The Federal Reserve won’t be able to rescue investors if the stock market dives again – MarketWatch

At the time of this writing, the U.S. stock market has risen nine weeks in a row, following a slump in December.

There has essentially been a risk-free market since Federal Reserve Chairman Jerome Powell famously caved on Jan. 4, signaling flexibility on the central bank’s balance sheet runoff. Every dip in prices is bought, and stock market bears, not bulls, are increasingly looking as if they’re the ones who are trapped.

The parade of central bank jawboning has been as spectacular as it has been global. Consider what signals have been sent to markets by central banks in just the past few weeks:

• The Fed: No more interest-rate hikes, flexible on balance sheet reduction, even open to stopping it altogether and discussing making bond purchases a regular tool, not just an emergency measure. I thought we were done with those? Is quantitative easing (QE) 4 coming?

• The European Central Bank (ECB): Discussing bringing back LTRO (long-term refinancing operations), which would constitute another liquidity infusion. Didn’t they just end QE six weeks ago?

• Bank of Japan (BOJ): Ready to ease monetary policy more. More? They never stopped, and the BOJ famously owns more than 75% of the Japanese ETF market already.

­• People’s Bank of China: Has added record liquidity infusions in 2019, desperate to provide liquidity to its lending market.

There is no doubt that renewed global central bank capitulation has succeeded in levitating asset prices from the abyss in December. Greed is back, daily headlines are hinting at a successful China trade deal to come, and President Trump tweeting “up, up, up” all add up to a buying-panic atmosphere.

Global growth slowing? Who cares. Buy stocks vertically up:

A couple comments of principle on this linear Dow Jones Industrial Average
DJIA, -0.40%
 chart: 1. This is not a chart of a stable, normal bull market; it’s a highly erratic chart. 2. Vertical, extreme tight channel ramps don’t have happy endings, and this is most extreme tight channel ramp in many years. These ramps can extend, no doubt, but they eventually end in tears as we saw in February 2018, except this ramp is even steeper. 3. Central bank capitulation amid slowing macro data have proven bears right, as I outlined the other day. Central banks panicked and once again participants are witness to the awesome hold central banks have on equity prices.

But while central banks appear to have won the battle, there is one chart that strongly suggests they’ve already lost the war.

There’s a chart I’ve been watching for years, and it’s not an index chart; rather it is a ratio-driven chart that divides the S&P 500
SPX, -0.35%
 into CPI (consumer inflation) and it produces a fascinating picture:

For decades this ratio has followed a repetitive pattern: During bull markets, the ratio rises and then forms lows coinciding with market corrections. Those lows form along a very precise trend line. When markets enter a topping process, the ratio wobbles, becomes unstable in its ascent until the ratio breaks below the trend line coinciding with a bull-market top. And each time the ratio breaks, that break coincides with a break in the S&P 500 bull-market trend. At the same time, as we’ve seen with index chart tops, the relative strength index (RSI) prints a negative divergence (a lower high) while the ratio prints a new high. All of these things have now again come to fruition.

Coincidence? Judge for yourself by looking at the chart above.

What is clear is that the ratio broke its trend line in December for the first time since 2009. The two previous breaks marked the end of bull markets and brought about sizable bear markets. But note also that those bear markets experienced sizable bear-market rallies first. I’ll use a chart of the industrials
XLI, -0.41%
here to illustrate the point:

It sends the same message as the CPI ratio chart: The war is already lost, no matter how desperate central banks are in attempting to re-inflate asset prices. The larger message I take away from this: Market strength is an opportunity to sell, especially considering that this rally remains untested, technically uncorrected and dovish central banks have now been fully priced in. But, hey, perhaps it’s different this time. It has to be, otherwise the CPI ratio chart suggests new lows are coming.

Sven Henrich is founder and the lead market strategist of He has been a frequent contributor to CNBC and MarketWatch, and is well-known for his technical, directional and macro analysis of global equity markets. His Twitter handle is @NorthmanTrader.


