Wall Street Breakfast Podcast: Albemarle Hits Four-Year-Low

Lithium element symbol from the periodic table near metallic lithium with copy space. 3d illustration.


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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)

This is an abridged transcript of the podcast.

Albemarle (NYSE:ALB) finished Tuesday’s trading as the biggest loser on the S&P 500, -8.7%.

This is its lowest since October 2020, as two Wall Street analysts cut their price targets for the stock.

Baird analyst Ben Kallo lowered his PT to $127 from $170 even while maintaining an Overweight rating. He said lithium prices have remained at or below the low end of Albemarle’s (ALB) guidance, which sets up “a weak Q2” report for the company.

Kallo also noted concerns about the effect this year’s U.S. elections could have on the electric vehicle market, 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 (ALB) at Hold, trimmed his price target to $109 from $124.

Other lithium producers also fell on Tuesday, including Standard Lithium (SLI) -7.6%, Sigma Lithium (SGML) -6%, Lithium Americas (LAC) -4.1%, Arcadium Lithium (ALTM) -3.5%, SQM (SQM) -3%.

The commercial property sector will likely remain stressed for years.

That was the word from Federal Reserve Chair Jerome Powell to the Senate Banking Committee on the first day of his semi-annual testimony to Congress.

“It is a risk that has been with us and will be with us for some time, probably for years,” Powell warned on Tuesday. “And banks need to be honestly assessing what their risk is. 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. “The conclusion is that large banks can manage this problem, and most small banks can too,” Powell said.

Regulators are keeping a close eye on smaller banks with higher exposure to CRE, with half of the $929B in CRE loans due this year in multifamily and office.

To note, total outstanding commercial/multifamily mortgage debt rose to $4.70T at the end of Q1, data from the Mortgage Bankers Association showed.

Oracle (NYSE:ORCL) 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 Elon Musk startup and Oracle were in talks to expand an existing plan in which Oracle rents out specialized Nvidia (NVDA) 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 $10B.

The AI data center will be built in Memphis, Tenn., with the Nvidia chips now supplied by Dell (DELL) and Super Micro (SMCI), per the report.

Musk said in a post on X, “xAI is building the 100k H100 system itself for fastest time to completion.”

He went on to say, “Oracle is a great company and there is another company that shows promise also involved in that OpenAI GB200 cluster, but, when our fate depends on being the fastest by far, we must have our own hands on the steering wheel, rather than be a backseat driver.”

More articles on Seeking Alpha:

Musk claims new Tesla Optimus design will be completed in 2024

Albertsons, Kroger list stores to be sold in merger ahead of trial next month

Microsoft and Apple ditch OpenAI seats amid antitrust scrutiny – report

Catalyst watch:

  • Samsung’s (OTCPK:SSNLF) 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 Micro Computer (SMCI), Balchem (BCPC), Gibraltar Industries (ROCK), Federal Signal (FSS), and Helios Technologies (HLIO) are some of the companies set to participate at the CJS Summer New Ideas Conference.

  • Amazon (AMZN) will hold an AWS Summit in New York City.

  • Nasdaq will release its latest short interest report.

  • Axcelis Technologies (ACLS) will participate in the 16th Annual CEO Investor Summit 2024.

Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the green. Crude oil is up 0.2% at $81 per 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%.

The biggest movers for the day premarket: Baidu’s (NASDAQ:BIDU) stock rose around 3% on Nasdaq and about 10% in Hong Kong after Beijing authorities announced support for the introduction of robotaxis in ride hailing and car rental fleets in the city.

On today’s economic calendar:

  • 10:00 a.m. Federal Reserve Chairman Jerome Powell will testify before the House Financial Services committee

  • 02:30 PM Fed’s Michelle Bowman will give the opening remarks at the Fed Listens event hosted by the Federal Reserve Bank of Chicago

  • 07:30 PM Fed’s Lisa Cook will speak on the topic, “Global Inflation and Monetary Policy Changes” at 2024 Australian Conference of Economists