Morning News: September 4, 2023
Posted by Eddy Elfenbein on September 4th, 2023 at 7:08 am

Money and Politics Put World’s Biggest Climate Deal at Risk

Russia Says It Will Not Let Foreign Banks Exit the Market Easily — Unless They Unfreeze Russian Assets

Xi’s Unexplained G-20 Snub Erodes Image as Global Statesman

Huawei Teardown Shows Chip Breakthrough in Blow to US Sanctions

China’s Biggest Homebuilder Reels as Economy Slows

Faced With Evolving Threats, U.S. Navy Struggles to Change

US Stock Investors’ Complacency is Worrying, JPMorgan Strategists Warn

The Discredited Phillips Curve Cannot Be Discredited Enough

Inside a Sales Army Turning a Tax Break Into a Modern-Day Gold Rush

Arm IPO Expectations Tempered by Reality as Roadshow Kicks Off

Diamond Prices Are in Free Fall in One Key Corner of the Market

India Steps Up Coal Use to Stop Outages Triggered by Unusually Dry Weather

Warren Buffett’s Green Cash Washes Over Coal Country

J&J’s $40 Billion Split-Off Sets Stage for Pharma, Medical Tech Expansion

The Ground-Floor Window Into What’s Ailing Downtowns

Where in the World Are People Back in the Office?

A Summer of Strikes

Labor Could Be Detroit’s Next Big Disruption

Electric Cars Power China’s Economic Hopes as Internet Titans Take a Back Seat

Mercedes Bets on Range Boost in Swipe at Tesla’s EV Lead

Apple Is Set to Embrace an iPhone Charger Change It Didn’t Want

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Morning News: September 1, 2023
Posted by Eddy Elfenbein on September 1st, 2023 at 7:02 am

New Rising Stars Are Powering Gulf’s $50 Billion Spending Spree

India Is Losing a Green-Energy Subsidy Race

World’s Biggest Interest Rate Cuts Are Chile’s Prize for Taming Inflation

China Ramps Up Campaign to Boost Fragile Economy, Currency

The US, Allies See Opportunity and Risk in China’s Slowing Economy

Fed Officials Will Parse Jobs Numbers to Assess Economy’s Momentum

Summer Spending Surge Shows Consumers Driving Economic Growth

Rates Are Up. We’re Just Starting to Feel the Heat

US Stocks Still Face Hard Landing Risks, Bank of America Says

NFTs, Once Hyped as the Next Big Thing, Now Face ‘Worst Moment’

Wall Street Moguls Win Important Backer in Their Fight Over Hedge Fund Sale

Jon Corzine’s Critics Want Him Banned From Futures Trading

Wall Street Gets Tough on Return-to-Office Laggards

US Hiring to Slow Again Amid Writers Strike, Yellow Bankruptcy

5 Things CFOs Should Know About Generative AI

Billionaires’ Secretive Plan to Build a New City Is Backfiring

Tesla Refreshes Model 3 and Slashes Prices of Top-End Cars

Walgreens Chief Executive Roz Brewer Steps Down

New Boozy Drinks Blur Lines Between Kid and Adult Beverages

People Are More Generous Than You May Think

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Morning News: August 31, 2023
Posted by Eddy Elfenbein on August 31st, 2023 at 7:04 am

Inflation Rate in Eurozone Holds Steady

China’s Factory Activity Sparks Hope Slump Is Bottoming Out

China’s Slowing Economy Spells Trouble for Dry-Bulk Shipping

The U.S. and China Are Talking Again. Where It Will Lead Is Unclear

U.S. Businesses Need Predictability From China, Commerce Chief Says

The US Is Losing the Corn-Exporting Crown

Shell Quietly Abandons Its $100 Million-a-Year Plan to Offset Carbon Emissions

Fed’s Bostic Urges Caution to Avoid Inflicting Unnecessary Pain

UBS Flags Cost Cuts After $29 Billion Credit Suisse Windfall

Microsoft to Unbundle Teams Software in Europe

Musk Says X Will Offer Video and Audio Calls in Move Toward Super-App

The Tropical Island With the Hot Domain Name

Salesforce Needs to Play Its AI Chips Wisely

EV Boom Remakes Rural Towns in the American South

Companies Are Using Fewer Temp Workers, but That Doesn’t Portend a Downturn

Make Less Than $55,000 a Year? You Could Get Overtime Pay Under Biden Plan

Mark Thompson Helped Steady 2 News Outlets. Can He Do the Same at CNN?

