US Stocks Extend Losses On China Smartphone News

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by Tyler Durden
Wednesday, May 18, 2022 - 03:35 PM

US equity markets were already in puke mode following catastrophic earnings from WMT, TGT, and a bunch of other retailers confirming the US consumer is about to implode, but headlines from Nikkei just sparked another leg lower.

According to Nikkei, China’s top smartphone makers - Xiaomi, Vivo, and Oppo - have told suppliers to scale back orders for the upcoming quarters by about 20% due to supply chain disruptions from the country’s Covid-19 lockdowns (i.e., demand has cratered).

Xiaomi, China's biggest smartphone maker and No. 3 globally, has told suppliers that it will lower its full-year forecast to around 160 million to 180 million units from its previous target of 200 million. Xiaomi shipped 191 million smartphones last year and is aiming to become the world's leading smartphone maker. The company could adjust its orders again as it continues to monitor the supply chain situation and consumer demand in its home market.

Meanwhile, Vivo and Oppo are also seeking to reduce excessive inventories. Vivo told suppliers it will not update specifications for key components to reduce costs.

The news sent futures into an (even faster) freefall, led by a 3.5% plunge in Nasdaq...

With AAPL down hard...

As stocks plunge, bonds are bid with yields tumbling 6-8bps across the curve, with 10Y once again unable to hold above 3.00%...

How much more pain is Powell willing to take?