Wall Street Breakfast

Albemarle hits four-year-low as lithium prices slide

Albemarle (ALB) plunges to lowest in nearly four years as lithium prices keep sliding. (00:23) Commercial real estate risk may last for years, Fed's Powell warns. (01:40) Oracle (ORCL) dips after potential server deal with xAI falls apart. (02:45)

Episode transcripts seekingalpha.com/wsb.

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Duration:: 6m
Broadcast on:: 10 Jul 2024
Audio Format:: mp3

Welcome to Seeking Alpha's Wall Street Breakfast, where we cover the top news for investors every morning. Good morning! Today is Wednesday, July 10. I'm Julie Morgan. Albemarle takes a hit. The stress on commercial real estate isn't going away anytime soon, and Oracle's deal with XAI falls apart. Albemarle finished Tuesday's trading as the biggest loser on the S&P 500 down 8.7%. This is its lowest since October of 2020, as two Wall Street analysts cut their price targets for the stock. Baird analyst Ben Calo lowered his price target to $127 from $170, even while maintaining an overweight rating. He said lithium prices have remained at or below the low end of ALB's guidance, which sets up a week Q2 report for the company. Calo also noted concerns about the effect this year's U.S. elections could have on the electric vehicle markets, which directly affects lithium battery demand. The analyst sees automakers potentially holding back production or committing to more stringent transition targets afterwards as they await clarity on any potential changes in government EV tax credits. Additionally, UBS analyst Joshua Spector, who rates Albemarle at hold, trimmed his price target to $109 from $124. Other lithium producers also fell on Tuesday, including Standard Lithium, Sigma Lithium, Lithium Americas, Arcadium Lithium and SQM with Standard Lithium falling the most at 7.6%. The commercial property sector will remain stressed for years. That was the word from Federal Reserve Chair Jerome Powell to the Senate Banking Committee on the first day of its semi-annual testimony to Congress. Powell warned that it's a risk that has been with us and will be with us for some time, probably for years. He went on to say that banks should be honestly assessing what their risk is and that they need to be assured that they have the capital and liquidity and the systems in place to manage this risk. He noted that the Fed's stress tests of U.S. banks this year included commercial real estate risk. He said the conclusion is that large banks can manage this problem and most small banks can too. Regulators are keeping a close eye on smaller banks with higher exposure to CRE, with half of the $929 billion in CRE loans do this year in multi-family and office. According to data from the Mortgage Bankers Association, total outstanding commercial multi-family mortgage debt rose to $4.7 trillion at the end of Q1. Oracle slipped 3% on Tuesday following a report from the information that talks to expand a deal with XAI have fallen apart. According to the report, the startup and Oracle were in talks to expand an existing plan in which Oracle rents out specialized NVIDIA artificial intelligence chips to XAI. The chips were going to be used to build a supercomputer and the proposed deal was valued at as much as $10 billion. The AI data center will be built in Memphis, Tennessee, with the NVIDIA chips now supplied by Dell and Super Microcomputer. Elon Musk said in a post on X that XAI is building the 100K H100 system itself for fastest time to completion. He went on to say that Oracle is a great company and there is another company that shows promise also involved in that OpenAI GB 200 cluster. But he says when their fate depends on being fastest by far, he says they must have their own hands on the steering wheel rather than be a backseat driver. I have a few other articles I'd like to tell you about on Seeking Alpha. Albertsons and Kroger list the stores to be sold in a merger ahead of a trial next month. Elon Musk claims the New Tesla Optimus design will be completed in 2024. And Microsoft and Apple ditch OpenAI seats amid antitrust scrutiny. On our catalyst to watch for the day, Samsung's next Galaxy Unpacked event will take place in Paris. Industry watchers expect to see new foldables and smartwatches to be unveiled, as well as the arrival of the Galaxy Ring Smart Ring. Super Microcomputer, Gibraltar Industries, Federal Signal, and Helios Technology are some of the companies set to participate at the CJS Summer New Ideas Conference. Amazon will hold an AWS Summit in New York City. Nasdaq will release its latest short interest report. And Excellus Technologies will participate in the 16th annual CEO Investors Summit 2024. Now for a look at the markets today, as of 6am, Dow, S&P, and Nasdaq futures are in the green. Crude oil is up 0.2% at $81 a barrel. Bitcoin is up 1.9% at $58,000. In the world markets, the FTSE 100 is up 0.6%, and the DAX is up 0.7%. Baidu is on our list of the biggest movers of the day pre-market. Baidu is up 3% on the Nasdaq and was up about 10% in Hong Kong after Beijing authorities announced support for the introduction of Robotaxes and ride-hailing and car rental fleets in the city. On today's economic calendar, at 10am Federal Reserve Chairman Jerome Powell will testify before the House Financial Services Committee. At 2.30pm, the Feds Michelle Bowman will give the opening remarks at the Fed Listens event hosted by the Federal Reserve Bank of Chicago. And at 7.30pm, the Feds Lisa Cook will speak on the topic Global Inflation and Monetary Policy Changes at the 2024 Australian Conference of Economists. That's it for today's Wall Street Breakfast. Thanks for listening! To take full advantage of Seeking Alpha, join the highest quality community of real investors discussing stocks and ETFs at seekingalpha.com/subscriptions. I'm your host Julie Morgan. Go out and make it a great day! [Music] [BLANK_AUDIO]