Morning News: June 24, 2024
Posted by Eddy Elfenbein on June 24th, 2024 at 7:08 am

Ocean Shipping Prices Are Pushing Toward Pandemic-Era Highs as Congestion Swells

Vietnam Coal Power Project Moving Forward After Phase-Out Deal

Fire at Lithium Battery Plant in South Korea Kills 22

Hyundai and Kia Zip Into the U.S. Car Market’s Fast Lane

Japan and South Korea Are Fighting Over an App at a Tense Time

China Steps Up Pressure on Europe to Avoid EV Tariffs

France Keeps Markets on Edge With Le Pen Fighting Left for Power

How Jeff Yass Became One of the Most Influential Billionaires in the 2024 Election

How Long Can High Rates Last? Bond Markets Say Maybe Forever

Fed’s Mester: Mortgage Bond Sales Should Remain Option for Fed

Women in US Have Just 1/3 of Men’s Retirement Savings, Prudential Report Says

Foreign Banks Target Switzerland After UBS Takeover of Credit Suisse

Big US Banks Expected to Be Cautious on Shareholder Payouts

Jain Raises $5.3 Billion in Biggest Hedge Fund Debut Since 2018

Real Estate Bets Gone Wrong Roil $1.24 Trillion Canadian Funds

Nvidia Sales Grow So Fast That Wall Street Can’t Keep Up

AI Boom Drives Up Risk of Power Squeeze

Apple’s European Headache

Apple Hit by Fresh EU Warning Over Alleged App Store Abuses

Responsibility Over Freedom: How Netflix’s Culture Has Changed

Sonoco Products Buys Eviosys From KPS Capital For $3.9 Billion

Target Aims to Expand Its Online Marketplace With Shopify Partnership

How a Cyberattack Took 15,000 Car Dealers Offline

‘We’re Still Paying’: How Pets Became a Big Business

Holiday Travel Is Booming. Why Are Airlines Doing So Badly?

Tiger Woods, McIlroy-Backed TMRW Sports Valued at $500 Million in Funding Round

Fanatics Teams Up With Juventus in Decade-Long Merchandise Deal

Stephen A. Smith Is the Face of ESPN. How Much Is That Worth?

Be sure to follow me on Twitter.

Morning News: June 21, 2024
Posted by Eddy Elfenbein on June 21st, 2024 at 7:07 am

Japan Inflation Picks Up, Adding to Hopes for Rate Hikes by BOJ

Eurozone Recovery Slows as French Uncertainty Hits New Orders

U.K. Retail Sales Rebounded in May on Warmer Weather

The Taylor Swift Economy Has Landed in Europe

Monaco Expected to Join Dirty Money ‘Gray List’ Next Week

Wall Street’s $5.5 Trillion Triple-Witching to Test Market Calm

Money-Market Funds See First Outflow in Two Months With Taxes Due

Fintech Firm Pine Labs Weighs $1 Billion IPO in India

I.R.S. Extends Freeze of Pandemic-Era Tax Credit Amid Widespread Fraud

Democrats’ Dream of a Wealth Tax Is Alive. For Now

Arizona’s Economic Boom Is the Biden Signal in Trump Noise

Elon Musk Wants You to Trust X With Your Money

Nvidia’s Staggering Gains Leave Investors Wondering Whether to Cash In or Buy More

How to Do a Four-Day Workweek That Actually Works

First Solar Fights Foreign Subsidies While Cashing In on Its Own

America’s Nuclear Push Doesn’t Guarantee a Revival

Amazon Says It Will Stop Using Puffy Plastic Shipping Pillows

Cybersecurity Firm Kaspersky Denies It’s a Hazard After the U.S. Bans Its Software

Car-Dealer Chaos Arises From Cyberattack on $1.2 Trillion Market

Canada Prepares Potential Tariffs on Chinese EVs After US and EU Moves

At Blackstone’s $339 Billion Property Arm, the Honeymoon Is Over

The Opaque Industry Secretly Inflating Prices for Prescription Drugs

China Gives Europe’s Struggling Pork Farmers Another Headache

Britvic Rejects $3.9 Billion Takeover Offer From Carlsberg

Why Your Starbucks Frappuccino Is Now Half-Price

Be sure to follow me on Twitter.

