Morning News: December 5, 2022
Posted by Eddy Elfenbein on December 5th, 2022 at 7:04 am

War and Sanctions Threaten to Thrust Russia’s Economy Back in Time

Oil Price Rises After Russia Cap Kicks In

Advice for Europeans: Bundle Up and Get Ready for Outages

World Cup Wins Deepen Currency Pain for Football Fans

‘Huge, Missing and Growing:’ $65 Trillion in Dollar Debt Sparks Concern

Dollar Erases More Than Half of This Year’s Gains on Fed Bets

Why Fed Chair Jay Powell Is the Man to Watch in 2023

Fed Could Pencil in Higher Interest Rates Next Year While Slowing Hikes in December

Credit Suisse’s Investment Bank Spinoff Attracts Saudi Crown Prince

Crypto CEOs Fearing Worst Is Yet to Come Are Cutting More Jobs

The Crypto Industry Struggles for a Way Forward

Employers Try to Hold Line on Wages, With Mixed Success

Railroads Focus on Stabilizing Workforce After Strike Is Averted

FDA Takes Tougher Line on Fast-Tracked Drugs

TSMC’s Arizona Chip Plant, Awaiting Biden Visit, Faces Birthing Pains

Apple’s Warning About China Business

The Button That Could Have Changed the Internet

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Morning News: December 2, 2022
Posted by Eddy Elfenbein on December 2nd, 2022 at 7:03 am

Global Inflation Expected to Peak Near Double Digits, Bloomberg Economics Says

Chinese Solar Manufacturers Dodged U.S. Tariffs, Probe Finds

European Frustration Over U.S. Subsidies Mounts Ahead of Key Meeting

Ukraine War Shows Europe Too Reliant on U.S., Finland PM Says

Gas Prices Are Dropping: Here’s How Much Lower They Might Go

U.S. Consumer Spending Powers Ahead in October; Inflation Cooling

The Fed’s Preferred Inflation Gauge Slowed in October

If Biden Is Really Pro-Union, He Has One Chance to Prove It

Rail Strike Threat Averted as Senate Votes to Impose Labor Deal

Why Are Middle-Aged Men Missing From the Labor Market?

Layoffs Hit White-Collar Workers as Amazon, Walmart, Others Cut Jobs

Goldman Jolts Traders With Bonus Warning After Bumper Haul

Credit Suisse Set to End Losing Streak as Chairman Calms Markets

Washington Lawmakers Hold on to Crypto Holdings Despite Calls for New Laws In Wake of FTX Collapse

Crypto Meltdown A Boon for Bankruptcy Lawyers

Blackstone Just Limited Withdrawals From Its Huge Retail Real Estate Fund

Musk Delivers First Tesla Truck, but No Update on Output, Pricing

Disney Proposal to Restructure, on McKinsey’s Advice, Triggered Uproar From Creative Executives

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Morning News: December 1, 2022
Posted by Eddy Elfenbein on December 1st, 2022 at 7:08 am

How a ‘Golden Era for Large Cities’ Might Be Turning Into an ‘Urban Doom Loop’

Europe Races Against the Clock on Oil

Biden’s Meeting With Macron Comes Amid Rising Trans-Atlantic Tensions

Third-Quarter U.S. Growth Was Stronger Than Previously Thought

JPMorgan Strategists See US Stocks Slumping in First Half of 2023

Jerome Powell Signals Fed Prepared to Slow Rate-Rise Pace in December

Some Retailers Are Learning to Love Bulked-Up Inventories

Some Rail Workers, Seeking Sick Days, Say Biden Betrayed Them

FTX Missing Billions Remain Mystery After Bankman-Fried Grilling

How the Collapse of Sam Bankman-Fried’s Crypto Empire Has Disrupted A.I.

TSMC Plans to Make More Advanced Chips in US at Urging of Apple

Elon Musk Says Apple and Twitter Have ‘Resolved’ Differences After Meeting

Netflix to Let Tens of Thousands of Subscribers Preview Content

Bob Iger Is Back at Disney to Fix His One Big Failure: Succession

Who Made Your World Cup Jersey?