Constellation Brands Has Sobered Up. Its Stock Has Room to Party

The Fight to Control Big Gay Ice Cream, Which Made the Rainbow Its Brand

For Women With Money Issues, an A.D.H.D. Diagnosis Can Be Revelatory

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Morning News: August 30, 2023
Posted by Eddy Elfenbein on August 30th, 2023 at 7:05 am

Gabon Military Stages Coup, the Latest to Hit a Former French Colony in Africa

Parisians Are Pledging Allegiance to the ‘Republic of Super Neighbors.’ They Must Bring Cheese.

China Moves to Shore Up Finances of Troubled Bank

China’s Biggest Homebuilder Raises Capital in Scramble to Pay Debts

EU Lawmakers Struggle to Compromise on Post-Brexit Derivatives Clearing

Crypto’s Top Enemy Gensler Put on Defensive by Grayscale Ruling

Funds Punished for Owning Too Few Nvidia Shares After Stunning 230% Rally

Tiger Cubs’ Wrong-Way Bets Cut Flow of Fresh Cash to a Trickle

Voice Deepfakes Are Coming for Your Bank Balance

Oil Rises on US Stockpile Draw and Hurricane Jitters

Lithium Players Race for Breakthrough to Meet Electric Car Demand

Toyota-Supplier Denso Is Ready for the EV Era

Where Peak-Season Shipping Is Headed, In Charts

Train Wi-Fi Can Be Terrible. Operators Are Looking High and Low for Solutions

Salesforce Boss Marc Benioff Warns He May Pull Headline Conference from San Francisco Over Rampant Homelessness and Drug Use—but He’s Donating $1 Million to Try to Help

A California Land Mystery Is Solved. Now the Political Fight Begins

Where Tech Investors Are Buying Up Land, Locals Are Worried

The Hostile Takeover of Blue Cities by Red States

How a Tiny Mexican Border City Built a Budget Dental Empire

Lego Sales Increase While Other Toy Makers Struggle

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CWS Market Review – August 29, 2023
Posted by Eddy Elfenbein on August 29th, 2023 at 6:53 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.”)

Jay Powell Gives Stocks a Boost

“August, die she must.” So sang Simon and Garfunkel. Indeed, the month of August is nearly over, and it’s been a slightly negative one for Wall Street. Through Tuesday, the S&P 500 is down 2% for the month. Of course, that’s not a very big drop in any historical context, but it could be our first monthly loss since February.

Interestingly, when the mini-selloff started at the beginning of the month, growth stocks took much of the heat. That’s standard for a downward market, but then things changed, and it was value suffering the most.

The S&P 500 even closed below its 50-day moving average for nine days in a row. The streak finally ended today thanks to a nice three-day rally on Wall Street. In fact, the S&P 500 just posted its best three-day run since March.

On Tuesday, the S&P 500 had its best day since June 2. If you want to split hairs, Tuesday’s gain was a millimeter behind the gain from June 2 (1.453% to 1.451%).

What’s the cause for the late-August optimism? That’s no secret. It was largely due to the Fed Chairman Jerome Powell’s tempered outlook at Jackson Hole this past weekend.

On the weekend before Labor Day, the Federal Reserve holds its annual powwow in Jackson Hole, WY. On Friday, Jerome Powell gave a speech in which he stressed the need to be vigilant against inflation. That’s pretty much boilerplate for any big Fed conference although he did say that more rate hikes may be coming.

Powell didn’t give a lot of details, but he did say that the Fed has made considerable progress in fighting inflation. Last summer, the 12-month inflation rate peaked at more than 9%. It’s down by about two-thirds since then. Bear in mind that prices are still rising, just at a slower rate.

