Morning News: October 17, 2023
Posted by Eddy Elfenbein on October 17th, 2023 at 7:03 am

China Invested $1 Trillion to Gain Global Influence. Can That Go On?

Country Garden, Evergrande Set Up Two Tense Weeks for Creditors

CVC Capital Is Said to Near Kickoff of Mega Private Equity IPO

Dalio’s Abu Dhabi Penthouse Shows Rise of New Hedge Fund Hubs

Goldman Sachs Profit Plunges on Impact from Fintech Sale, Real Estate Bets

Goldman Boss David Solomon Ditches His High-Profile DJ Gigs

BofA Beats Estimates on Trading and Net Interest Income Gains

BNY Mellon Beats Profit Estimates on Boost from Higher Interest Rates

AI Funding Soars to $17.9 Billion as the Rest of Silicon Valley Slumps

The Niche Insurance Policy Behind a Software Company’s Big Legal Payout

Starboard Takes 5%-Plus Stake in Contract-Research Firm Fortrea

Choice Offers to Buy Wyndham Hotels in $9.8 Billion Deal

Holiday Spending to Grow 14% This Year, Deloitte Survey Shows

How Long Can the American Consumer Keep Splurging?

It’s Getting Too Expensive to Have Fun

A Higher Monthly Payment, but Less Square Footage

Real Estate Brokers Pocketing Up to 6% in Fees Draw Antitrust Scrutiny

As Coal Plants Shutter, a Chance to Redevelop ‘the Gates of Hell’

Those Doritos Too Expensive? More Stores Offer Their Own Alternatives

John Legend Looks to Take on Yelp and Google Reviews With His First Tech Startup

No, Really, What Is Going On With Sam Bankman-Fried’s Baffling Defense?

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Morning News: October 16, 2023
Posted by Eddy Elfenbein on October 16th, 2023 at 7:03 am

Xi’s $1 Trillion ‘Project of the Century’ Faces Uncertain Future

Risk-Advisory Firms Decide Hong Kong Isn’t Worth It

China Got a Big Contract. Nepal Got Debt and a Pricey Airport

US to Tighten Curbs on China’s Access to Advanced Chip Tech

As Global Debt Worries Mount, Is Another Crisis Brewing?

Janet Yellen Says Higher Interest Rates May Persist in US

Home Sales on Track for Slowest Year Since Housing Bust

Surge in Health-Insurance Costs Pose Next Challenge for Finance Chiefs

The Goldman Banker on a Crucial Mission to Help Juice Its Stock

Florida’s Battered Orange Growers Are Cashing In on a Housing Boom

How a Fertilizer Shortage Is Spreading Desperate Hunger

Oil Prices Fluctuate as Concerns Mount Over Middle East Tensions

IMF, World Bank ‘Impotent’ on Israel-Gaza War Shock as Reforms Edge Forward

Warning of ‘Grave’ Errors, Powerful Donors Push Universities on Hamas

Harvard Cozies Up to #MentalHealth TikTok

Netflix Deepens Videogame Push, Ripping Page From Its Hollywood Script

Ad-Free Versions of Facebook and Instagram Have One Audience in Mind: Regulators

Brands Are Handing Out Freebies at Walmart as Online Ads Lose Appeal

Taylor Swift’s ‘Eras’ Is Easily the Biggest Concert Film Opening Ever

Rite Aid Files for Bankruptcy, Will Close More Stores

Altice Employees Raised Red Flags Years Before Corruption Probe

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Morning News: October 13, 2023
Posted by Eddy Elfenbein on October 13th, 2023 at 7:03 am

U.S. Clamps Down on Russian Oil Sales With New Sanctions

The Oil Price Has a Safety Valve. Gas Doesn’t

China on Brink of Deflation Again Reveals Still-Weak Rebound

Investors Bet Thriftier Chinese Shoppers Are Here to Stay

Across U.S., Chinese Bitcoin Mines Draw National Security Scrutiny

Inflation Slowdown Remains Bumpy, September Consumer Price Data Shows

The Latest Tool to Refinance Short-Term Debt: Double-Dip Financing

JPMorgan Notches Another Net Interest Income Record, Lifts Guidance

Wells Fargo Raises Interest Income Forecast as Third-Quarter Profit Beats Estimates