Online Gambling Ravaged Britain. America Could Be Next

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Morning News: November 30, 2022
Posted by Eddy Elfenbein on November 30th, 2022 at 7:05 am

‘Breach of the Big Silence.’ Protests Stretch China’s Censorship to Its Limits

China’s Zhengzhou, Home to World’s Largest iPhone Factory, Ends Covid Lockdown

Global Debt Costs Are Soaring. Here’s Where It Will Hurt Most

Where Cowboys Fly and Cattle Set Sail: An Epic Food Journey

Eurozone Inflation Eased in November, but Further Rate Rises Likely

ECB Says Bitcoin Is Artificially Propped Up, Shouldn’t Be Legitimised

Biden Administration Pressed by Allied Nations to Revise EV Subsidy Program

Congressional Leaders Commit to Quickly Pass Legislation to Avert Rail Strike

David Lipton, a Longtime Economic Diplomat, Will Step Down From Treasury

U.S. Government to Backstop Mortgages Above $1 Million in High-Cost Areas

The Not-So-Obvious Costs of “Buy Now, Pay Later” Plans

Airbnb Aims to Attract Big Landlords With a Cut of Its Rental Sales

Kroger, Albertsons CEOs Defend Grocery Tie-Up, Say Deal Won’t Hurt Competition

FTX’s LedgerX, a Solvent Corner of SBF’s Fallen Empire, Will Put Millions in Bankruptcy Pot

Elon Musk Is Finding Out That Free Speech Isn’t Rocket Science

Bob Chapek Didn’t Believe in Disney Magic

NYC Becomes One Billionaire Family’s Haven From China Property Crash

Krispy Kreme Donut Chain Rebranded ‘Krunchy Dream’ in Russia

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CWS Market Review – November 29, 2022
Posted by Eddy Elfenbein on November 29th, 2022 at 10:27 pm

(This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

The stock market pulled back on Monday and the selling continued into Tuesday. This comes after a string of good days before Thanksgiving. The immediate cause is most likely the uncertainty brewing in China.

We don’t have a precise picture of what’s happening in China due to the government’s strict control of the media, but it appears that there are large-scale protests against the country’s draconian Zero Covid policy.

Why is this a concern for financial markets? For one, it could again disrupt global supply chains. There are also many American companies that do a large share of their business with China. Apple is a good example. Shares of Apple fell 2.6% on Monday. That was its biggest drop in two weeks. Apple is down close to 20% this year.

Apple has a major manufacturing site in Zhengzhou. That plant could have a production shortfall this year of six million iPhone Pro units. The facility is run by Foxconn.

The plant has been a focal point of protests against the government’s heavy-handed Covid protocols. Last month, several thousand employees left the plant due to food shortages. The employees were replaced and soon the new employees began protesting the pay and quarantine practices. Once a protest like this gets started, you never know where it will go.

Foxconn is trying to get workers back on the job. The company said it will offer a bonus of 500 yuan to returning workers. That’s about $70. Also, workers can get another 3,000 yuan if they stay for 30 days, plus another bonus of 6,000 yuan in January.

This has been building for some time. The protests in China come after several months of economic pain. The unemployment rate for young people in China is close to 20%. President Xi Jinping has placed himself in a difficult spot. If Covid cases explode in China, that could hurt the economy. Yet if he continues with these policies, that could risk a major political upheaval.

In Shanghai, they had a lockdown that lasted eight weeks. That helped put the economy on the path towards its worst year for economic growth in decades.

Previously, the government said it was going to roll back some restrictions. Investors immediately celebrated and Chinese stocks soared. But soon, Covid cases started to rise, and the government reimposed the restrictions.

I’m certainly not an expert on China and the innerworkings of the CCP, but I do know that what starts out as a Covid protest can easily evolve into something more.

There was a terrible building fire in Urumqi that killed 10 people. Many of the protesters are blaming the restrictions for the death toll. Students at a university turned on their cell phone flashlights as a tribute to the victims of the fire. I won’t venture a guess as to what will happen in China, but the recent events seem to be something quite different. This could be a turning point for China, and for the world.

Preview of Friday’s Jobs Report

The jobs report is due out later this week. Wall Street expects to see a gain of just 200,000 nonfarm payrolls. That’s a fairly conservative expectation. The economy created 261,000 net new jobs for the month of October, and that was the smallest increase since December 2000. Last month, the unemployment rate was 3.7%. Wall Street expects that number to stay the same for November.

Despite multiple rate increases, we haven’t seen much damage to the labor market. Initial jobless claims have creeped up a little over the past few weeks but it’s nothing to be alarmed about. Not that long ago, initial jobless claims were the lowest we had seen in more than 50 years.

The weak spot continues to be wages. Wage growth has largely not kept pace with inflation.

Tomorrow, ADP, the payroll company, will release its payroll report. I used to follow this report closely but honestly, it wasn’t a very good report. While ADP’s report came out before the government’s report, it proved to not be a very good omen for what the Feds would say. Recently, ADP revamped their report, so we’ll see if it proves to be a better indicator for the jobs market.

