Morning News: October 3, 2023
Posted by Eddy Elfenbein on October 3rd, 2023 at 7:06 am

OPEC+ Shows No Sign of Easing Oil Squeeze as Ministers Meet

US Supreme Court to Hear Case Targeting Consumer Financial Watchdog

The Fed Seeks to Up Its Influencer Status

Fed’s Mester Says One More Rate Hike May Be Needed This Year

Wall Street Thinks America’s Homes Are Overvalued

Americans’ Growing Reluctance to Quit Their Jobs, in Five Charts

A Plot to Oust the House Speaker Hits Weary Investors

‘Dumb Money’ Exposes the Baffling Allure of Bad Investment Advice

Can AI Beat the Market? Wall Street Is Desperate to Try

J.P. Morgan Growth Equity and Index Ventures Back Logistics Payment Platform Loop

Brookfield Raises $12 Billion for Flagship Private Equity Fund

Zoom’s Ex-CMO Will Now Pitch Hybrid Work as CEO of Video-Tech Firm Neat

Meta Explores Charge for Ad-Free Instagram and Facebook. Its Model Is Under Threat

From $26 Billion to Bust: Sam Bankman Fried’s Astonishing Rise and Fall

U.S. Car Sales Expected to Increase Again in the Third Quarter

China Is Suffering a Brain Drain. The U.S. Isn’t Exploiting It

A Rural Michigan Town Is the Latest Battleground in the U.S.-China Fight

China Evergrande Shares Soar as Trade Resumes Amid Police Probe

Key Taiwan Tech Firms Helping Huawei With China Chip Plants

Rare Look Inside TikTok Parent’s Finances Shows Slowing Revenue Growth

Tiger Woods-Backed Golf League Signs Sponsorship Deal with SoFi

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Morning News: October 2, 2023
Posted by Eddy Elfenbein on October 2nd, 2023 at 7:06 am

Does China’s Property Bust Make a Financial Crisis Inevitable?

China’s Precarious Economy Signals More Support Is Needed

BOJ to Buy Additional Bonds to Curb Rise in Sovereign Yields

Kenya’s Stock Market Becomes World’s Worst Performer

Why a US Recession Is Still Likely — and Coming Soon

Will Companies Keep Their Pandemic-Era Gains? It Depends

Higher Rates Starting to Hit US Profits, Goldman Strategists Warn

Wall Street’s Most Hated Regulator Faces a Fundamental Threat

Severe Crash Is Coming for US Office Properties, Investors Say

With Banks Offering 5% Returns, Financial Advisers Fight Irrelevance

Americans Are Still Spending Like There’s No Tomorrow

Why Consumers Are Mad About Inflation Even Though It Has Fallen

Birkenstock Attracts Norwegian Wealth Fund to $1.6 Billion IPO

Vaccine Breakthrough Behind Pfizer, Moderna Shots Wins Nobel

Aging Trees Show a Crisis Looms for the World’s Everything Oil

The Secret Behind the First $1 Billion Green Hydrogen Startup

Rivian’s Quest to Build the Ultimate Truck Burns Through Billions

Crypto Goes on Trial, as Sam Bankman-Fried Faces His Reckoning

Who’s Rooting Hardest for a Sam Bankman-Fried Conviction? The Crypto Industry

Airbnb Is Fundamentally Broken, Its CEO Says. He Plans to Fix It.

Peak TV Is Over. A Different Hollywood Is Coming

Longtime Union Leader Steps Fully Into Hollywood’s Spotlight

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Morning News: September 29, 2023
Posted by Eddy Elfenbein on September 29th, 2023 at 7:03 am