Powell said, “We are prepared to raise rates further if appropriate and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”

While that sounds tough, it’s noticeably different from last year’s Jackson Hole conference. That’s when Powell made headlines by saying that “some pain” will be needed to confront inflation. That line seriously rattled the markets. In fact, stocks didn’t turn positive until October.

This year, markets are far more pleased. I think many observers were concerned that Powell would deploy more “some pain”-type of rhetoric. That didn’t happen and stocks and bonds are rallying. Over the last week, the yield on the 10-year Treasury has fallen by 0.2%.

We don’t have the August inflation numbers yet, but the core inflation rates for both June and July were 0.2%. That’s pretty good. Powell agreed that those numbers are good, but he added that it’s “only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal.”

The Fed is winning the war against inflation, but it’s important to stress that the battle isn’t over just yet.

Another good development is that the Fed has reduced its gigantic balance sheet. The Fed has allowed nearly $1 trillion worth of bonds to roll off since the middle of last year.

The Fed meets again in three weeks. This will be another meeting where the Fed will update its economic forecasts. For now, the futures markets largely expect another pause from the Fed. That means the central bank will vote to keep its target range for the Fed funds rate at 5.25% to 5.50%. Interest rates haven’t been this high in 22 years.

After next month’s meeting, things get a little cloudy. The Fed won’t meet again until early November. Right now, it looks to be a tossup on the odds for another rate hike. Futures traders are about evenly divided between a 0.25% rate hike and another rate pause. Obviously, the data between now and then will help tip the balance.

We can’t say for certain, but this could be end of the Fed’s rate-hiking cycle. Even if there’s another hike or two coming, the long series of hikes is mostly likely past us. Traders currently think there’s a decent shot of a Fed rate cut by May. I’m skeptical but I understand that investors are concerned about future economic growth.

Higher interest rates have an important influence on investors as they force investors to become more conservative with their portfolios. Cheap money can initially reward foolish ideas. Those rewards often don’t stay for long.

Better’s SPAC Goes SPLAT

Speaking of silly behavior, Better.com (BETR) has seen better days. The online mortgage lender went public this week, but not by the traditional route.

Instead, Better.com’s parent company, Better Home & Finance, merged with Aurora Acquisition Corp. (AURC)

Never heard of them? Well, you’re not alone. Aurora is a Special Purpose Acquisition Company, better known as a SPAC.

SPACs are basically shell companies that are already listed on the exchanges. Instead of going public through an IPO, a SPAC will buy an unlisted company thereby making it publicly traded. That way, it skips a lot of bureaucratic steps.

If you think SPACs are sketchy, I agree. The day before the Better deal, shares of Aurora were trading at $17.44. After the deal, the stock fell to $1.15. Now it’s at 85 cents per share. The SPAC is now a speck.

SPACs were all the rage a few years ago. It’s amazing how low interest rates can make smart people do a lot of silly things. In Q1 of 2021, 278 SPACs hit the market. In Q2 of this year, only four went public. In Q1 of 2021, 98 SPAC deals were announced, but only 100 in the first half of this year.

Bloomberg notes that there have been 11 SPAC deals this month. Nine of them are in the red. The median loss is 41%. Roughly 40% of the 400 SPACs now trade below $2 per share. Most SPACS started at $10 per share so we’re talking about an 80% loss.

Better is fighting two headwinds at the same time. It’s a terrible market for SPACs and it’s a lousy market for mortgages. Better is already considered somewhat shady. This is the company that made the news two years ago when it fired 900 employees over Zoom. These aren’t exactly PR geniuses we’re dealing with.

If that’s not enough, the SEC delayed Better’s SPAC deal until it concluded an investigation to see if it had violated securities law. The SEC ultimately decided against any enforcement action.

Better is only the latest in a series of SPACs than have gone splat. Shares of WeWork (WE) and Virgin Galactic (SPCE) have both been crushed. Virgin Orbit and Pear Therapeutics both filed for bankruptcy. WeWork may not be far behind.

It really is all driven by interest rates. When rates are high, the future is expensive, but when rates are low, the future is cheap — and sometimes it gets too cheap.