BlackRock Clients Pull $13 Billion From Long-Term Funds

Dreams of Big Bond Gains Backfire With $10 Billion ETF Loss

Sam Bankman-Fried’s Lawyers Fail To Shake Ellison’s Account About FTX Crimes

Microsoft-Activision’s $69 Billion Pact, Biggest Gaming Deal, Cleared by UK

Retailers’ Seasonal Hiring Plans Signal a Cooling Labor Market

Detroit’s Electric Reckoning Has Arrived

Why Being an Auto Worker Isn’t as Lucrative as It Used to Be, in Charts

Detroit Carmakers Paid $1 Billion to CEOs as Auto Wages Slumped

South Korea Had High Hopes for 5G. What Happened?

Verizon Turns to Inside Fixer to Pull Mobile Giant Out of Downward Spiral

Your Face May Soon Be Your Ticket. Not Everyone Is Smiling

Green Energy Builders Sought Billions More in Subsidies. New York Said No.

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Morning News: October 12, 2023
Posted by Eddy Elfenbein on October 12th, 2023 at 4:39 am

Energy Firms, Green Groups and Others Reach Deal on Solar Farms

Natural Gas Prices Rise on Israel Concerns and Finland Pipeline Leak

Biden Weighs Freezing $6 Billion for Iran After Hamas Attack on Israel

Facing Exclusion From U.S., Chinese EV Suppliers Map a Circuitous Route Back In

China State Fund Buys Bank Shares, Fueling Rescue Hopes

ECB Should Not Stop Bond Buys Early, Stournaras Says

Fed Minutes Show Officials Divided on Future Rate Rise

What to Watch in the CPI Report: A Mild Inflation Reading Could Keep Fed on Hold

Bond Traders Are Starting to Bail on Winning Yield-Curve Bets

Barclays CEO Warns Banking Deal Revival Still Some Way Off

Goldman Sachs Offloads ‘Buy Now, Pay Later’ Firm in Quick Retreat

Goldman Sues Malaysia as 1MDB Settlement Dispute Escalates

Caroline Ellison Says ‘Sam Was the One’ Who Caused FTX Collapse

Birkenstock’s Stock Falls Nearly 13% in Trading Debut, Ends Well Below IPO Price

Billionaire Bets That a $12 Mobile Phone Can Get More of the World’s Most Populous Country Online

Ghost in the Machine: How Fake Parts Infiltrated Airline Fleets

NY’s Cannabis Rollout Could Destroy a Legal Entrepreneur

Autoworkers Escalate Strike as 8,700 Workers Walk Out at a Ford Kentucky Plant

Hollywood Studios Suspend Talks With Actors

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Morning News: October 11, 2023
Posted by Eddy Elfenbein on October 11th, 2023 at 7:05 am

This Country Won the Global Tax Game, and Is Swimming in Money

Yellen Says Nothing Is ‘Off the Table’ as U.S. Considers New Sanctions on Iran and Hamas

Higher Rates May Be Needed to Curb Inflation, Fed’s Bowman Says

Largest US Banks Grapple With Worst Write-Offs in Three Years

KKR and Carlyle Take No Carry on New Private Credit Funds

JPMorgan Has a Master Plan to Beat Competitors in Silicon Valley

Even Google Insiders Are Questioning Bard AI Chatbot’s Usefulness

U.S. Considers Dropping Sanctions Against Israeli Billionaire in Push for EV Metals

Exxon to Buy Pioneer for $60 Billion to Dominate Shale Oil

Fear and Anger Follow the Path of Joe Manchin’s Mountain Valley Pipeline

Birkenstock, the German Sandal Maker, Raises $1.48 Billion in Its I.P.O.

The Californization of the Texas Housing Market

Biden to Announce New Actions Slashing Junk Fees

Amazon Wants You to ‘Buy Again’

High UAW Wages Shrink Detroit’s Room to Maneuver

Boeing’s 737 MAX Output Falls to Lowest Level in Two Years

Walgreens Names Veteran Health-Care Executive Tim Wentworth as Next CEO

Claudia Goldin’s Nobel-Winning Research Shows ‘Why Women Won’

Only Question for Taylor Swift Film: How Big Will It Be?