Oil Prices Near $100 per Barrel Raise Questions Over Demand Destruction

Evergrande Tycoon Crossed a Red Line When Wealth Funds Ran Dry

Japan’s 30-Year Bond Yield Reaches Highest Level Since 2013

Eurozone Inflation Rate Drops to 4.3 Percent

Europe Is Trying to ‘Trump Proof’ the Transatlantic Relationship

Turmoil Over Migrants at U.S.-Mexico Border Is Straining Trade Flows

The Threat of an American Debt Crisis

BlackRock CEO Larry Fink Sees 10-Year Yields Heading Above 5%

Quirk of Bond Futures Threatens to Accelerate Surge in US Yields

A Silver Lining From the Pandemic: A Surge in Start-Ups

Huawei Takes Revenge as China Catches Up on Semiconductors

Biden’s $100 Billion Chip Bet Caught Up in Arizona Union Showdown

UAW Expected to Expand Auto Strikes Friday

EVs Will Hit Detroit Harder Than a UAW Raise

Billionaire Agarwal Shakes Up Vedanta Empire as Debt Bill Looms

VW Scraps Plan for New €2 Billion EV Factory in Germany

How West Africa Can Reap More Profit From the Global Chocolate Market

Meal-Kit Maker Blue Apron to Be Sold (Ending Disastrous Six-Year Experiment with Public Ownership)

Nike Clears a Low Bar With Investors

Henry Kravis, Endeavor, Fenway Eye PGA Tour Deal to Rival Saudi Arabia’s

The U.S. Tried to Pitch Peanuts at Japanese Baseball Games. It’s a Tough Nut to Crack

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Morning News: September 28, 2023
Posted by Eddy Elfenbein on September 28th, 2023 at 7:06 am

Evergrande Halts Trading After Founder Put Under Police Control

Saudi Arabia and Russia Win Big in Gamble on Oil Cuts

Oil Touches $95 With Shrinking Inventories Fanning Fresh Rally

Feeding the World Once Brought the US Untold Influence—No More

Want to Spur Green Energy in Wyoming? Aim for the Billionaires

Standoff in Congress Brings Government to Brink of Shutdown

Missing ‘Gold Standard’ Economic Data Will Test Alternatives in US Shutdown

Bond Selloff Pushes Treasury Yield to New ‘07 Peak

What’s Driving the September Stock Swoon

In Suing Amazon, FTC’s Lina Khan Turns Her Earlier Pricing Argument on Its Head

US SEC Nearing Settlement with Wall Street Firms Over WhatsApp Probe

GameStop’s Billionaire Backer Cohen Replaces Ousted CEO

Elon Musk Wins US Space Force Contract for Starshield

Meet the A.I. Jane Austen: Meta Weaves A.I. Throughout Its Apps

To Bring Socializing Back to Social Networks, Apps Try A.I. Imagery

Google User Data Has Become a Favorite Police Shortcut

The Magic Number: 32 Hours a Week

What Worries UAW’s Striking Workers, in Their Own Words

Car Sales Are Slowing. Car-Listing Websites Are Just Getting Started

Peloton Soars After Deal With Lululemon to Share Fitness Content

Logistics Companies Grow Cautious on Holiday Hiring

When Corporate Confessions Make Companies Look Good—and When They Don’t

Delta CEO: Airline ‘Probably Went Too Far’ with SkyMiles Changes

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Morning News: September 27, 2023
Posted by Eddy Elfenbein on September 27th, 2023 at 7:06 am

China Has Second Thoughts About Controlling Prices in Its Multi Trillion-Dollar Housing Market

China Puts Evergrande’s Billionaire Founder Under Police Control

What the U.S.-China Chip War Means for a Critical American Ally

US Investors Want Clarity on Biden’s Vague Curbs on China Tech

ECB’s Holzmann Floats Tenfold Hike in Minimum Reserves

IPO Optimism Grows, Fueling Hope for Global Recovery

US Government Shutdown’s Economic Risks Grow the Longer It Lasts

DOJ Steps Up Probe Against Credit Suisse, UBS Over Alleged Russian Sanctions Evasion

