Morning News: November 28, 2023
Posted by Eddy Elfenbein on November 28th, 2023 at 7:05 am

China’s Property Lifeline Exposes Banks to Big Losses, Job Cuts

The Hong Kong Judge Who Puts Fear Into China’s Deadbeat Builders

Gold Bars and Tokyo Apartments: How Money Is Flowing Out of China

European Fund Giant Amundi Dips Toe Back into Turkey’s Lira

Biggest Climate Talks Ever Confront Global Chaos and Record Heat

BlackRock Sees Bank Reforms Freeing $4 Trillion in Climate Funding

Vietnam Relied on Environmentalists to Secure Billions. Then It Jailed Them

A Psychedelics Boom Is Minting Environmentalists

UBS Chair Kelleher Warns Bubble Is Forming in Private Credit

Ex-Hedge Fund Boss Fights SEC at Supreme Court With Big Backers

Goldman CEO Says Proposed Bank Rules Could Impact Airfares, Pensions

In the Age of Public Salary-Range Listings, Some Jobseekers Feel Duped

Inside U.S. Efforts to Untangle an A.I. Giant’s Ties to China

Chinese Sales Swamp Competition in Soaring Mexican Car Market

Musk’s Cybertruck Is Already a Production Nightmare for Tesla

Tesla Sues Swedish Transport Agency in Dispute Over License Plates

New Bidder Aims to Save Bankrupt Trucking Firm, if Treasury Goes Along

Fashion Retailer Shein Files Confidentially for US IPO

Shein Still Needs to Prove It’s a Bargain

Advertising Is Dead. Long Live Advertising

U.S. Whiskey Is ‘Collateral Damage’ in Trans-Atlantic Trade Fight

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Morning News: November 27, 2023
Posted by Eddy Elfenbein on November 27th, 2023 at 7:02 am

Behind Tesla’s Challenges in Making the Cybertruck: Ultrahard Stainless Steel

Global Automakers Turn to China for EV Lessons

China’s Remote Deserts Are Hiding an Energy Revolution

Origin Energy Bidder Doesn’t Know How Much Largest Shareholder Wants

President Biden Plans to Skip COP28 Climate Summit in Dubai

Now for Some Good News About Climate

Javier Milei Needn’t ‘Dollarize’: Market Forces Have Done It for Him

Russian Central Bank to Resume Domestic FX Market Interventions from January

China Scrambles to Contain a Looming Shadow-Bank Meltdown

Goldman’s Jan Hatzius Believes the Hard Part Is Over

Billions Wiped Out as Stock-Safety Trade on Wall Street Misfires

Americans Ditched Big Cities During the Pandemic. Now Many Are Regretting It

Just How Bad Is the US Cost-of-Living Squeeze? We Did the Math

Retailers Have Cleaned Up Their Inventories for the Holidays

There’s a Lot Riding on Black Friday and Cyber Monday

The Biggest Delivery Business in the U.S. Is No Longer UPS or FedEx

Blackstone’s Schwarzman Sees Opportunities in Europe Real Estate

Choice Hotels Prepares to Challenge Wyndham’s Board

Hot Healthcare Hiring Bolsters Cooling U.S. Labor Market

Amazon Once Inspired Fear in the Health-Care Industry. No Longer

How To Make a Weight-Loss Drug Go Viral

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Morning News: November 24, 2023
Posted by Eddy Elfenbein on November 24th, 2023 at 7:04 am

A More Moderate Milei Embraces Trading Partners He Had Shunned

Dirty Venezuelan Fuel Imports Threaten Colombian Leader’s Green Credentials

Germany Announces Special Budget to Avert Crisis

Turkey Nears First Bond Sale to Abu Dhabi Fund in Landmark Deal

Mideast Wealth Funds Draw Greater US Scrutiny Over China Ties

Ukraine’s Struggle for Arms and Attention Gives Putin an Opening

Canada’s Real-Estate Market Stumbles as Rate Hikes Bite

Nissan Invests $1.4 Billion to Build Two New EV Models in Britain

Tennessee Zinc Smelter Is at the Center of U.S.-China Trade Fight

Why Americans Can’t Buy Cheap Chinese Electric Vehicles

Auto Dealers Find Savings by Buying Cars Off the Street

Asset Managers Quietly Add ‘ESG’ to Portfolios of Defense Stocks

Muddy Waters’s Latest Target Follows String of Notable Wins

College Dropouts Who Weathered Crypto’s Crash See Promise Ahead

Nvidia Shares Fall as It Reportedly Delays China AI Chip Designed to Comply with U.S. Export Rules