Morning News: June 20, 2024
Posted by Eddy Elfenbein on June 20th, 2024 at 7:07 am

Putin’s Hybrid War Opens a Second Front on NATO’s Eastern Border

European Sanctions Target Russian Liquefied Natural Gas for First Time

Tourist-Rich Caribbean Islands Aim to Shake Up Global Aid

China’s Central Bank Hints at Major Policy Shift

Indonesia’s Central Bank Stands Pat as Expected

Bank of England Holds Rates Steady, Despite Slower Inflation

US Regulators at Odds Over Whether to Issue New Draft of Bank Capital Hikes

Treasuries Are a Whisker Away From Erasing This Year’s Loss

How a College Dropout Changed What We Know About the U.S. Economy

A Third of CFOs See US Elections Impacting Investment Decisions

Germany Fines Citigroup Over ‘Fat-Finger’ Failures

Hedge Fund Talent Schools Are Looking for the Perfect Trader

Dilemma on Wall Street: Short-Term Gain or Climate Benefit?

BP to Take Control of Brazilian Biofuels JV in $1.4 Billion Deal

The World’s Best Astronomy Spot Has a Light Pollution Problem

Companies Are Watering Down Their Diversity Recruiting Programs

Reimagining a Retirement Fit for Boomers, and Those Who Are Next in Line

Ilya Sutskever Has a New Plan for Safe Superintelligence

Dell’s AI Margin Slip Will Be a Speed Bump

Micron Has to Resolve a Bat Problem Before Building Syracuse Chip Fab

Honeywell Strikes $2 Billion Deal for Defense Business

Ford Sacrifices Short-Term Profits to Fix Its Costly Recall Problem

Eli Lilly Broadens Crackdown on Fake and Compounded Zepbound

Tate & Lyle to Buy CP Kelco for $1.8 Billion in Push to Cash in on Health Nutrition Trends

Danone Targets Health, Nutrition as Food Industry Braces for Ozempic Era

McDonald’s $5 Value Meal Intensifies a Fast Food Price War

Be sure to follow me on Twitter.

Morning News: June 19, 2024
Posted by Eddy Elfenbein on June 19th, 2024 at 7:05 am

France and Italy Get EU Deficit Scolding as Markets Watch

Japan Bank to Overhaul Investments as Wrong-Way Rate Bets Trigger Bond Losses

Bond Trading by China’s PBOC Wouldn’t Be Quantitative Easing, Gov. Says

JPMorgan Ignites $40 Billion Rush Into Indian Bonds

JPMorgan Joins Goldman in Scrapping Cap on London Banker Bonuses

Strikes Loom as 200,000 German Bank Staff Fight for Hefty Pay Rise

US FDIC Chair Nominee Likely Has the Votes But Confirmation Process Could Drag

Nvidia’s 591,078% Rally to Most Valuable Stock Came in Waves

What Does Musk’s Shareholder Win Mean for His Pay Package?

Researchers Say Social Media Warning Is Too Broad

HPE’s $14 Billion Juniper Deal Attracts UK Antitrust Scrutiny

Vodafone to Raise $2 Billion Via Stake Sale in Indian Telecom Tower Company

Cyberattack Led to Harrowing Lapses at Ascension Hospitals, Clinicians Say

Codelco Struggles to Halt Persistent Slide in Copper Output

US Backs Angola Plan to Process Critical Minerals, Export Power

Coffeeholics in South Africa Feel the Heat of Surging Prices

Boeing CEO Apologizes to MAX Crash Families, Calls Culture ‘Far From Perfect’

Chinese Carmakers Call for 25% Tax on Large European Cars, CCTV Reports

In Rare Rebuke, Toyota Chairman’s Investor Support Tumbles

Yes In God’s Backyard? This Housing Solution May Be the Answer to Your Prayers

Washington Post CEO Plans a Mysterious ‘Third Newsroom.’ His Past Offers a Clue

Super-Star Sneaker Maker Golden Goose Postpones IPO Amid Market Turmoil

Be sure to follow me on Twitter.

