More signs of trouble ahead.
Do you remember chip shortages?
Well, via Bloomberg:
Intel Corp., the largest maker of computer processors, dragged down chip industry stocks after executives said a weaker economy will affect demand and hurt financial performance.
“I think on the macro side, clearly, it’s weaker,” Chief Financial Officer Dave Zinsner said Tuesday at a Bank of America conference. “That’s clearly going to impact us, as it will virtually everybody else in not only the semiconductor industry but globally in terms of corporations.”
Zinsner’s comments added to concern that booming demand for semiconductors and electronics in general is going to be slowed by inflation and weaker consumer and corporate spending. Zinsner declined to update the company’s projections for the second half of the year, forecasts that some analysts had already projected were too optimistic.
The Santa Clara, California-based company’s products are the heart of the majority of the world’s personal computers and are the key component in most of the servers that run data centers and corporate networks.
Meanwhile, Morgan Stanley has had some thoughts about cigarettes.
Shares of tobacco company Altria Group took a dive Wednesday after Morgan Stanley downgraded the company to underweight and lowered its price target from $54 to $50.
Inflation concerns were cited as a primary reason for the downgrade, which sent the stock down more than 6% as of 10:45 a.m. ET.
“Smokers skew toward low-income consumers, who are disproportionately impacted by rising gas and food prices,” analyst Pamela Kaufman wrote in a note. “We anticipate greater pressures from rising gas prices and weaker consumer sentiment, which should weigh on cigarette volumes and enhance trade down risk.”
Morgan Stanley believes there is an inverse relationship between gas prices and cigarette sales—and gas prices on Wednesday were averaging $4.95 nationwide, according to AAA.
For some reason, this came to mind.
And then, via CNBC:
Total mortgage application volume fell 6.5% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Demand hit the lowest level in 22 years.
That is partly a function of the fact that (as CNBC mentions) very few people are going to be refinancing existing mortgages at the moment (refinancings are down 75 percent from where they were a year ago), but still . . .