The Pension: That Rare Retirement Benefit Gets a Fresh Look

YOLO Consumers to Decide Winners and Losers This Holiday Season

Black Friday Isn’t What It Used to Be

These Retail Workers Make Your Holiday Shopping Spree Possible

Next Year’s Holiday Gift May Be AI in Your Pocket

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

Russia’s Sanctioned Sovcombank Requests US Licence to Make UN Climate Payments

Why Carbon Capture Is Big Oil’s Solution for Climate Change

In Biden’s Climate Law, a Boon for Green Energy, and Wall Street

Turkey Central Bank Hikes Rate by Double the Forecast to 40%

Germany Financial Sector Facing Dark Clouds, Bundesbank Warns

German Budget Mess Could Inflict Big Growth Hit in 2024, BE Says

Dutch Giant ASML Warns Against Labor Curbs After Far-Right Win

Mexico’s Inflation Ticks Up as Banxico Holds Key Rate Steady

Chinese Financial Conglomerate Zhongzhi Has a $31 Billion Problem

China Races to End Property Panic, Fill $446 Billion Gap

Washington Quietly Scrapped a Plan to Save Homeowners Thousands of Dollars

Virgin Money’s Profit Misses Forecasts as Cost Pressures Bite

A $200,000 Pet-Rock NFT Shows How Crypto Is Relapsing Into FOMO

Altman Is Back at OpenAI, But Questions Remain as to Why He Was Fired in First Place

OpenAI Engineers Earning $800,000 a Year Turn Rare Skillset Into Leverage

A.I. Belongs to the Capitalists Now

Judge Says Evidence Shows Tesla and Elon Musk Knew About Flawed Autopilot System

How the Memphis Sanitation Workers’ Strike Changed the Labor Movement

Toy Shoppers Come Down With a Case of the Holiday Blahs

Colt Makes $1.74 Billion Offer for Vista Outdoor, Gate-crashing Rival Deal

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Morning News: November 22, 2023
Posted by Eddy Elfenbein on November 22nd, 2023 at 7:05 am

OPEC+ Talks Hit Turbulence as Saudis Agitate Over Output Levels

Andurand Says OPEC+ May Need Deeper Cuts as US Supply Surges

Argentina Is a Textbook Case of ‘Fiscal Dominance’

African Bank Plans Pre-IPO for Shareholders, Eyes 2025 Listing

ECB’s Centeno Says Inflation Expectations Remain Anchored

US Mortgage Rates Slide Sharply, Reinvigorating Housing Demand

Some of America’s Costliest Cities Offer Best Middle-Class Life

It’s the Most Wonderful Time of the Year (for the Economy)

The Rules for Holiday Spending This Year (No. 1: Wait ‘Til December)

American Shoppers Have Plenty of Dry Powder

McKinsey and Its Peers Are Facing the Wildest Headwinds in Years

The Sudden Downfall of Changpeng Zhao, the Crypto Titan Behind Binance

Sam Altman Returns as OpenAI CEO in Chaotic Win for Microsoft

Nvidia Fails to Satisfy Lofty Investor Expectations for AI Boom

The Bill for Offshore Wind Power Is Rising

Ford Resumes Work on E.V. Battery Plant in Michigan, at Reduced Scale

Mary Barra’s $280 Billion Goal Confronts a Litany of GM Hurdles

Why China and Boeing Still Need Each Other

The Old-School Artillery Shell Is Becoming High Tech

Blackstone to Buy U.K. Software Developer Civica

Music Licensing Giant BMI Sells to Private Equity Firm

The Strange $55 Million Saga of a Netflix Series You’ll Never See

How Elon Musk Spent Three Years Falling Down a Red-Pilled Rabbit Hole

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CWS Market Review – November 21, 2023
Posted by Eddy Elfenbein on November 21st, 2023 at 6:13 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.”)

