Wall Street on Edge: Inflation Spike, $58B Debt Test, and Trade Turmoil Collide
Warning! GuruFocus has detected 5 Warning Sign with META.
Despite the rebound from April's tariff-driven slide, institutional investors have yet to jump back into equities in full force. Deutsche Bank notes that institutional positioning has been this low less than a quarter of the time since 2010. JPMorgan and Barclays, however, suggest the tide could be turning, with more big money managers set to ramp up equity exposure. That shift hasn't shown up yetBank of America's clients were net sellers last week, with institutions pulling out while hedge funds and retail buyers stepped in. Strategist Jill Carey Hall thinks the market may have already priced in much of the deglobalization risk, but not the potential upside from underappreciated tax policy tailwinds.
On the corporate front, action is heating up. Tesla (NASDAQ:TSLA) isn't grabbing headlines today, but its peers are moving fast. Meta's (NASDAQ:META) CEO Mark Zuckerberg is going all-in on artificial general intelligence, quietly assembling a powerhouse team to build out the next big wave in AI. Boeing (NYSE:BA) just secured its biggest monthly order tally in over a yearmuch of it inked during President Trump's trip to the Middle East. Cisco (NASDAQ:CSCO) is rolling out new AI-powered upgrades across its networking portfolio to stay competitive in the enterprise race. Taiwan Semiconductor (NYSE:TSM) posted a 40% revenue surge in May as chipmakers rushed to build inventory ahead of potential trade roadblocks. Not everything was rosyMcDonald's (NYSE:MCD) was slapped with a rare sell rating from Redburn Atlantic, and Citigroup (NYSE:C) is preparing to book hundreds of millions more in loan loss provisions, signaling early cracks in consumer credit health.
This article first appeared on GuruFocus.
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CNBC
a minute ago
- CNBC
Why a great company's beat and raise was sold, and what I plan to do with the stock
When is a beat and raise not a beat and raise? That's a question that has frustrated us this earnings season. Case in point: How about Honeywell 's beat and raise last week? Here's a conglomerate splitting into three different companies, which also has a quantum computing business that's probably more advanced than any of the publicly traded quantum entities. Honeywell has an amazing aerospace business that handles the cockpit for most commercial airlines and a host of other accoutrements, including propulsion. It will very much participate in the aerospace boom and is only being held back by how many planes Boeing is allowed to make each month. That number will be going up soon. The automation business is about, among other things, industrial cybersecurity, smart grid, and regulated energy. There are underperforming divisions that if they are not fixed will be sold. The chemicals and materials businesses, including sustainable refrigerants, chemicals needed to make semiconductors and materials for carbon capture. Boring stuff but stuff that tends to be No. 1 in its category. The advanced materials business seems to be the legacy of Allied Chemical, which became Allied Signal, before merging with Honeywell. On last week's earnings call , management updated the timing on the breakup, saying the spinoff of advanced materials will happen in the fourth quarter. The other two are slated for the second half of 2026. At no point will these divisions be static. When there is something that can be done to make each better, it will be done, like the acquisition of Carrier 's global security business for $4.9 billion last year, a great price because Carrier needed to get to investment grade and did so by selling the division to Honeywell. Vimal Kapur, who became Honeywell's CEO in June 2023, takes after Dave Cote, the CEO before Darius Adamczyk. Cote is a legendary figure when it comes to creating value. I give you that history because Honeywell's stock, as of Friday's close, was down 0.7% year to date versus the S & P 500 's gain of 8.6% in 2025. Shares of Honeywell are trading nowhere near where they will trade as the split comes to fruition. Oddly, if it weren't breaking up, I think, at this point, it would trade higher than it does right now after that astonishing collapse last week based on, well, nothing. There was a margin issue in one division that will be fixed. There were two underperforming segments that will most likely go. There will be three companies that will either stand on their own or be bought by private equity, although the scarcity in aerospace company coupled with a pro-merger Federal Trade Commission will probably make that company a takeover target almost immediately. HON 1M mountain Honeywell 1-month performance While I have no idea why Honeywell's stock really collapsed, I can take the conspiratorial view, that some of the hedge funds who were short Kohl's decided to blow me up using a complex method of call buying and shorting. I know it seems phantasmagorical. But, when I started my Charitable Trust, whose holdings make up the CNBC Investing Club portfolio, I played open-handed and took fire quite often — even dealing with some who hinted that's exactly what they were doing. That's a dangerous game. I know what I am doing. I make mistakes, but a company like Honeywell — and Dover and DuPont , for that matter — are not among them. The Club owns all three. Another possible reason: Honeywell's structure could be too hard to understand. There are a huge number of divisions within divisions. You could ChatGPT these all day long and not figure out how they come together. But that's OK. That's what is being rectified by the planned split. But all of them are part of the reshoring and the reindustrialization of America. When you hear President Donald Trump getting $550 billion from the Japanese, Honeywell will get its share, whether it is from plane orders, or industrial buildings, or the myriad chemicals it takes to make things safely. Honeywell's split could be too far off. We call it spin purgatory , a period where nothing happens other than the back off separation of the divisions. Like with Honeywell, we're seeing that happen in DuPont, too, which trades like death. So, did Kenvue , when Johnson & Johnson spun it off. There's all of this red tape about new boards and new procedures that aren't everyday occurrences. No one can explain the length of time it takes. But it takes time and people aren't patient. They really want to wait until they see the whites of their separation eyes. It could also be the lack of real data center exposure. The only industrials that are working are the ones with data center exposure. While building automation within Honeywell has some, it is obviously not enough. What's my conviction based on then? How can I believe in Honeywell's stock, which does a beat and raise