Let’s take a look at some top stories from around the markets including headlines in the biotech and tobacco spaces, some household names facing material selling pressure, and the significant impact of massive wildfires in California.
By Kris Rosemann
Market volatility persists as of the November 12 trading session. Concerns surrounding global trade disputes and a stronger dollar are weighing on investor expectations, and multiple big name companies facing selling pressure only add to less than rosy outlooks. The biotech space (XBI) remains under pressure with future price uncertainty providing a material overhang, and big tobacco is under pressure as a result of the potential for a ban on menthol cigarettes from the FDA. Simulated newsletter portfolio holding Altria (MO) is among those impacted by the news, but British American Tobacco (BTI) may be most exposed as a result of US menthol cigarettes accounting for a material portion of its business.
Simulated newsletter portfolio holding Apple (AAPL) and General Electric (GE) are among the big names being punished by Mr. Market November 12. General Electric is reiterating its commitment to shoring up its balance sheet as management after new CEO Larry Culp noted that the company has “plenty of opportunities through assets sales to do that.” Shares of the once sprawling industrial giant have lost their appeal to income-oriented investors following the slash of the quarterly dividend to a token payout of $0.01 per share, “GE Slashes Dividend Again; Will Reorganize ‘Power’ Business.”
Apple is the subject of a number of iPhone target cuts, and iPhone suppliers are also facing pressure after Lumentum (LITE) lowered its guidance on lower orders from customers. Expectations for a stronger dollar are weighing on important emerging market iPhone sales performance projections as emerging markets account for nearly half of iPhone unit volume, and the average emerging-market currency has depreciated roughly 15% against the US dollar from a year ago. These unit concerns come after Apple announced it would no longer report iPhone unit sales data in its quarterly earnings reports, “Apple Turns in Solid Quarter; Will Stop Reporting Unit Sales Figures,” and iPhone supplier concerns have the potential to provide a material drag on the entire tech sector (XLK).
California utility PG&E (PCG) is facing levels of volatility very rarely seen for a company with what is supposed to be an ultra-stable business as it faces tremendous levels of risk related to its culpability in the raging California wildfires. Estimates peg the death count at roughly 30 as of the morning of November 12, but that figure is almost certain to rise, as is the level of liability for PG&E if recent reports tying a faulty transmission line to the start of the blaze prove to be true. Edison International (EIX) also saw its share price drop precipitously after a subsidiary noted a power outage occurred near a suspected starting point of the fires near Los Angeles.
Tobacco: BTI, MO, PM, SWM, VGR
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Kris Rosemann does not own shares in any of the securities mentioned above. Some of the companies written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.