Milei Wins

Earlier this year, I wrote about the stunning presidential primary victory of libertarian economist Javier Milei. This was a major shock, not only to the political establishment, but also to world currency markets. The Argentine Fed responded by raising interest rates 21% to 118%.

Now Milei has been elected president and he has an opportunity to implement his agenda.

The point I want to make wasn’t about the particulars of Argentinian politics but about the interplay of financial markets and government policy. This is an important aspect that’s often overlooked by investors and policy makers.

Investors tend to see the economy as a chessboard and the politicians as those who move the pieces around. In many ways, the truth is the precise opposite. The economy calls the tune, and the politicians adjust their policies.

James Carville famously said, “I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody.” Boy, is that right.

Indeed, there many times when investors can serve as the veto of last resort. In the end, currency markets get a vote.

Here’s part of what I wrote:

I should explain that Milei isn’t exactly your typical presidential candidate. Milei isn’t merely a small-government conservative; he’s a full-throated anarcho-capitalist. Two of his dogs are named Milton and Murray, in honor of Friedman and Rothbard.

I don’t want to give you the impression that Milei is somehow odd or unusual. For example, he wants to legalize the selling of organs and children. He also refuses to comb his hair. Additionally, he’s a tantric sex instructor. After that, things frankly start to get a little odd.

Now he’s president. Yes, Milei is zany but that’s part of his charm. The real story is that the economy is Argentina is a disaster. Inflation is running at 138%, and the country is on the brink of its sixth recession in the last decade.

People are frustrated and they want something done, even if it’s dramatic. In the U.S., we were alarmed about 9% inflation. Here’s a look at the inflation rate in Argentina.

This means prices double in less than a year.

One of Milei’s bolder plans is “dollarization.” He wants to ditch the Argentine peso and use the U.S. dollar. Other countries like Panama and Ecuador have tried this, but no one as big as Argentina has given it a shot.

The Argentine peso is governed by strict capital controls. There’s the official rate which is around 350 pesos to the dollar; then there’s the real rate. It never seems to occur to policymakers that their currency can be, and is, traded outside their country. The unofficial price for the peso is about one-third the official price.

For a land of such beauty and promise, Argentina seems to go from one self-induced crisis to the next. Forty percent of the people live in poverty. Yet it’s that frustration that’s driving Milei’s popularity. Milei said he wants to cut taxes and implement large spending cuts.

Did I mention that he cloned his dog? Yep, he did that too.

I’m not sure that the people of Argentina have embraced Milei’s strong views. Perhaps they have, but the truth is that things are so bad that voters are willing to give politicians outside the mainstream a hearing. Of course, we’ve had similar outcomes in our elections.

The problem with replacing the peso with the dollar is that Argentina simply doesn’t have enough dollars. They need outside investors and lots of them. Argentina could go to the IMF, but they’re already the IMF’s largest borrower.

Bond markets have been notoriously troublesome for some politicians. In 1981, Francois Mitterrand won a stunning Socialist victory. A lot of French money quickly found a new home in New York. Eventually, Mitterrand reversed course on his more radical policies.

Liz Truss faced a similar crisis last year, leading her to resign after just seven weeks as U.K. Prime Minister.

A Milei presidency could have a major impact on global commodity markets. Argentina is famous for its beef, but it’s also the world’s fastest-growing lithium producer. Milei has promised to take the axe to farm taxes. That could make Argentina’s agricultural sector more competitive. The country also has major deposits of copper and shale oil.

For now, the markets love Milei. In yesterday’s trading, shares of Argentina-based stocks soared on U.S. markets. There are 15 Argentine stocks that trade in the U.S. Most of the companies are financial or energy stocks, with a few utilities. Shares of Telecom Argentina (TEO) were up 22% yesterday, and they gained another 10% today. YPF Sociedad Anónima (YPF), a large energy company, jumped 40% yesterday. Check out the recent performance of the Argentina ETF (ARGT):

I’m skeptical Milei will get much of his program passed. Bureaucracies are hard to change. Still, it’s another indication that voters aren’t happy with high inflation and corruption. In the end, Milei will be able to go as far as the bond and currency markets let him.