CWS Market Review – June 18, 2024
Posted by Eddy Elfenbein on June 18th, 2024 at 6:25 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 closed at another all-time high today. This is the S&P 500’s 31st new high this year. The Nasdaq rose for its seventh day in a row.

The stock market also reached another milestone. Nvidia passed Microsoft to become the world’s most valuable public company. The chipmaker now has a valuation of $3.3 trillion. It’s larger than every company in the Russell 2000 combined.

Ten years ago, Nvidia was worth $10 billion. CEO Jensen Huang’s first job was as a busboy at Denny’s. Now he’s worth $117 billion. Not bad.

As I’ve mentioned many times before, this market has been heavily tilted toward growth stocks. In fact, today snapped an 11-day winning streak of the S&P 500 Growth ETF (SPYG) outpacing the S&P 500 ETF (SPY).

As strong as this market has been, it’s been very narrow. Despite being at a new high, only 50 stocks in the index touched 52-week highs today.

Soaring markets can be surprisingly tricky for investors. Watching share prices march steadily higher can induce intense fear in some investors. They tend to think that we must be getting near a cliff and that it would therefore be best to cash out now.

That’s a mistake. A rising market doesn’t necessarily mean we’re in a bubble. It only means that share prices are higher than where they were. Rallies can go on for longer than you think. Peter Lynch said, “Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves.”

A few years ago, I looked into the data and found that the stock market does very well when it’s at an all-time high. Not only that, but the market is significantly less volatile when it’s at a new high. It’s pretty rare that the market rallies by more than 1% in a day following an all-time high.

Where do we go from here? That’s hard to say but I’ll note that July has been up for the last nine years in a row.

Let’s look at the market’s current valuation.

The S&P 500 closed Monday at 5,473.23. Wall Street currently expects the S&P 500 to earn $240.78 per share this year. That gives the market a forward price/earnings ratio of 22.7.

That works out to an earnings yield of 4.40% (i.e., the inverse of the p/e ratio, it’s the e/p ratio). To get an idea of how expensive that is, we want to compare the S&P 500’s earnings yield with the current yield on the long-term Treasury bonds. The 10-year Treasury currently yields 4.22%.

In other words, investors are getting a very mild safety cushion of 20 basis points by being in Treasury bonds. That’s not much. The risk/reward balance still leans towards stocks.

There are some important caveats. The market’s forecast for earnings this year is just that, a forecast. Wall Street analysts have often been wrong, and sometimes by a lot. Wall Street has already lowered its earnings forecast for this year, and it can do it some more.

We also don’t know where interest rates will go. If inflation comes back, that would send yields soaring. It was only eight months ago that the 10-year Treasury was yielding close to 5%. Right now, the bigger fear is that the economy will turn south.

Retail Sales Were Weak Last Month

Americans haven’t been shopping as briskly as expected, which is odd since you might think that shopping was our national pastime.

To be fair, this morning’s retail sales report was only a little weaker than expected. Last month, retail sales rose by 0.1% which was 0.1% below expectations. Over the last year, retail sales are up by 2.3%. That’s not adjusted for inflation. The number for April was revised to a decline of 0.2%.

Here’s the year-over-year growth in retail sales:

If we don’t exclude autos, then retail sales for May fell by 0.1% whereas Wall Street had been expecting an increase of 0.2%. So what caused the sluggish shopping numbers?

Moderating gas prices helped hurt receipts at gas stations, which reported a 2.2% monthly decline. That was offset somewhat by a 2.8% increase at sports goods, music and book stores.

Online outlets reported a 0.8% increase, while bars and restaurants saw a 0.4% decline. Furniture and home furnishing stores also reported a 1.1% drop.

The retail sales report is important because consumer spending makes up about 70% of the economy. The good inflation news has come at the same time that consumer spending has apparently weakened.

Following the report, the odds of a September rate cut edged up from 61.5% yesterday to 67% today. Futures traders think there’s a 66% chance that the Fed will cut rates twice this year.

The most troubling news today came from the Congressional Budget Office. The CBO increased its estimate for the U.S. budget deficit by 27% to nearly $2 trillion. The new estimate is $400 billion higher than the previous estimate in March. Last year, the deficit was $1.69 trillion. For this year, the CBO sees it reaching $1.92 trillion.