Disneyland Lifts Prices Up to 9%; Florida Annual Passes Rise Too

Caroline Ellison, Adviser to Sam Bankman-Fried, Says He ‘Directed’ Her to Commit Crimes

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CWS Market Review – October 10, 2023
Posted by Eddy Elfenbein on October 10th, 2023 at 10:25 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.”)

Wall Street Rallies on the September Jobs Report

On Friday, the government said that the U.S. economy created 336,000 net new jobs last month. That was well above expectations for a gain of 170,000. It was also an improvement of more than 100,000 jobs compared with August. September was the best month for job gains since January.

This report is very good news and it’s a sign that the economy may not be in as much trouble as the bears believe. While I’m pleased to see these numbers, I still think the economic cycle may be nearing its end.

Let me explain.

The labor market tends to be a lagging indicator. It usually tells us what just happened instead of what’s about to happen. After all, folks generally don’t lose their jobs until after business conditions weaken.

The jobs report also said that the unemployment rate was 3.8%. Wall Street had been expecting the jobless rate to fall to 3.7%.

I had been particularly interested to see the wage gains numbers. Unfortunately, they weren’t that good. For September, average hourly earnings rose by 0.2%. Wall Street had been expecting a gain of 0.3%. Over the last year, earnings are up by 4.2%. That’s above the rate of inflation but not by much. I disagree with the Fed about lots of things, but we’re on the same page on an important point. The recent bout of inflation was not caused by excess wages.

Here are some details from the jobs report:

From a sector perspective, leisure and hospitality led with 96,000 new jobs. Other gainers included government (73,000), health care (41,000) and professional, scientific and technical services (29,000). Motion picture and sound recording jobs fell by 5,000 and are down 45,000 since May amid a labor impasse in Hollywood.

Service-related industries contributed 234,000 to the total job growth, while goods-producing industries added just 29,000. Average hourly earnings in the leisure and hospitality industry were flat on the month, though up 4.7% from a year ago.

The private sector payrolls gain of 263,000 was well ahead of a report earlier this week from ADP, which indicated an increase of just 89,000.

The labor force participation rate stayed the same at 62.8%. That number has improved a lot but it’s still below the pre-Covid levels. I also like to look at the labor force participation rate for prime working-age adults. That was unchanged at 83.5%. The broader U-6 jobless rate rose to 7%.

The stock market was initially soft after the jobs report came out, but the bulls eventually got in control and the market closed higher. The rally was strong enough to continue into Monday and today. The bond market was closed yesterday for Columbus Day, but yields fell sharply today in a global desire for safety.

The problem with the economy right now isn’t jobs. The economy has created more than two million jobs this year, and there are nearly 10 million open positions. The problem is inflation.

Even if people are employed, they sense that the economy is not as good as it used to be. It’s often noted that if unemployment rises from 4% to 9%, that affects 5% of people. If inflation rises from 2% to 9%, that impacts 100% of people.

We’re at an odd point where jobs are plentiful but your money doesn’t go as far. For example, the cost of housing has been particularly hard on consumers. The median home price is up 27% since late 2019. The median age of a homebuyer is now 36. That’s the highest on record which goes back 40 years.

Wall Street seems to have reconciled itself to the fact that the Federal Reserve will pause once again at its next FOMC meeting. The Fed is scheduled to meet again on November 1.

The futures market currently places the odds of another pause decision at 86%. I was surprised to see traders place the odds of a Fed rate cut in March of next year at 25%. One week ago, those odds were at 7%. Those odds may get higher soon. The Fed doesn’t see a rate cut as probable until June 2024.

Here are the odds for the June FOMC meeting:

Raphael Bostic, the head of the Federal Reserve Bank of Atlanta, said he doesn’t see the need for more rate hikes. He’s been one of the more dovish members on the FOMC. It’s as if the recent rise in long-term bond yields has helped do some of the Fed’s work for it.

The market has a few hurdles to get through. Tomorrow, the Fed will release the minutes from its last meeting. This is when the Fed decided to pause on rates, but it tried to sound tough.

On Thursday, the government will release the CPI for September. Wall Street expects both core and headline inflation to have increased by 0.3% last month.