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AMAT – If Data Is the New Oil, This Stock Will Soar

For the past 10 years or so, a popular phrase in the technology industry has been, “data is the new oil.” The thinking behind that saying is that while oil powered much of the 20th-century economy, the collection, processing, and use of data in decision-making would power the economy of the 21st century.
Given the current massive shortage of semiconductors coming out of the pandemic pushing up prices for various goods, especially cars, it looks as though that term is turning out to be true.
Assuming accelerating data growth continues this decade and beyond, Applied Materials (NASDAQ:AMAT), the largest, most diverse semiconductor equipment company in the world, stands to benefit handsomely. Yet although the company just reported another strong quarter last week, miraculously, the stock still trades at a cheaper valuation than the overall market.

Image source: Getty Images.

Another quarter of booming growth
In the company’s fiscal third quarter ending in June, Applied’s revenue surged 41%, while earnings per share grew a whopping 79% and free cash flow doubled. Applied has the largest and broadest portfolio for semiconductor equipment in the industry, spanning etch, deposition, metrology, and even advanced packaging, along with a slew of value-add services. 
Currently, just about all of Applied’s segments are firing on all cylinders, with each of its segments outperforming expectations, according to management. Though the semiconductor equipment industry is in a boom right now, Applied took market share last year on top of that, despite its already being the largest company in the space.
So why’s it so cheap? 
Despite these eye-opening results, Applied Materials’ stock still trades at a discount to the market, at 19.3 times this year’s earnings estimates (its fiscal year ends in September). That’s below the 31 P/E ratio of the S&P 500 and even lower than the 22 P/E forward ratio for the S&P based on next year’s earnings estimates.
With a high-margin business and balance sheet with $6.1 billion in cash against just $5.5 billion in debt, Applied Materials is also repurchasing shares at what seems like a great price. Last quarter, the company bought back $1.5 billion in stock. If one annualizes that to $6 billion, that’s good enough to retire 5.2% of the company’s shares at current prices, on top of a 0.75% dividend, good for a total shareholder return of nearly 6%.
The reason investors may not be giving Applied Materials its due is due to the highly cyclical past of the semiconductor industry, which has traditionally caused rather large swings in equipment sales from year to year. 

Applications like 5G and artificial intelligence are driving a semiconductor super-cycle. Image source: Getty Images.

Why Applied’s future may not be as cyclical in its past
While it’s always dangerous to say “this time is different,” there are a number of reasons why semiconductor equipment sales should be more consistent into the 2020s, and why companies that produce them should also be more resilient.
First, given the increasing importance of semiconductors, as well as the difficulty and capital intensity of producing leading-edge chips, chip foundries have announced multi-year investment plans, to the tune of hundreds of billions of dollars. On the conference call with analysts, Applied’s management disclosed a backlog of orders reaching nearly $10 billion — an all-time record for the company.
At the same time, Applied Materials and its peers have also developed lots of value-add services to help customers get the most of out of their machines, while also developing recurring subscription services within that services segment, which currently makes up 21% of revenue. Chief Financial Officer Dan Durn talked at length about Applied’s growing recurring revenue segment on the conference call:

Connecting the installed base to our AIx servers enables us to perform data-enabled services for our customers. Today, we have just over 4,300 connected tools, which is up over 30% from our 2020 baseline. We’re also growing the number of secure remote connections, which allows us to connect our best experts to the installed base to perform remote analytics, diagnostics, and optimization from anywhere in the world. The number of remote-connected tools now exceeds 3,200, which is up over 36% from our 2020 baseline. Another key focus is transitioning our recurring revenue to subscriptions in the form of long-term service agreements. Today, we’re generating 60% of our recurring revenue from subscriptions, and our goal is to reach around 70% by 2024. We also have a subscription renewal rate of around 90%. Another sign of customer value is the tenure of the agreements. Across the entire base of subscription agreements, we’ve increased the tenure from 1.9 years at the end of 2020 to 2.2 years today. In fact, of our subscriptions booked in Q3, 77% were multi-year agreements. We track all of these KPIs very closely. Finally, another key metric we disclose is AGS segment operating margin, which provides a good indicator of the value our services bring to customers. In Q3, it crossed 30% for the first time in 15 years.