The Fed Says It’s Not Looking to Cut Rates

This afternoon, the Federal Reserve released the minutes from its most-recent FOMC meeting (October 31 to November 1). Today’s minutes show that the Fed is in no hurry to cut rates. While inflation has been much better behaved, it’s still above the Fed’s target rate of 2%.

The Fed is not fully convinced that the battle against inflation has been won. That’s probably correct. During the 1970s, inflation came back again and again, worse each time. The Fed wants to avoid that.

The Fed is saying that policy should remain “restrictive” until it’s clear that inflation is headed back to 2%.

From today’s minutes:

In discussing the policy outlook, participants continued to judge that it was critical that the stance of monetary policy be kept sufficiently restrictive to return inflation to the Committee’s 2 percent objective over time.

All participants agreed that the Committee was in a position to proceed carefully and that policy decisions at every meeting would continue to be based on the totality of incoming information and its implications for the economic outlook as well as the balance of risks.

Participants noted that further tightening of monetary policy would be appropriate if incoming information indicated that progress toward the Committee’s inflation objective was insufficient.

Translated from Fedspeak, this is simply the Fed trying to sound tough. That’s quite different from making an actual tough-minded policy decision.

The markets continue to believe strongly that the Fed is done hiking rates. Odds of a rate hike at the December FOMC meeting are currently at 5%. For March, traders see a 28% chance of a Fed cut.

That’s interesting because at his last news conference, Jerome Powell said the Fed isn’t even talking about rate cuts. For May, the rate-cut odds rise to 59%, and by Election Day, traders expect to see three rate cuts.

We’re now witnessing a growing gap between what the Fed is saying, and what the public believes. When in doubt, I have greater confidence in the market’s opinion.

That’s all for now. 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: November 21, 2023
Posted by Eddy Elfenbein on November 21st, 2023 at 7:05 am

For Argentina, Dollarization May Work Better on YouTube Than in Reality

South African Inflation Breakevens Tumble as Rates Seen on Hold

Russian Agricultural Bank Files Lawsuit Against JP Morgan

Bond Managers of $2.5 Trillion Make Case for Leaving Cash Behind

Is the US Headed for a Recession? Look at What Richer Americans Do on Black Friday

New ETF Tracks Developers of Obesity Drugs Amid Ozempic Hype

The Great Disconnect: Why Voters Feel One Way About the Economy but Act Differently

Higher Interest Rates Are Shattering Housing Dreams Around the World

October Home Sales Likely Fell to New 13-Year Low

Houses Too Expensive to Buy Underpin Lofty Rents

China Property Stocks Surge After Beijing Picks 50 Firms to Fund

US Is Seeking More than $4 Billion From Binance to End Case

A New Front Is Opening Up in the US-China Conflict Over Chips

How Microsoft’s Satya Nadella Kept the ‘Best Bromance in Tech’ Alive

OpenAI in ‘Intense Discussions’ to Quell Potential Staff Mutiny

The Long Shadow of Steve Jobs Looms Over the Turmoil at OpenAI

India Closer to Agreement With Tesla to Import EVs, Set Up Plant

GM’s Driverless Taxis Need to Slow Down

Wyndham Rebuffs Latest Takeover Attempt From Choice Hotels

How a Billionaire Banker Is Helping Elite US Colleges Recruit New Talent

A Descendant of Freed Slaves, Financier Pursues Family’s $900 Million Oil Claim

Soon You May Know Exactly Where Your Diamond Was Mined

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Morning News: November 20, 2023
Posted by Eddy Elfenbein on November 20th, 2023 at 7:03 am