We’re also about to get some of the first earnings reports for the Q3 earnings season. The big banks usually go first. On Friday, Citigroup, JPMorgan and Wells Fargo are set to report.

SAIC Is Worth a Look

Defense stocks got a nice boost yesterday for obvious reasons. On our Buy List, we have Science Applications International (SAIC), which is a very good company. SAIC gained more than 4% yesterday and another 2% today.

Last month, SAIC said that its fiscal-Q2 earnings increased by 17% to $2.05 per share. That was well ahead of Wall Street’s consensus for $1.62 per share. This is the third quarter in a row in which SAIC has beaten the Street by more than 17%.

SAIC’s CEO Nazzic Keene said, “I am proud of the financial performance we delivered in the quarter with both strong organic-revenue growth and margin expansion. We remain on track to achieve our three-year financial targets and are off to a strong start.”

SAIC’s operating income increased 7% to $134 million. Operating margin widened by 70 basis points to 7.5%. Q2 EBITDA increased by 5% to $174 million, and EBITDA margin was 9.8%. Free cash flow was $143 million. These are solid results.

One impressive stat is that SAIC reduced its number of outstanding shares. For Q2, SAIC’s number of shares decreased from 55.9 million to 53.9 million. During the quarter, SAIC used $100 million to buy back shares and paid out $20 million in dividends.

SAIC also raised its outlook for the rest of this year. The company now sees full-year earnings coming in between $7.20 and $7.40 per share. That’s an increase of 20 cents to both ends of the previous guidance. Wall Street had been expecting $7.16 per share.

This is the second time this fiscal year that SAIC has increased its full-year guidance. The previous increase was also by 20 cents per share at both ends.

Shares of SAIC had a very nice run earlier this summer, but they had been somewhat weak lately. That is, until this week. SAIC’s next earnings report will be due out in early December. Look for more good results.

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: October 10, 2023
Posted by Eddy Elfenbein on October 10th, 2023 at 7:04 am

Fragile Global Economy Faces New Crisis in Israel-Gaza War

Israel War: Military Builds Forces Near Gaza as US Sends Aid

Bank of Israel Interventions Reverse Shekel Selloff

Bank of England to Review How It Stress Tests Banks

China Mulls New Stimulus, Higher Deficit to Meet Growth Goal

Country Garden Caves to Debts as China’s Real Estate Crisis Worsens

IMF Warns of Stubborn Inflation and Weaker Global Growth in 2024

U.S. Dysfunction Clouds Economic Diplomacy Efforts

Treasuries Have Best Day Since March on Signs Fed May Be Done

Americans Have Saved Hundreds of Billions More Than Previously Thought

Tiny Homes Are the Hot New Homeowners’ Accessory

Binance Founder’s $1 Billion Plan to Save Crypto Quietly Fizzled Out

South Korean Chip Makers Get U.S. Waivers From China Export Rules

General Motors Workers in Canada Walk Out After Contract Talks Fail

Amazon Dangles Prime Day Deals With Shoppers in ‘Driver’s Seat’

PepsiCo’s Hefty Quarter Pokes a Hole in Idea of an Ozempic-Fueled Sell-Off

Consumers Are Less Interested in Brands Taking Stances on Sociopolitical Issues, Survey Finds

CNN Boss Mark Thompson to Staff: Network Is ‘Nowhere Near Ready for the Future’

Has Bob Iger Lost the Magic?

Why Nelson Peltz Grew Impatient With Disney’s Turnaround Efforts

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Morning News: October 9, 2023
Posted by Eddy Elfenbein on October 9th, 2023 at 7:06 am

Oil Surges as Israel Conflict Reignites Middle East Volatility

Israel Shekel Slumps Despite $45 Billion Central Bank Pledge

Russia’s Economy Is Increasingly Structured Around Its War in Ukraine

U.S. Probe of Russia-Sanctions Busting Focuses on Major Oil Trader

BlackRock’s Hildebrand Wants IMF to Address New Economic Reality

Africa Is Front and Center at IMF as US-China Rivalry Heats Up

Burundi President Replaces Central Bank Governor After 14 Months

China’s Rich Entrust Total Strangers to Sneak Cash Out of the Country

The Free-Money Experiment Is Over

Harvard Professor Goldin Awarded Economics Nobel Prize for Pay-Gap Work

Amid Strikes, One Question: Are Employers Miscalculating?