Another point of good news on the services front is that Applied’s machine sales are growing faster than overall company sales, with systems revenue up 53% last quarter. Applied earns services revenues based on the number of chambers in its installed base, so those surging equipment sales should lead to future recurring services revenues for the life of those machines it’s selling today.
Given the long-term spending plans by customers and rising recurring services revenues, Applied’s current financial strength could be more consistent in the future than the market is giving it credit for. If that’s true, shares sure look cheap after its 13% pullback from recent highs.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

PTON – Peloton's rowing machine may finally be on the way after years of speculation, a report says

Peloton’s rowing machine is coming soon, according to a new report.

Ezra Shaw/Getty Images

Peloton’s rowing machine could be in the works, according to a new report from
The website analyzed Peloton’s latest Android app update, and found coding that referenced rowing.
This included instructions on how to row and references to a “Just Row” setting. 

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Peloton’s hotly-anticipated rowing machine could be on its way, according to a new report from the latest update on Peloton’s Android app, the website found code that hinted at new rowing features, such as instructions on a rowing stroke and references to a rowing setting similar to the “Just Run” mode on its $4,000 treadmill.Insider asked Peloton for comment on this report but did not immediately hear back. Rumors that Peloton would launch a rowing machine have circulated for years. Peloton CEO John Foley confirmed in an earnings call this year that the company would launch new products in the next fiscal year, but did not go into details.

The high-tech fitness brand has diversified from its core product, its $2,000 bike, to try to attract new customers and compete in the increasingly competitive home-fitness market. Read more: How Peloton is leading the revolution in smart home gymsExperts say that indoor rowing is the next big opportunity. The main player is Hydrow, which was set up in 2017 by former US National rowing coach Bruce Smith. Hydrow lets customers livestream classes led by professional athletes on the water in cities such as Miami, London, and San Francisco. Its rowing machines start at $2,245.”We see it as the fastest-growing modality in fitness,” Michael Farello, a managing partner at L Catterton — a consumer-focused private equity firm that is invested in several fitness companies including Equinox and Hydrow — told Insider in 2020.

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SBUX – How to Invest in Starbucks for Less Than the Cost of a Cup of Coffee

Whether you’re a fan of Starbucks (NASDAQ:SBUX) or not, the coffee giant has had a pretty good year. Its stock price is up almost 49% over the past year, and as of this writing, it’s sitting at about $115 a share.
Now to be clear, you can buy shares of Starbucks for a lot less money than many other companies out there. But what if you don’t have $115 on hand to invest right now? What if you only have a very small amount of money that you’re able to transfer into your brokerage account?
The good news is that it’s possible to invest in stocks with very little money. Here’s how you can own a piece of Starbucks, even if you can’t afford much more than the price of one of its lattes.

Image source: Getty Images.

Welcome to fractional investing
These days, more brokerage accounts are letting investors put money into fractional shares. When you buy a fractional share of a stock, you get to own a portion of a share — not a full share. Think of it as buying one slice of a pizza pie if you’re not hungry enough to need an entire pie to yourself.
If you don’t have $115 to sink into a share of Starbucks right now, but you do have about $57, you can purchase half a share. And then, if the value of Starbucks goes up, you’ll profit on a proportionate basis.
The upside of fractional investing
The great thing about buying fractional shares is that money doesn’t have to get in the way of you owning the companies you want. And that could, in turn, help you assemble a more diverse portfolio.
A diverse portfolio could be your ticket to growing a lot of wealth over time. It could also protect you in the event of a stock market crash.
One thing you should know is that not all brokerage accounts offer the option to purchase fractional shares, but many of them do. If your current brokerage doesn’t allow you to purchase partial shares, you may want to consider moving your money elsewhere.
Another thing you should know is that if you’re going to buy fractional shares of any given company, it’s important that you do the same research as you’d do if you were buying a full share. Or, to put it another way, don’t just invest in Starbucks because you’re a fan of its coffee. Rather, take a look at its financials.
Is Starbucks managing its cash flow well? And what plans does it have to adapt in an age when some customers may not be eager to gather in coffeeshops due to the pandemic? These are important questions to answer before you invest your money — even a small amount of it.
Starbucks may be a great fit for your investment portfolio. And the good news is that you can buy it even if your budget is limited to the cost of an iced tea and muffin. Just make sure to do your research so you can buy Starbucks with confidence — even if you’re only scooping up a piece of a single share.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