As a percent of GDP, the CBO sees the deficit getting to 6.7%. That’s up from the prior estimates of 5.3%. Last year’s deficit was 6.3% of GDP.

According to Bloomberg, “Over the coming decade, the CBO sees US deficits totalling $22.1 trillion, up more than $2 trillion from February’s report.”

The CBO listed four major reasons for the budget revisions: President Biden’s student loan forgiveness plans, aid to Ukraine, Israel and Taiwan, FDIC payments for bank failures and heightened Medicaid spending. What’s frustrating is that the CBO sees higher revenues incoming but not enough to offset the higher spending.

If world markets become convinced that the U.S. is too much of a risk to invest in, that would hit the dollar and our ability to borrow money. So far, the market doesn’t seem too concerned. I don’t know how long that can last.

Stock Focus: Nathan’s Famous

With July 4th coming up, I wanted to highlight one of my favorite unfollowed stocks which is Nathan’s Famous (NATH), the hotdog stand.

Not many people realize that the Coney Island mainstay is publicly traded, but it is. Not only is Nathan’s listed on the exchange, but it’s been a great stock for decades.

Nathan’s is currently priced at $67.65 per share. That’s not a bad valuation. Nathan’s Enterprise Value/EBITDA is currently 9.73 which isn’t bad.

The company has a market value of $282 million. Last week, Nathan’s reported earnings for fiscal 2024 of $4.81 per share. That was up by one penny per share from one year before. Sales growth is low but positive.

Currently not a single analyst follows Nathan’s. Since December 31, 1999, Nathan’s is up 3,846% while the S&P 500 is up 493%.

That’s all for now. The stock market is closed tomorrow for Juneteenth. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Morning News: June 18, 2024
Posted by Eddy Elfenbein on June 18th, 2024 at 7:02 am

Biden’s Tough-on-China Stance Threatens Green America Push

Indonesia Can’t Ignore the Cost of Its Battery Metal Boom

Carbon Removal Fund Backed By Meta, Alphabet Agrees Europe Deal

The Deadly Mining Complex Powering the EV Revolution

Waabi Raises $200 Million to Deploy Driverless Trucks by 2025

Electric-Vehicle Startup Fisker Files for Bankruptcy

Coke—and Dozens of Others—Pledged to Quit Russia. They’re Still There

Western Multinationals Fleeing Nigeria Are Being Replaced by Asian and Turkish Firms

India Regulator Plans Tweaks to Address Derivative Trading Risks

EU Finance Chief Says Ditch National Symbols to Boost Capital Market

Central Banks Expect to Snap Up More Gold This Year Amid Dollar Pessimism

Biden’s Stimulus Juiced the Economy, but Its Political Effects Are Muddled

Citi Pitches Money-Moving ‘Crown Jewel’ as Central to Revamp

Goldman Sees US Jobs at Inflection Point, Sticks to Two-Cut Call

BofA Poll Shows Investors Primed to Fuel Stock Rally With Cash

JPMorgan’s Latest Fintech Fight Highlights the Pain of Sellers’ Remorse

Hedge Fund’s Trades With Lenders Point to Return of Crisis-Era Structures

A Korean Secret to Keeping Friendships Strong: Savings Groups

Amazon Union Workers Join Forces With the Teamsters

‘I Live in Hell’: Anti-Growth Fervor Grips US South After Pandemic Boom

TikTok Challenges Congress’s Secrecy on Alleged Security Threat

Apple Scraps Its Buy Now, Pay Later Product. Forget Payments, AI Is the Focus

Best Buy Trains 30,000 to Handle Microsoft’s AI Laptops Launch

Bacon Ice Cream and Nugget Overload Sees Misfiring McDonald’s AI Withdrawn

Boeing’s Bumpy Ride Isn’t Over

Blackstone to Buy Japanese E-Comic Provider

Be sure to follow me on Twitter.