That’s all for now. The stock market will be closed on Monday for Labor Day. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

P.S. If you want more info on our ETF, you can check out the ETF’s website.

Morning News: August 29, 2023
Posted by Eddy Elfenbein on August 29th, 2023 at 7:05 am

China’s Economic Outlook: Pep Talks Up Top, Gloom on the Ground

China Banks to Cut Rates on Mortgages, Deposits

Manufacturers Leaving China Find a Home With Indian Startups

Germany Is Losing Its Mojo. Finding It Again Won’t Be Easy

Quietly Absorbing One More Fed Hike

The S&P Just Avoided an Unwanted Statistic. This Is the Next Text

FDIC Set to Unveil Plan for Stricter Regional Bank Rules

Citadel Vets 69,000 Intern Applicants to Find Next Math Geniuses

World’s Hottest Stock Evokes Memories of a $400 Billion Crash

Goldman Is Selling a Wealth-Advisory Unit to $240 Billion Money Manager

C.E.O.s Side with New York in the Migrant Crisis

Move Over, San Francisco: The Suburbs of Silicon Valley Are Calling

Mortgage Rates at 7% Are Making Everything Worse for US Homebuyers

More US Firms Offer Student Loan Help to Debt-Burdened Grads

NIO Earnings Miss Estimates. But There Is Some Good News for Tesla and BYD

Amazon CEO Andy Jassy Warns Remote Workers: ‘It’s Probably Not Going to Work Out for You’

3M Board Approves $6 Billion Earplug Settlement

U.S. Fines American Airlines for Dozens of Long Tarmac Delays

Subway Foot Traffic Crumbles More than 20% as Sandwich Maker OKs $9.6 Billion Sale

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Morning News: August 28, 2023
Posted by Eddy Elfenbein on August 28th, 2023 at 7:11 am

Euro Zone Lending Growth Slows Further as Rate Hikes Bite

Lagarde Policy Silence Keeps ECB Interest-Rate Debate Raging

Why Central Bankers Are Unsure Whether They’ve Raised Rates Enough

China’s 5.5% Stock Rally Fizzles in Blow to Market Rescue Effort

Evergrande Loses $2 Billion In Value As Trade Resumes; Extends Creditor Voting

China’s Worsening Economic Slowdown Is Rippling Across the Globe

Biden’s Commerce Secretary Raimondo Says Trade Can Stabilize US-China Ties

Apple’s iPhone Supply Chain Splinters Under US-China Tensions

US-Sino Tensions Help Spawn China Card Game Craze

Fed’s Inflation Fight, China’s Slowdown Hammer Emerging Markets

Economists, and Their Comical Search For a Higher ‘Inflation Target’

Traders Have S&P 500 Comebacks Fading at Historic Pace

The ‘Fidelity Mafia’ Behind Big Crypto

Western Banks Help Fund Blacklisted Oligarch’s Charity

Consumers Are Spending Like It’s 2019

Auto Union Boss Wants 46% Raise, 32-Hour Work Week in ‘War’ Against Detroit Carmakers

3M Agrees to Pay More Than $5.5 Billion Over Combat Earplugs

Owens Corning Appears Insulated From High Rates

Hawaiian Electric Stock Surges. It’s Fighting Back Against Maui Wildfire Allegations

Broken Satellite Risks Big Claim in Shrinking Insurance Market

A.I. Brings the Robot Wingman to Aerial Combat

Please Support This Ice Maker: Big Manufacturers Try Crowdfunding to Market-Test Products

The Kingdom of Golf Carts

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Morning News: August 25, 2023
Posted by Eddy Elfenbein on August 25th, 2023 at 7:00 am

Argentina’s Milei to Send Team for Investor Talks in New York

China Stimulus Rally Lasts Just 10 Minutes, Showing Trader Gloom

US Budget Deficits Are Exploding Like Never Before

How Jackson Hole Became an Economic Obsession

One Year Later, Powell Faces a Changed Economy and Market

Why the Stock Market’s Summer Doldrums Are Not a Problem

Stockpickers Aren’t Stupid. The Market Is Just Stacked Against Them

Crypto Is Dead? Or Is That Just ‘Fud’?