Milei Opens a New Era: What Comes Next in Argentina Policymaking

China Drafts List of 50 Property Firms Eligible for Funding

Trudeau’s Spending Plans Are Squeezed by Soaring Debt Payments

UK Convenes Wall Street Titans at Royal Palaces to Woo Investment

Fed Increasingly Turning to Anecdotes to Make Sense of Economy

The White House May Condemn Musk, but the Government Is Addicted to Him

Bayer’s Investment Case Seen Shaken by Double Whammy

US Securities Regulator Signals It May Curb Climate Rule Ambitions

This Coal Giant Now Wants to Get Out of Coal

NRG Energy CEO Exits Amid Board Shakeup

Pritzker Chases Every Federal Dollar With New $1 Billion EPA Bid

How to Boost EV Sales? Pay Drivers to Turn in Old Polluting Cars

‘Lost Time for No Reason:’ How Driverless Taxis Are Stressing Cities

Kyle Vogt Resigns as CEO of GM’s Driverless-Car Unit Cruise

Talks to Bring Sam Altman Back to OpenAI Stretch Through Weekend

Microsoft Ends Weekend of OpenAI Drama With Coup of Its Own

A 30-Year Trap: The Problem With America’s Weird Mortgages

More Americans on Ozempic Means Smaller Plates at Thanksgiving

Black Friday, Cyber Monday Spending Projected to Hit New High

Shakira Reaches Deal with Spanish Prosecutors on First Day of Tax Fraud Trial

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Morning News: November 17, 2023
Posted by Eddy Elfenbein on November 17th, 2023 at 7:04 am

Oil Collapses Into Bear Market as Robust Supply Pressures OPEC+

China Wants to Bulldoze Old Neighborhoods to Revive the Economy

ECB’s Lagarde Says Europe Needs Single Market Watchdog in Push for Capital Union

France Makes Case for Paris to Host New EU Dirty Money Watchdog

US Consumer Watchdog Hands Wall Street Rare Win With Big Tech Crackdown

Biden Signs Bill Averting Shutdown, Teeing Up 2024 Budget Battle

Powell’s Fed Sticks Together in Fight Against Inflation Despite Differences

Treasury Yields Dive as Oil Craters, Economy Softens

Where Have All the Foreign Buyers Gone for U.S. Treasury Debt?

Active ETF Boom Is Mostly a Mirage as Stockpicking Fades Away

Wall Street Bosses Turn to AI to Help Write Performance Reviews

Swedish Dockworkers Are Refusing To Unload Teslas At Ports In Broad Boycott Move

Union Workers Back Contract Deals at 3 Big Automakers

Are Americans Falling Out of Love With EVs?

The Share of Americans Who Are Mortgage-Free Is at an All-Time High

Congrats, Your House Made You Rich. Now Sell It.

Companies Hesitate on Specialized Industry Clouds

When Huawei Shocked America With a Smartphone

Apple Plans to Make It Easier to Text Between iPhones and Androids

Gap Is Righting the Ship With Old Navy

This Thanksgiving, Full Planes to Go With Full Plates

These People Are Responsible for Thanksgiving’s Most Polarizing Food

The Estée Lauder Family Built a Beauty Empire. A Succession Rift Threatens It

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Morning News: November 16, 2023
Posted by Eddy Elfenbein on November 16th, 2023 at 7:06 am

Pandas, Ping-Pong and Profits: Chinese Leader Woos U.S. CEOs

Musk-Xi Meeting Shows Tight Relationship China Has With Tesla

Alibaba Nixes Cloud Spinoff After US Blocks AI Chips From China

Covid’s Biggest Economic Winner Is Running Out of Steam

While All Inflation Feels Bad, Housing Inflation Is the Worst

The Global Fight Against Inflation Has Turned a Corner

EU Banks May Face Major Hit If They Need to Sell Bonds -Lagarde

Systematic Hedge Funds Pummeled in Post-U.S. CPI Stocks Rally – Goldman Sachs

Lina Khan Has a Warning for the World of Private Equity

A Secretive Hedge Fund Tycoon Is the World’s Greatest Shipwreck Hunter

How R.F.K. Jr. Has Turned His Public Crusades Into a Private Windfall

The Pentagon’s Deadly Secret: It Makes Money From Bullets Used in Mass Shootings

‘Everything’s Locked Up’: Shoppers Turn to Amazon as Big-Box Retailers Combat Theft

Walmart Shares Retreat on Wary Earnings Outlook For Year

G.M.’s Contract Deal With U.A.W. Faces Surprisingly Stiff Opposition

Starbucks Unionized Baristas’ Strike Coincides With Red Cup Giveaway

Chicken Finger Craze Fuels $7.6 Billion Fortune for Raising Cane’s Founder

McDonald’s Growing Appetite for Fashion

Guinness Maker’s Morning After Offers Little Reassurance

Breaking Down Your Thanksgiving Costs

GrainCorp Holds Dividend Despite 34% Fall in Annual Profit

Stop Corporatizing My Students

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