10-Year Treasuries Aren’t An ‘Important’ Asset, They’re a Consequence

The Wager That Betting Can Change the World

Big-Company Bankruptcies Hang Over Economy

US Wealth, Income Concentration Resume Upwards Climb in Post-Pandemic Era

The U.S. Economy’s Secret Weapon: Seniors With Money to Spend

How Beyoncé and Taylor Swift Struck a New Kind of Movie Deal

Home Depot Tracked a Crime Ring and Found an Unusual Suspect

The Stunning Boom and Bust of a Tax-Refund King

Zombie Viruses Are Waking Up After 50,000 Years as Planet Warms

GSK Partners With Zhifei to Boost Shingles Vaccine Availability in China

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Morning News: October 6, 2023
Posted by Eddy Elfenbein on October 6th, 2023 at 7:04 am

Russia Lifts Diesel-Export Ban That Battered Global Markets

Exxon in Talks to Buy Shale Driller Pioneer Natural in What Could Be 2023’s Biggest Deal

Chevron Labor Dispute Flares Up Again in Australia

New Shein Executive Aims to Expand Supply Chain Outside China

China Is Becoming a No-Go Zone for Executives

The IMF’s $43 Billion Argentina Problem Is About to Get Worse

Rates Are Jumping on Wall Street. What Will It Do to Housing and the Economy?

The 5% Bond Market Means Pain Is Heading Everyone’s Way

Corporate America Is Ignoring Jay Powell and Bingeing on Debt

Why Are Investors So Jittery?

Finance CEOs Who Have Stuck It Out for 11 Years Are Eyeing Exit

America Has a Bankruptcy Problem

September Jobs Report May Be Last Good One Before Sharp Slowdown

How to Protect Your Retirement From Nagging Inflation

Between a Rock and a ‘Hard’ Insurance Market

Tesla Cuts Model 3, Y Prices in US After Quarterly Sales Dip

The Birkenstock IPO Is Coming. Nobody Mention Crocs.

New This Holiday Season: Discounts on Shipping Packages

Philips Shares Fall 7% After U.S. Drug Regulator Deals Fresh Blow to Sleep Device Recall

PGA-LIV Deal Faces Delay Over Antitrust, Players Demand Stake

Down With Efficiency! (When We Get Around to It.)

Confessions of a Pop-Tarts Taste Tester

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Morning News: October 5, 2023
Posted by Eddy Elfenbein on October 5th, 2023 at 7:06 am

Pakistan Considers Long-Term LNG Deal as Domestic Output Slides

Oil Extends Plunge as Brent Falls Below $85 on Demand Worries

High Gas Prices Reek of Low Cigarette Sales

Diesel Prices Could Keep Inflation High

McCarthy’s Ouster Raises Likelihood of a Government Shutdown

Fed’s Bid to Avoid Recession Tested by Yields Nearing 20-Year Highs

Only an Equities Crash Can Rescue the Bond Market, Barclays Says

Traders from Moore Capital Are Spinning Out $3 Billion Hedge Fund to Wager on Inflation

Rising Interest Rates Mean Deficits Finally Matter

The Economics of ‘Free Stuff’ Is That There’s No Free Stuff

They Dredged the Mississippi River for Trade. Now a Water Crisis Looms

America’s Factory Boom Brings Billion-Dollar Projects to Tiny Towns

New U.A.W. Chief Has a Nonnegotiable Demand: Eat the Rich

In This City, the Right to Own a Car Starts at $76,000. And That Doesn’t Include the Car

China’s E.V. Threat: A Carmaker That Loses $35,000 a Car

A Start-Up’s Alternative to Uber: Employing Its Own Drivers

Relocation Concerns Slow Hiring of New Tech Leaders

‘This Is a False Advertisement’: X Ads Are Being Challenged by Reader Context

Ozempic Is Making People Buy Less Food, Walmart Says

French Train Maker Alstom Slumps After Cash Flow Warning

Caroline Ellison Is One of the Only People Who Knows ‘Truth’ Behind SBF’s Fall

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