Morning News: June 17, 2024
Posted by Eddy Elfenbein on June 17th, 2024 at 7:03 am

Berlin Holds Key to Remaining Russia Gas Flows to Europe

China Property Drag Is Getting Worse, Factory Output Disappoints

Facing E.V. Tariffs, China Threatens Pork Imports From Europe

Global Central Banks Recalibrate as the Big Policy Easing of 2024 Fizzles

Paris Loses Crown as Europe’s Biggest Stock Market to London

ECB Pays Attention to Good Functioning of Markets, Lagarde Says, After France Spooks Investors

How the US Mopped Up a Third of Global Capital Flows Since Covid

Latest Inflation Data Provides Potential for ‘Even Greater Upside’ in the Stock Market Rally

Top Wall Street Bear Surrenders to Bull Market and Flips Forecast, Now Seeing the S&P 500 Soaring to 6,000 by Year-End

Hedge Funds’ Secret Weapon to Fight the SEC Lives in Texas

Trump’s Planned Tariffs Would Tax US Households, Economists Warn

Momentum Is Still Drawing Magnificent Mojo

Trailing 97% of Bond Funds, Western’s Flagship Is Losing Cash

Popular Arbitrage Trade Backfires as TSMC Frenzy Grows in US

Google DeepMind Shifts From Research Lab to AI Product Factory

Apple’s Vision for AI Simplicity Highlights Miss by Microsoft

Surgeon General Calls for Warning Labels on Social Media Platforms

Inside DOJ’s Wrenching Decision on Whether to Prosecute Boeing

When Will America Get Its $25,000 Electric Car?

Stellantis, Champion of Home Work, Asks Engineers Back to Office

Toyota Investors Challenge Scion’s Grip at a ‘Critical Juncture’

How A.I. Is Revolutionizing Drug Development

It Will Take More Than US Bargaining Power to Cut Drug Costs

US Olympian Shaun White Launches Snowboarding League

As N.B.A. TV Deal Nears, Warner Bros. Discovery Is on the Outside

Adidas Investigates Allegations of Bribery in China

China’s Lust for Durian Is Creating Fortunes in Southeast Asia

Primo Water, BlueTriton Brands Affiliate to Merge

Be sure to follow me on Twitter.

Morning News: June 14, 2024
Posted by Eddy Elfenbein on June 14th, 2024 at 7:02 am

Gas Markets Brace for Price Spikes During Turbulent Summer

Global Food Roundup: Farming’s AI Answer and Struggling Startups

Industrial Policy Balances Politics and the Planet

BOJ’s Lack of Detail on Bond Buying Cuts Leaves Yen Vulnerable

Macron Election Call Sends French Markets to Worst Week in Years

US Money-Market Funds Hit All-Time High of $6.12 Trillion

Why the Stock Market Has Risen Even With No Fed Rate Cut

Crypto Titans’ $160 Million War Chest Threatens Senate Democrats

The Case for Investing in Bitcoin or Gold, or Both

Former Bank Bailout Watchdog Is Choice to Lead F.D.I.C.

The Pandemic Felled Dozens of Stellar Credit Ratings. CFOs Want Them Back

Visa, Mastercard $30 Billion Fee Settlement in Peril

Courting C.E.O.s, Trump Says He Intends to Cut Corporate Taxes Again

Does It Pencil?

F.A.A. Investigating How Counterfeit Titanium Got Into Boeing and Airbus Jets

Musk Pay Victory Removes Cloud at Tesla, but Fresh Legal Fight Looms

Tesla Can’t Be All About Elon Musk

Nice EV You Got There—Can You Afford to Insure It?

Stellantis Moves Some EV Production Out of China Due to EU Tariffs

Why Are Shares of Adobe Stock Soaring After Earnings?

Amazon Has Upended the Streaming Ad Market, and Netflix Is Paying the Price

Paramount Will Keep Its Family Discount

Red Lobster Looks to New Wall Street Savior After Prior Woes

Cava Is Worth $33 Million Per Restaurant After Blistering Debut

The N.B.A. Sees Its Future in Africa

Be sure to follow me on Twitter.