ATHA – FINAL DEADLINE TUESDAY: ROSEN, A LEADING LAW FIRM, Encourages Athira Pharma, Inc. Investors to Secure Counsel Before Important August 24 Deadline in Securities Class Action – ATHA

New York, New York–(Newsfile Corp. – August 23, 2021) – WHY: New York, N.Y., August 22, 2021. Rosen Law Firm, a global investor rights law firm, reminds purchasers of the securities of Athira Pharma, Inc. (NASDAQ: ATHA): (a) pursuant and/or traceable to the Company’s initial public offering conducted in September 2020 (the “IPO” or “Offering”); and/or (b) between September 18, 2020 and June 17, 2021, both dates inclusive (the “Class Period”), of the important August 24, 2021 lead plaintiff deadline.SO WHAT: If you purchased Athira securities pursuant and/or traceable to the Company’s IPO and/or during the Class Period you may be entitled to compensation without payment of any out of pocket fees or costs through a contingency fee arrangement.WHAT TO DO NEXT: To join the Athira class action, go to or call Phillip Kim, Esq. toll-free at 866-767-3653 or email or for information on the class action. A class action lawsuit has already been filed. If you wish to serve as lead plaintiff, you must move the Court no later than August 24, 2021. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation.WHY ROSEN LAW: We encourage investors to select qualified counsel with a track record of success in leadership roles. Often, firms issuing notices do not have comparable experience, resources or any meaningful peer recognition. Be wise in selecting counsel. The Rosen Law Firm represents investors throughout the globe, concentrating its practice in securities class actions and shareholder derivative litigation. Rosen Law Firm has achieved the largest ever securities class action settlement against a Chinese Company. Rosen Law Firm was Ranked No. 1 by ISS Securities Class Action Services for number of securities class action settlements in 2017. The firm has been ranked in the top 4 each year since 2013 and has recovered hundreds of millions of dollars for investors. In 2019 alone the firm secured over $438 million for investors. In 2020, founding partner Laurence Rosen was named by law360 as a Titan of Plaintiffs’ Bar. Many of the firm’s attorneys have been recognized by Lawdragon and Super Lawyers.DETAILS OF THE CASE: According to the lawsuits, the Offering documents contained, and defendants made, false and/or misleading statements and/or failed to disclose that: (1) the research conducted by the Company’s Chief Executive Officer and President, Leen Kawas, was tainted by Kawas’ scientific misconduct, including the manipulation of key data through the altering of Western blot images; (2) this purported research was foundational to Athira’s efforts to develop treatments for Alzheimer’s because it laid the biological groundwork that Athira was using in its approach to treating Alzheimer’s; (3) as a result, Athira’s intellectual property and product development for the treatment of Alzheimer’s was based on invalid research; and (4) as a result of the foregoing, defendants’ positive statements about Athira’s business, operations, and prospects, were materially misleading and/or lacked a reasonable basis. When the true details entered the market, the lawsuit claims that investors suffered damages.To join the Athira class action, go to or call Phillip Kim, Esq. toll-free at 866-767-3653 or email or for information on the class action.No Class Has Been Certified. Until a class is certified, you are not represented by counsel unless you retain one. You may select counsel of your choice. You may also remain an absent class member and do nothing at this point. An investor’s ability to share in any potential future recovery is not dependent upon serving as lead plaintiff.Follow us for updates on LinkedIn:, on Twitter: or on Facebook: Advertising. Prior results do not guarantee a similar outcome.——————————-Contact Information: Laurence Rosen, Esq.Phillip Kim, Esq.The Rosen Law Firm, P.A.275 Madison Avenue, 40th FloorNew York, NY 10016Tel: (212) 686-1060Toll Free: (866) 767-3653Fax: (212) 202-3827lrosen@rosenlegal.compkim@rosenlegal.comcases@rosenlegal.comwww.rosenlegal.comTo view the source version of this press release, please visit