🧸Micron: The Chips are Off💣

The equity market wobbled on Tuesday as other chip makers signalled a slowdown in demand. The chip woes are capping the upside on major indices. Micron Technology announced that it expects the sales for the current quarter to fall to the lower end of its guidance which was set at $6.8B to $7.6B. 

The weaker demand is hurting the business’s revenue, and it expects a hit on its profit margin and free cash flow. This comes after Nvidia warned about the weakening of global gaming chip demand. 

Pika World expects tech stocks to remain weak unless we see macroeconomic conditions brightening, such as today’s CPI data on inflation. 

🕹Roblox: Stocks fell on poor earnings🧽

The videogame company announced yet another worst-than-expected earnings report. The loss for the quarter is larger than expected. Roblox’s primary business enables children and teens to create virtual worlds that allow interaction. 

A critical metric, the average booking per daily active user, was down 21% on a year-over-year comparison despite average daily users up 21% from a year ago. It continued to be challenged in making its platform profitable, and investors appeared to be losing patience. 

🧨China: Unpredictable signs maintained💰

A muddy field described the Chinese stocks as analysts are re-evaluating China’s stock market given the recent regional Covid surges in the country. The zero tolerance for the spread despite economic consequences unnerves investors. 

On the backdrop is also geopolitics tension as the two largest economies and militaries remain in a tense mood given Pelosi’s recent visit to Taiwan. But, more importantly, analysts are seeing some intermittent signs of yet another tech crackdown after enjoying some months of reprieve. 

The property crisis in China is also pushing the tepid Chinese economy to the brink. Without a robust property market, analysts would see Chinese economic growth cool off to a level of a long-term 2% annual rate for the next ten years. 

For some investors, it appears that the path of Chinese stocks isn’t correlated to the real economy but perhaps a bet on government policy. 

Pika World maintains exposure to the Chinese market as we await more clarity. 

🍏What’s on the menu today?🍎

At 8.30 pm, we will receive the much anticipated CPI data. For the Monthly comparison, we expect inflation to fall from 0.7% growth to 0.5%. On an annual basis, we expect a decrease from 9.1% to 8.7%. 

This is critical as the first step in signalling that inflation has finally peaked and is coming down.