Quantum Computing Gets Super Charged, Billion Dollar Boost for IBM, Warsh’s In!
Let’s check the major boost for quantum computing after promised funds, the surge for semis, and a new day for the Fed.
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Just wow! Did quantum computing stocks ever take off on Thursday? To repeat. Just wow! On Thursday morning, it was learned that the Trump administration’s Department of Commerce has signed nine letters of intent to provide more than $2 billion in federal incentives to build a domestic quantum computing supply chain. The funding will be generated under the CHIPS and Science Act. International Business Machines, or IBM, (IBM) appears, as we have mentioned often in this column, to be a key driver of quantum technology and a big winner here under the government’s plans.
According to the Wall Street Journal, the Commerce Department has agreed to send $1 billion, or almost half of the entire package, to IBM. In turn, IBM will launch “Alderon,” which will be a standalone quantum chip manufacturing company with another $1 billion tossed in by IBM itself. IBM describes Alderon as America’s first pure-play quantum foundry. Speaking of foundries, GlobalFoundries (GFS) announced that it had entered a letter of intent with the Commerce Department that lands the company $375 million to accelerate the development of its new quantum business to be known as “QuantumTechnology Solutions.”
In addition to those deals, the Commerce Department will take a mom-controlling equity stake in seven much smaller “pure-play” quantum computing companies while providing funding. Among publicly traded companies included are D-Wave Quantum (QBTS), Infleqtion (INFQ) and Rigetti Computing (RGTI). Infleqtion is a former Sarge-folio and $10K Portfolio holding that soared 31.5% on Thursday. IBM, which was up 12.4% on Thursday, remains the Sarge-folio’s fifth largest holding.
Silent Moment
It’s not another mindless three-day holiday weekend. It’s an observance of those who went and never came home. It’s a chance to offer a silent thank you. Don’t get me wrong. It’s more than OK to have fun and enjoy one’s family and friends. Just remember why we take Monday off. Remember and say a prayer for the soul of someone who made that sacrifice for you and I. Go into any number of databases and pick a name if you don’t have a name in mind and pray for that soul. He or she may have been forgotten.
For those unaware, that flag, our flag is still there….
“Christ, kid. You been through Belleau Wood, an’ Soissons, and now this. Get out of this game while you still got a chance. Let some of the damn slackers with weak hearts and flat feet come over here. Let some of the damn politicians – .” The sergeant stopped and fished in a pocket. “Here’s twenty francs an’ my wristwatch, son. I won’t be needing them. You go get a couple of drinks for me when you get out of the hospital, kid, and don’t come back.”
– Elton E. Mackin (Suddenly, We Didn’t Want to Die, Memoirs of a WW1 Marine), published 1993
On The Holiday Weekend
U.S. equity index futures appear to be trying to rally as I work my way through the zero-dark hours on Friday morning. There seems to be some optimism, yes again, concerning the possibility of a peace deal actually being consummated this weekend. That puts traders, not necessarily investors, at odds with the calendar. Traders like to be flat going into weekends and really like to be flat going into extended holiday weekends as headline risk can be a nasty phrase in that world.
This improved sentiment comes after another spate of optimism had been dashed on Tuesday. Hopes for peace faded on Thursday after Pakistan’s military chief, who has acted as a “go between” throughout these negotiations, postponed a planned trip to Tehran on Thursday. It appears that Iran wants to keep its enriched uranium. That would be a mistake.
Still, markets largely hung on to gains made late during that session. Secretary of State Marco Rubio tried to explain… “I think we’ve made some progress, but obviously we are dealing with a system that is a little fractured, the Iranian system.
Marketplace
On Thursday, during the regular session, yields fell as bond investors re-engaged with Treasury markets. By day’s end, the US Ten-Year Note paid 4.56%, down three basis points for the day. WTI Crude has sold back off after a Thursday morning run. I now see the sweet stuff trading with a $98 handle (per barrel).
Turning to equity markets, the S&P 500 squeezed by with a gain of 0.17% while the Nasdaq Composite added just 0.09%. Hey, green on the screen is still green on the screen. It’s better than red. Small caps outperformed the broader market. The Russell 2000 gained 0.93% on the session as the S&P 600 gained 0.3%. The Philly Semiconductors popped for a nifty gain of 1.28% on Thursday, led again by Arm Holdings (ARM) and of course, GlobalFoundries. SanDisk (SNDK) also had a very nice day.
Breadth
Seven of the 11 S&P sector SPDR ETFs closed out the Thursday session in the win column led by the utilities (XLU) and tech (XLK). Energy (XLE) finished in last place again, while communication services (XLC) managed to close unchanged. Defensives generally outperformed cyclicals for the day.
Winners beat losers at the NYSE by a narrow seven-to-six margin and at the Nasdaq by a more comfortable five to three. Advancing volume took a 63.9% share of composite NYSE-listed trade and a 62.5% share of composite Nasdaq-listed activity. Interestingly, while aggregate trade across NYSE-listings increased by just a smidgen on a day-over-day basis, volume contracted by 6.9% across Nasdaq-listings.
Hence, though the markets have rallied over the past three days after a three-day sell-off, none of those days presented as a classic “Day One” reversal nor as a day of technical reconfirmation. Technically, we are more or less drifting.
On a Happy Note…
At least I think so… Kevin Warsh will be sworn in as Chair of the Federal Reserve Bank later today (Friday). It’s easy to think that he can’t be worse than the last guy, but conditions always seem to get worse at our central bank. I remember thinking that Yellen couldn’t possibly be worse than Bernanke. I was wrong. I remember thinking that Powell couldn’t be worse than Yellen. I don’t know if he was worse, but he wasn’t much better.
Though I probably would not agree with him in this current environment, I miss Paul Volcker. Now, that was a Fed Chair that knew what he was trying to do and was intentional in how he went about it… and wow, could he ever command a room. You shut your piehole when that guy spoke. They just don’t make them like that anymore.
Economics
(All Times Eastern)
08:30 – CB Leading Indicators (Apr): Expecting -0.3% m/m, Last -0.6% m/m.
10:00 – U of M Consumer Sentiment (May-F): Flashed 48.2.
10:00 – U of M One-Year Inflation Expectations (May-F): Flashed 4.5%.
10:00 – U of M Five-Year Inflation Expectations (May-F): Flashed 3.4%.
1:00 p.m. – Baker Hughes Total Rig Count (Weekly): Last 551.
1:00 – Baker Hughes Oil Rig Count (Weekly): Last 415.
The Fed
(All Times Eastern)
11:00 – Speaker: Reserve Board Gov. Christopher Waller.
Today’s Earnings Highlights
(Consensus EPS Expectations)
Before the Open: BAH (1.34), GSL (2.41)
At the time of publication, Guilfoyle was long IBM, SNDK equity.
