Morning Perspective: UBS Cuts Chips and Phone Sales

According to Bloomberg, UBS cut its estimates for global chips and mobile phone sales due to slowing consumer demand. Revenue in the semiconductor industry will rise 4% to $273 billion versus previous projections of 7%. Mobile-phone sales will grow 2%, half of what was previously expected. In addition, UBS stated average semiconductor prices will likely drop 5% this year compared to prior expectations of a 2% decline based on excess supply driving down memory chips by more than 40%. For some context in the tech sector, read Professor Jeff Cooper’s Instant Karma Silences The Wolves.

From the Bull Pen: Just yesterday, shares of Nokia (NOK), the world’s largest maker of mobile phones, moved higher after its CFO said it hasn’t been hurt much by a U.S. slowdown. Bulls can play the upside with sell-stops set below $30.

From the Bear Cave: Bears can look elsewhere in the tech space with a downside play in Multi-Fineline Electronix (MFLX); buy-stops can be set above yesterday’s high ($21).

Caterpillar Focuses on the East

According to the WSJ, Caterpillar (CAT) will take a majority stake in joint venture Shin Caterpillar Mitsubishi (SCM) in a transaction with Mitsubishi Heavy Industries that is valued at $500 mln. The deal will increase CAT’s stake from 50% to 67% and will also give Caterpillar the option of redeeming the remaining shares owned by Mitsubishi Heavy, exercisable after five years. The move is seen as Caterpillar’s latest attempt to increase its presences in Asia and Russia where there has been strong demand for Caterpillar’s machinery. Professor Quint Tatro mentioned Caterpillar recently in his column Pioneers of Global Marketplace Head East.

From the Bull Pen: Those bullish on Caterpillar can play the upside with sell-stops below $75.

From the Bear Cave: Bears can play the downside in Terex (TEX). Buy-stops can be set above $68, or $70 for those with a higher risk profile.


Quick Check Around the World

Asian trading closed with the Hang Seng +0.68%, Nikkei -0.30%, Sensex -0.81%, Taiwan -0.31% and Shanghai -0.63%.

Looking towards Europe, we find the CAC -0.57%, DAX -0.39%, FTSE -0.69%.

As of 8:30 AM EST, S&P futures are lower by -5.7 points to 1345, and Nasdaq futures are down by -7 points to 1818.

A Look At Commodities

Commodities are stronger. Crude oil is higher +1.13 to 102.35. Gold is up +11.40 to 946.40. Silver is lower -0.007 to 17.755 and copper is higher +4.45 to 369.95.

The dollar index is lower -0.536 to 71.740.

On the Radar

Economics

MBA Mortgage Applications: 48.1% vs. -2.9% last week.
Durable Goods Orders: -1.7% vs. 0.7% cons.
Durable Goods ex trans: -2.6% vs. -0.3% cons.

10:00 New Home Sales: 576 k cons
10:00 New Home Sales (m/m): -2.1% cons

Click here for the full trading radar.

Happy Hump Day. Good luck!