Current Market Is Priced For Perfection

Published on

In his podcast addressing the markets today, Louis Navellier offered the following commentary.

Priced for Perfection

The current market is priced for perfection. When a company comes out, beats, and guides higher, it still can go down if there are any concerns or worries. The best case study was probably Tesla Inc (NASDAQ:TSLA). Tesla announced its second-quarter results on Wednesday and its sales, earnings, and operating margins were all impressive. 

However, Elon Musk cautioned investors that further price cuts may be necessary, despite price cuts of 14% to 28% this year on its EVs.  Furthermore, Musk said that Tesla would scale back its production in the third quarter to update its factories.

Finally, Musk said that Tesla is investing heavily in supercomputers to develop autonomous driving based on all the data that its cars collect on the road. Musk’s comments about Tesla’s autonomous driving development apparently hurt the stock since the company abandoned lidar systems to see animals and people to avoid collisions. No matter how much data Tesla has, a lidar system is superior to Tesla’s camera system to protect occupants from hitting deer, pedestrians, etc.

Taiwan Semiconductor (NYSE:TSM) is building this big plant in Arizona and they postponed staffing it to 2025 because they can’t find “qualified workers”. That’s a bit alarming. Obviously, the Biden administration is trying to onshore a lot of businesses. Semiconductor production is a big deal and if we don’t have the workers, we can’t have the plants.

Nevertheless, earnings are coming in very strong. But again, everything is priced for perfection. There also seems to be a little anxiety on some of the top tech stocks as they are going to get a haircut on Monday on the NASDAQ realignment. The seven giant tech stocks are going to be trimmed. Meanwhile, Netflix is not being trimmed but is actually being added to.

Itchy Trigger Finger

Speaking of Netflix Inc (NASDAQ:NFLX), they had very good results and added a lot of subscribers. Their crackdown on passcode sharing seems to be working very well, and they’re moving upscale on the price of their services.

But what’s interesting is that the stock still got hit which might be due to the Hollywood strike or other concerns they had but it shows that Wall Street has an itchy trigger finger to take profits.

Building New Homes

The Commerce Department on Wednesday announced that single-family home starts declined 7% in June to 935,000 after surging 18.7% to a revised annual pace of 1.005 million (up from 997,000 previously reported).  May was the highest level for single-family home starts since June 2022. 

Also notable is that building permits for single-family homes rose 2.2% in June to an annual pace of 922,000.  The Wall Street Journal reported that many folks do not want to sell their single-family home due to low mortgage rates in the past few years, so effectively home builders are being forced to build more new homes since the inventory of existing homes for sale remain abnormally low.

Coffee Beans: Fit as a Fiddle

A California man who was named the world’s oldest bodybuilder in 2015 had his title updated when he participated in a recent competition at age 90. The athlete said he started lifting weights at age 15. Source: UPI. See the full story here.