Jerome Powell is scheduled to give a speech tomorrow and you can be sure that investors will closely parse every word and comma for a hint of a change in policy. The Fed meets again in two weeks, and there appears to be emerging conventional wisdom that the Fed will hike rates by only 0.5%. This comes after four consecutive meetings when the central bank increased interest rates by 0.75%.

I suspect that we’ll get a few more rate increases before the Fed pauses. In fact, the Fed could hold rates steady for much of next year. That would be good for the overall market.

As I mentioned before, the stock market had been doing quite well before this small break. Measuring from the market’s low on October 13 to the high on November 25, the S&P 500 gained 15.5%.

I should also point out that this has historically been one of the best times of the year for the stock market.

I number-crunched all 126 years of daily closings for the Dow Jones Industrial Average. That’s more than 45,000 data points.

From December 13 until January 8, the Dow has gained an average of nearly 3%. That may not sound like a lot but in terms of long averages, it’s pretty impressive. That means that more than 37% of the Dow’s total gain has come in less than one month of the year.

I don’t place a great deal of analysis on these long-term calendar effects, but I do think it’s interesting that investors have tended to be more optimistic during the holiday season.

Stock Focus: McCormick & Co.

One of the things Christopher Columbus was looking for was spices. Perhaps it shows us how important is the role that spices play in our lives. It’s also why McCormick & Company (MKC) is one of my favorite companies. It’s the largest producer of spices in the world. McCormick is a major food company that has delivered outstanding results for decades.

The company was started by Willoughby McCormick in the late 19th century. He initially sold his products door to door. A few years later, he got into the spices business.

Today, McCormick is based in Hunt Valley, Maryland and it has more than 14,000 employees around the world. The company owns several well-known brand names such as Old Bay seasoning and French’s mustard.

I also like the stability of the business. This is an underestimated character of good stocks. I like to have a good idea what the business will look like next month and next year. With some companies, that’s nearly impossible, but with McCormick, it’s quite easy. Since 1994, the shares have gained more than 20-fold.

This is an interesting time for McCormick because their business results have been below expectations. The company missed Wall Street estimates for the last two quarters. In October, McCormick reported Q3 earnings of 69 cents per share. Wall Street had been expecting 76 cents per share. The company said it continues to be impacted by supply-chain issues.

The company expects earnings this year to range between $2.63 and $2.68 per share. That implies Q4 earnings between 83 and 88 cents per share. At the current share price, that means the stock is going for more than 30 times earnings. As much as I like McCormick, the current price is too high. If the company offers bold guidance for next year, it may be worth a look.

That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

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Morning News: November 29, 2022
Posted by Eddy Elfenbein on November 29th, 2022 at 7:05 am

Chinese Unrest Over Lockdown Upends Global Economic Outlook

Global Yield Curve Inverts in Signal a Recession Is Brewing

India’s Free-Market Oasis Aims to Take On Singapore and Dubai

Globalized Supply Chain Brings More-Turbulent Food Prices

Iron Ore Shrugs Off China COVID Woes, Focuses on Stimulus

EIB Launches Second Euro Digital Bond

Ukraine War’s Economic Ripples Sow Discord Between Washington, Allies

Ukraine Is Biden’s Defining Issue, and His Biggest Economic Challenge

Fed’s Williams Says Inflation Fight Could Last Into 2024

Banks Stuck With $42 Billion Debt Seize Chance to Offload It

Banks Plan to Start Reimbursing Some Victims of Zelle Scams

Musk Threatens War With Apple, Jeopardizing Vital Relationship

BlockFi Bankruptcy Hijacks More Customer Cash

‘No Cooperation’: How Sam Bankman-Fried Tried to Cling to FTX

U.S. Crypto Exchange Kraken Settles With Treasury Dept.

Chinese Startups Try to Make It Big in the U.S.—but Without the Backlash

Disney CEO Robert Iger at Town Hall Vows to Focus on Creativity, Streaming Profitability

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Stocks Pullback on Uncertainty in China
Posted by Eddy Elfenbein on November 28th, 2022 at 12:16 pm

The stock market is down today. I think traders are a little nervous about the uncertain news coming out of China. As I write this, the S&P 500 is off by about 0.8%. There doesn’t seem to be a major theme to today’s trading. High Beta is down more than Low Vol, and Value is down less than Growth. Consumer Staples and Consumer Discretionaries are barely positive while the other sectors are down.