Pro Take: Corporate Venture Capital Provides Path for Long-Term Tech Strategy

Heineken Sells Russia Business…for $1

These Are 5 Ways Surging Mortgage Rates Are Reshaping the Housing Market

Zillow Offers 1% Down Payment to Lure Struggling Homebuyers

This Is Public Housing. Just Don’t Call It That

AstraZeneca Fights Back Against Biden’s Move to Cap Drug Prices

Justice Department Sues SpaceX, Alleging Discrimination Against Refugees

Wagers on the Weather? Insurers Offer a Way for Businesses to Hedge Climate Risks

Seafood Is Safe After Fukushima Water Dump, but Some Won’t Eat It

Coach and Michael Kors Tie-Up Shows Limits of Accessible Luxury

Shein and Forever 21 Team Up in Fast-Fashion Deal

New US Private-Jet King Crowned After Cessna Model’s Long Reign

He Didn’t Start the Fyre

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Morning News: August 24, 2023
Posted by Eddy Elfenbein on August 24th, 2023 at 7:03 am

BRICS Asks Saudi, Iran, Other Nations to Join Bloc

Insiders Say China’s $9 Trillion Debt Problem Is Getting Worse

How China Made Its Housing Crisis Worse

Turkey’s Central Bank Raises Rates More Quickly Than Expected

How Jackson Hole Became an Economic Obsession

Powell Is Using Jackson Hole as Final Push in Inflation Fight

Bank Boardrooms Need More Experts on Nature-Related Risks

KKR’s Latest Bankruptcy Deal Is a Bad Omen for Lenders

In Quest for Battery Metals, U.S. Takes On Cobalt’s ‘Inconvenient Truth’

How High a Rate Can Housing Take?

The U.S. Regulates Cars, Radio and TV. When Will It Regulate A.I.?

Nvidia Nears Record High as AI Demand Fuels Blowout Forecast

In Reversal Because of A.I., Office Jobs Are Now More at Risk

Sandwich Chain Subway Agrees to Sell Itself to Roark Capital

Shein Strikes Deal With Forever 21

Facing Backlash, Nike Says It Will Offer Star Soccer Goalie’s Jersey

Michael Jordan Is the Richest Basketball Player Ever With $3.5 Billion Fortune

Elon Musk Is Acting Like He Wants to Break His Own Company

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Morning News: August 23, 2023
Posted by Eddy Elfenbein on August 23rd, 2023 at 7:08 am

Slide in Euro Zone Service Sector Sharpens ECB’s Rates Dilemma

The Hottest Jobs in Argentina Are the Ones That Pay in Dollars

Can Shrinking Be Good for Japan? A Marxist Best Seller Makes the Case

China Tries to Increase Its Clout in Africa Amid Rivalry With the U.S.

Oil Slides on Grim Manufacturing Data

The Race to Ditch Russian Uranium Starts in New Mexico’s Desert

The BRICS and Their Dollar Dilemma

Recession Fears Have Been ‘Blown Out of the Water,’ Long-Serving Fed President Says

US SEC Readies Vote on Regulatory Overhaul for Private Funds

Bank of America Trading Desks Gain Ground With More Capital

With ‘Everybody Else’ Dead or Gone, One California Bank Thrives

US Mortgage Rates Jump to 7.31%, Highest Level Since Late 2000

Youngest Baby Boomers’ Pay in the US Peaked When They Hit 45

Goldman Sachs Cancels ‘Summer Fridays,’ Wants Staff in Office Five Days a Week

U.S. Steel, United Steelworkers Square Off on Takeover

UPS Employees Approve New Contract, Averting Strike

Bankrupt Trucker Yellow’s Real Estate Is in High Demand

Ford CEO Jim Farley and his $300,000 Mustang are Gunning for Porsche

Foot Locker’s Stock Tumbles 31% as Company Suspends Dividend after Swinging to a Loss

Peloton Gives Downbeat Forecast as Comeback Remains Elusive

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