring for their labor requires it to be skilled. All right. Finally, trading desks at some of the biggest names in banking crashed in, cashed in, rather, on market volatility in the most recent quarter. And that is not including the past two weeks, which fell outside of that reporting period. Morgan Stanley, JPMorgan, Goldman, all seeing record equity trading revenue during the quarter. Despite the blockbuster results, executives did express some caution about the current macro backdrop. JPMorgan’s Jamie Dimon warning of considerable turbulence roiling the US economy. Well, Goldman’s David Solomon said the prospects of a recession had increased. You couldn’t pay Solomon to mention the word tariffs, but he did semi-maybe allude to it in that comment. Is this trading revenue for banks a signal of strength in your view, Steve? Or is this something that can kind of hide any economic macro concerns?
06:29 Steve
Kind of the latter. You know, I remember I spent the bulk of my career as an option trader, and I used, I loved environments like this. Um, you know, and to Jamie Dimon’s comment, you know, about turbulence, you know, I always described VIX as sort of the price of a parachute when the plane hits turbulence at some level. You know, people want that protection. But here’s what happens during volatility with, if you’re an active trader. You widen your spreads, you shrink your sizes. So, effectively that really impairs liquidity, but if you’re the person trading off those bid offs, bid-ask spreads, each trade you do is more profitable. And so, yes, that leads to the trading desks making more money, but really, you know, analysts typically discount that over time. It’s actually a little odd this quarter that the analysts are very happy that the banks are making all this money trading because for years, again, as a trader at a publicly traded firm, the analysts were always very dismissive when we had a good quarter.
07:51 Speaker A
Yeah. Right, right, because it’s potentially not a sign of continued gains for, for the banks. Steve, thank you so much for sticking with us. For our audience, you can scan the QR code below to track the best and worst performing stocks with Yahoo Finance.
08:09 Steve
Exactly. My pleasure.