Taiwan Semiconductor Manufacturing () announced that its revenue rose 5.6% in July (compared to June) and 44.7% in the past 12 months to $14.51 billion. This revenue growth is above TSM’s guidance and bodes well for the entire semiconductor industry.
The only possible negative component is that the U.S. trade deficit is expected to continue to rise due to all the technology imports from TSM and other Asian companies that manufacture CPUs, GPUs, and memory chips. A higher trade deficit from technology imports curtailed second-quarter GDP growth.
Phillips 66 () is coming to the rescue for California, which now has to import approximately 30% of its specialty blended gasoline from South Korea and India. Specifically, Phillips 66 is proceeding with $5 billion project, called the Western Gateway Pipeline system, to build a 900-mile pipeline to ferry 230,000 barrels a day of gasoline, jet fuel and diesel from the Texas Panhandle to Arizona and California.
What has been causing refineries to close in California was it now regulates that diesel not be made from crude oil, but rather from organic material like soybeans. As a result, California refineries have been closing since when you refine a barrel of crude oil, you typically get 19 gallons of gasoline and 12 gallons of diesel. The remaining California refineries now have to ship the diesel made from crude oil to other markets, like Mexico and China.
Bloomberg had an excellent article entitled “AI-Dominated Leveraged ETFs Are Rattling Markets.” Although only 1% of ETFs are leveraged, Bloomberg pointed out how these leveraged ETFs are causing excess volatility in the underlying stocks. There are some legacy ETFs with 3 times leverage, but new filings for 3 times leverage are now being increasingly rejected due to liquidity concerns. Prediction markets are growing in popularity, and leveraged ETFs now seem to be catering to the crowd that follows prediction markets.
My only consolation is that corporate earnings are now so strong that the wild trading swings that occurred in July have been muted by the reality that record sales, earnings, positive guidance, and rising order backlogs are real.