and it gets clobbered anyway; or that it has had a previous ones that were also poorly received, too? I give you a few reasons. First, discouragement is not a good quality to base an investment decision on. That's what I did with Emerson . It had two shortfalls, and I decided that its reorganization based around electrification wasn't going to work. I bolted after the second one. My total bad. They got it together even after a hostile bid that they won, and this very difficult to understand ugly duckling became a swan. I felt the same way with Oracle . The company had made a somewhat dispiriting acquisition of medical records company Cerner, and I had no idea what the hell that was about. Then it decided to get into data centers. Not once, but twice, they disappointed in their data center goal. I was livid. So, I kicked it out. It then ran higher. I had isolated two fantastic stock ideas. And, just when they got hammered a second time, I fled, right before they were recognized as great situations by everyone. I can't let that happen again. Curiously, the pain was the greatest after that second miss, when people were truly fed up. This one is the worst and, yet, I would argue it wasn't as bad a miss, if it were a miss at all. Second, people don't believe that Kapur can actually improve each of the three companies that are developing. They fear lost focus. They fear economic cycles. They fear that he is in the "wrong" industries even as private equity firms are routinely in the wrong industries, yet they are fine. Kapur knows how to multitask. Three, there is tremendous fright here in the way Honeywell stock trades, The moves are particularly vicious. They are from peak to trough, tremendously ugly, devoid of any support whatsoever. I wish I had an answer to this one. All I can say is that the decline has to be bought because the overreaction is ridiculous. I know when a stock is down nearly 14 points on a given day, as it was after Thursday's earnings print, it is typically not done going down. The selling from the previous day tends not to be finished. Too many sellers. And, that's what happened. Friday's opening hours were hideous as the sellers from Thursday finished. The stock market typically gives you clues about what a stock will do. When I find a stock breaking down as much as Honeywell, I know the queue to get out is a deep one and the process, if heavy institutional selling, means that a broker usually buys stock to work it by finding clients. If they can't be found you get what you got Thursday and Friday, the brokers just throw out what's left. Hence the Day 2 ugliness. Barring some craziness from the president, Honeywell is recharged and ready to go because, you see, it was a beat and raise. It was real — as will the next move. Bottom line So, what am I doing? Standing pat initially, waiting for my restrictions to run out. Remember, when I mention a stock on television, the Club must wait three days to trade it. Then, I am going to buy some because I am being given a chance to do so, like I did with Oracle and Emerson, and I didn't take them. Were they unique? Who knows? I do know this. I had done the work. I had conviction. Out of pique and frustration, I gave up. I am doing the opposite this time. (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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31 minutes ago
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Stock futures rise as U.S.-EU trade deal kicks off a hectic week for markets: Live updates
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Business Insider
an hour ago
- Business Insider
‘It's an Easy Call,' Says Top Investor About Palantir Stock
Palantir (NASDAQ:PLTR) stock, like any investment, requires weighing the potential rewards against the risks. While the company continues to perform exceptionally well, the primary – and arguably only – factor giving investors pause is its elevated share price. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. That concern hasn't slowed the stock's momentum. Palantir shares have surged by over 500% in the past 12 months, and late last week, the company reached yet another record high. Its valuation multiples now tower over sector medians by thousands of percentage points, raising questions about whether the fundamentals can keep pace with investor enthusiasm. Next week's Q2 earnings report, scheduled for August 4th, could provide a timely reality check. It offers a critical opportunity for the company to justify its lofty valuation – or fall short of the market's high expectations. Top investor Rick Orford, who's ranked among the top 1% of stock pickers on TipRanks, is leaning toward the former scenario. He anticipates another upswing in PLTR shares following the earnings release, making it an easy call given the current trajectory. 'Should Palantir hit its Q2'25 targets – and with how the wind is blowing, that could happen – I think Palantir shareholders will be pleased. His optimism is rooted in both historical performance and Palantir's current momentum. Historically, the stock has swung an average of 17.5% following earnings – a double-edged sword, but one that Orford believes will cut favorably this time. Central to that belief is the company's AI Platform (AIP), which helped drive a 39% year-over-year revenue increase last quarter. That growth has been especially notable in Palantir's U.S. commercial segment, where AIP adoption led to a 71% revenue spike in Q1. According to Orford, this surge reflects a broader trend: companies across the country are scrambling to implement AI but often lack the in-house expertise. Palantir's AIP provides them with a ready-made solution. 'American enterprises are most likely desperate to implement AI solutions, but not all of them have the technical expertise to do so. With AIP, these enterprises get what they need to implement custom AI into their operations,' the investor explains. Orford also sees Palantir's government work as a key stabilizing force. Its deep ties to the U.S. defense sector – with multi-year, high-margin contracts – offer a steady revenue stream that cushions any slowdown in the private market. 'Palantir checks all the boxes of an exciting, growing company that's at the intersection of two major trends: enterprise AI adoption and national defense modernization,' the investor sums up. 'Analysts say Hold, but history says otherwise.' Unsurprisingly, Orford gives PLTR shares a Strong Buy rating. (To watch Orford's track record, click here) The analyst consensus on PLTR is indeed a Hold, based on 10 Hold ratings, 4 Buys, and 3 Sells. The average 12-month price target stands at $109.50, implying a 31% downside from current levels. (See PLTR stock forecast) To find good ideas for stocks trading at attractive valuations, visit TipRanks' Best Stocks to Buy, a tool that unites all of TipRanks' equity insights.