Morning News: June 13, 2024
Posted by Eddy Elfenbein on June 13th, 2024 at 7:06 am

Deadly and Wildly Profitable, Uranium Fever Breaks Out

Chinese Trader’s $20 Million Pile of Russian Copper Goes Missing

G-7 Agree to Tap Frozen Russian Assets for $50B to Ukraine

China’s Once-Mighty Credit Cycle Is a Fading Force on World Markets

Why Biden Is Escalating Trump’s China Tariffs

Taiwan Central Bank Leaves Key Interest Rates Unchanged

Why Bond Markets Are So Spooked by the French Election

Bond Market Splits From Fed Again by Betting on 2024 Rate Cuts

Private Lenders Storm Public Bond Markets at Record-Setting Pace

Treasury Secretary Yellen Says U.S. Debt Load is in ‘Reasonable Place’ If It Remains at this Level

Why Investors Don’t Believe the Fed

Why Big US Banks Are Resisting Bigger ‘Capital Cushions’

Goldman Sachs Aims to Double Lending to Wealthy Private Bank Clients

Trump to Pitch Dimon, Fraser as Verdict Fails to Scare Off CEOs

JPMorgan to Wager on Weight-Loss Craze With $500 Million Fund

Big Tech Wins Again on Double Whammy Day

TikTok, Snap Find It’s Not Easy to Keep Young Kids Off the Apps

Larry Ellison’s Fortune Passes Brin and Ballmer as AI Boosts Oracle

China’s EV Makers Saw Europe Tariffs Coming, and Many Already Have a Plan

Tesla Expects to Raise Model 3 Price In Europe Due to EU Tariffs on EVs From China

Tesla Share Price Is Its Own Referendum on Musk

Tesla Jumps After Musk Says Shareholders Backed Pay Package

Elon Musk Allegations Are a Reminder That Harassment Is About Power

Montana Has More Cows Than People. Why Are Locals Eating Beef From Brazil?

The Rise and Fall of a $600 Million Strip-Mall Tycoon

Disney and DeSantis Reach Agreement, Ending Protracted Fight

HBO Could Use a Hit. Enter the Dragons

Sony Pictures Acquires Alamo Drafthouse in Lifeline to Cinema Chain

Be sure to follow me on Twitter.

Morning News: June 12, 2024
Posted by Eddy Elfenbein on June 12th, 2024 at 7:04 am

OPEC+ Producers Are Caught Between Diverging Oil Forecasts

The World Will Be Swimming in Excess Oil by End of This Decade, IEA Says

G-7 to Call on China to Stop Helping Russia’s War in Ukraine

EU to Impose Additional Tariffs on EV Imports From China

Umicore Slashes Guidance After Slower EV Demand Hits Battery-Materials Business

Uniper Wins $14 Billion Arbitration Ruling Against Gazprom

Far Right May Irk EU in €500 Billion Investment Push, Scope Says

FedEx to Lay Off up to 2,000 Employees in Europe Amid Cost-Cutting Efforts

U.K. Economy Slows, Underlining Government’s Challenges as Elections Loom

Peso Gets Crushed as Investors Worry Sheinbaum’s Win Was Too Big

Fed Officials Eye Key Inflation Metric Hours Before Rate Decision

Biden Nears Pick for Next F.D.I.C. Chair

JPMorgan Risk Swap Ends Up at a Familiar Place: Rival Banks

US Money Funds Look Past Reform Angst Thanks to High Rates

The Tiny Trades That Brought Down Segantii’s Giant Hedge Fund

GameStop Raises Over $2 Billion After Roaring Kitty Rally

McKinsey Boss’s Next Big Consulting Project: His Own Firm

Asia’s Family Office Frenzy Comes With Plenty of Imposters

Explosive Cases Flow to US Supreme Court from ‘Bold’ Regional Court

I Spent a Day Down TikTok’s Disinformation Rabbit Hole

Paramount Can’t Stay Independent Long After Rebuffing Skydance

Why the Paramount Deal Talks Failed

Losing a Bridge Upends Life in Baltimore (and It May Soon Get Worse)

Buyers Snap Up Aging and Empty Office Buildings for Deep Discounts

More Than 75% of US Hotels Remain Short-Staffed

The World’s Most Online Male Gymnast Prepares for the Paris Olympics

Be sure to follow me on Twitter.