There’s not much in the way of economic news although two Fed members will be speaking later today. This Friday will be Jobs Day. On Wednesday, we’ll get the ADP report along with an update to the GDP report.

We have one Buy List earnings report coming next week when SAIC is due to report. Its fiscal Q3 ended on October 31. Wall Street expects earnings of $1.74 per share. The company has topped earnings for the last nine quarters in a row. The stock is up over 30% for us this year.

This is also the time of year when a lot of companies like to raise their dividends. In the next few weeks, I expect to hear from companies like Zoetis, Carrier Global, Stryker and Abbott Labs.

Morning News: November 28, 2022
Posted by Eddy Elfenbein on November 28th, 2022 at 7:07 am

China’s Covid Contagion

More Venezuelan Oil Unlikely to Reach Markets Soon Despite New Chevron License

Giant Wind Farms Arise Off Scotland, Easing the Pain of Oil’s Decline

Puerto Rico’s Power Failures Worsen After Private Takeover

Exxon Mobil Has a Potash Problem in the Permian Basin

Globalized Supply Chain Brings More-Turbulent Food Prices

Powell to Set Stage for Slowing Fed Rate Hikes Amid Hawkish Tone

There’s a Job-Market Riddle at the Heart of the Coming Recession

Business Travel’s Rebound Is Being Hit by a Slowing Economy

Have the Anticapitalists Reached Harvard Business School?

Why Retailers Are Trying Extra Hard to Woo Holiday Shoppers

Hedge Fund That Beat 99% of Peers Places Contrarian Bet on Meta

FTX Tensions Intensify as Bahamas Blasts Company’s New Chief Ray

Apple to Lose 6 Million iPhone Pros From Tumult at China Plant

Yahoo Takes Minority Stake in Ad Network Taboola

The Lowly Boxcar Can Make Your City a Better Place to Live

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Morning News: November 25, 2022
Posted by Eddy Elfenbein on November 25th, 2022 at 7:04 am

‘Heated’ and ‘Really Ugly’: Europe Fails to Thrash Out Details on Gas Price Cap as Talks Turn Sour

Vietnam’s VinFast Ships First Electric Vehicles to U.S. Customers

Backers of Farmworker Visa Overhaul Make Year-End Push for Immigrant Labor Deal

Billions of Dollars Are at Stake in a Puzzling Holiday Shopping Season

Black Friday Starts With a Toy Glut. Can Shoppers Save Christmas?

If the Price Ended in 99, You Probably Overpaid

High Inflation to Tamp Down Gift Giving

This Holiday Season, the Poor Buckle Under Inflation as the Rich Spend

How to Manage Credit Card Debt When Holiday Shopping

Tech Giant Aims to Cut Ties With Russia

Apple’s Reliance on China Grows Perilous With Chaos in iPhone City

Mega-Companies Are Messing Up America’s Job Market. Again.

Musk Says Twitter Will Relaunch Verified Service Next Week

Crypto Firm FTX Landed in the Bahamas With a Bang, and Now the Bahamas Is Picking Up the Pieces

Binance’s Crypto Rescue Plan Fails to Quell All the Fears of Post-FTX Contagion

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Morning News: November 24, 2022
Posted by Eddy Elfenbein on November 24th, 2022 at 8:00 am

China Recovery Hopes Crushed by Record Covid Outbreak as Lockdowns Spread

Bill Ackman Is Betting Against the Hong Kong Dollar

Credit Suisse Clients Flee to UBS in Asia as Rich Weigh Options

EU Split on Russian Oil Price Cap Level, Talks to Resume Thursday

U.S. Poised to Grant Chevron License to Pump Oil in Venezuela

BOE’s Top Economist Rejects Calls to Cut Interest Paid on Reserves

Binance’s Zhao Flags Possible $1 Billion for Distressed Assets

She Was a Little-Known Crypto Trader. Then FTX Collapsed.

Crypto Firm FTX’s Ownership of a U.S. Bank Raises Questions

Biden Officials to Target Nonbanks for Tougher Oversight

Twitter Exodus Hits Teams Tasked With Regulatory Issues

The Worst Midnight Email From the Boss, Ever

There’s No Fixing Meta’s Metaverse, Scrap It, Start Over

Financial Talking Points for an Awkward Holiday Season

Black Friday Seen Kicking Off a Bumpy Holiday Shopping Season for Retailers

Black Friday Spending Traps: Credit-Card Offers, Tricky Trips and So-So Discounts

Two Films Hit Theaters, but Netflix Remains Committed to Streaming

Why the N.F.L.’s Big Streaming Deal Is Going Into Overtime

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