Intel swoons on dividend cuts while Nvidia soars on A.I. frenzy
It was also a mixed bag for semiconductor company earnings this week. On Wednesday, Intel (INTC/NASDAQ) cut its dividend by 65% from $0.37 to $0.13, weeks after announcing major cuts in executive compensation. That prompted Morgan Stanley to declare its stock looked better after the cut, and the stock rose a tad on Thursday. But that move was eclipsed by a big move in Nvidia (NVDA/NASDAQ), which soared 14% Thursday, on top of a jump after positive earnings news on Wednesday. Even before that, the stock was up 45% in 2023 over the firm’s strong position in the increasingly manic A.I. sector.
Inflation watch: Shipping containers
If you want a quick way to quantify just how dramatic the post-COVID consumer switch to services and away from goods has been, the cost of shipping containers is down 85% from its pandemic peak, and is now below pre-pandemic levels.
A huge part of the costs of manufactured goods in North America comes from transportation: moving raw materials to the manufacturers, and shipping the final products from overseas factories to our local retailers. Consequently, with lowered oil prices and shipping container rates being down 85%, it represents a massive cost reduction. And with 90% of goods reaching retailers via ships, and the quantity of goods demanded being down 5% year-over-year, the disinflationary pressures from the goods side of the CPI market basket should continue to help out consumers.
With the world’s biggest shipping companies using unprecedented massive earnings during the pandemic to upgrade and expand their capacity, we shouldn’t see shipping prices trend upward for a while.
Now if we could just get the services sector to follow a similar disinflationary pattern, central bankers around the world—and regular folk, too—could breathe a sigh of relief. Inflation headlines could then retreat back to the 6th page of the business section, as opposed to screaming in bold font “above the fold” each month.
Kyle Prevost is a financial educator, author and speaker. When he’s not on a basketball court or in a boxing ring trying to recapture his youth, you can find him helping Canadians with their finances over at MillionDollarJourney.com and the Canadian Financial Summit.