Crypto’s Wild D.C. Ride: From FTX at the Fed to a Scramble for Access

A $12 Million Request to Cover a Crypto Scam Sank a Bank CEO

Why Now Is a Horrible Time to Refinance Student Loans

Britain Approves Huge, Controversial Oil and Gas Field in the North Sea

E.U. Law Sets the Stage for a Clash Over Disinformation

Lina Khan vs. Jeff Bezos: This Is Big Tech’s Real Cage Match

How Elon Musk Came to Influence the Fates of Nations

A Futuristic Plan to Make Steel With Nuclear Fusion

This Ford vs. GM Feud Could Shape the Future of EVs in America

Auto Workers Aren’t Striking Only For Higher Wages. They Want Their Pensions Back, Too

Las Vegas and Its Big, Big Ambitions

Las Vegas Hospitality Workers Authorize Strike at Major Resorts

Costco Keeps Members and Investors Guessing

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CWS Market Review – September 26, 2023
Posted by Eddy Elfenbein on September 26th, 2023 at 5:40 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 S&P 500 Drops to a Three-Month Low

Wall Street has been in a sour mood lately. As I’ve discussed before, early fall has historically been a tough time for Wall Street. It’s happening again this year. On Tuesday, the Dow had its worst day since March. The S&P 500 closed at its lowest level since June 7.

It’s as if everyone got back from the Labor Day weekend in a lousy mood. This time, investors are worried about a sluggish economy and (another) potential government shutdown. Mind you, the market hasn’t experienced a sudden drop. Instead, it’s been a slow and gradual decline. Nor has the damage been severe — at least not yet.

Since the end of July, the S&P 500 has pulled back by 6.9%. The S&P 500 had already dropped below its 50-day moving average, which can be a sign of continued weakness. The index isn’t far from its 200-day moving average (the green line in the chart above). The S&P 500 has traded above its 200-DMA without stop for more than nine months.

Counting Thursday, the S&P 500 has now had six daily drops of more than 1% in August and September. In July and August, there were zero 1% drops.

Of course, we should remember that the market had a very nice run from mid-March until late July. The S&P 500 gained 19% in 20 weeks.

As impressive as the July peak was, it was still well short of the all-time peak from early 2022. This means the stock market has gone 21 months without making a new high. And I’m not adjusting that for an unpleasant bout of inflation which isn’t fading as quickly as we hoped.

Here’s an odd stat for you. The S&P 500 has closed higher for the last 12 Mondays in a row. That’s an all-time record (via Callie Cox).

The market may be sensing a growing unease among consumers. On Tuesday, the Conference Board reported that consumer confidence fell to a four-month low. I like to keep a close eye on the report because so much of the economy comes down to how optimistic people are.

For September, the Conference Board’s Consumer Confidence Index fell to 103. That’s down from 108.7 for August. It’s the second-lowest reading for this year. In fact, this month’s number came close to dipping below May’s number of 102.5 which would have been the lowest number this year.

Interestingly, the drop in consumer confidence was felt most strongly among folks who make more than $50,000 per year.

Within the Consumer Confidence report, the Conference Board also tracks its Expectations Index. For September, that fell to 73.7. Unofficially, a reading below 80 often tells us that a recession is near. I don’t want to sound alarmist, but we should note that consumers are feeling anxious.

What’s driving all this negative sentiment? That’s not much of a secret. Consumers are worried about higher interest rates, higher mortgage rates and rising gasoline prices. America’s credit card debt recently hit $1 trillion. Overall household debt is now more than $17 trillion.

Folks are feeling the strain. Bank of America recently said that the number of people tapping their 401(k) accounts due to financial stress jumped 36% from a year ago.

Look at the bond market where we see rising yields. The 10-year Treasury yield recently hit a 16-year high while the two-year yield touched a 17-year high. In fact, the two-year yield came within 17 basis points of making a 23-year high. Two years ago, the two-year yield was going for 0.3%. Now it’s going for 5.1%.

The housing market is also feeling the squeeze of higher rates. On Tuesday, the Census Bureau said that sales of new homes fell 8.7% from July to August (that’s seasonally-adjusted and annualized). That’s the slowest pace since March.

Guess what happens when there’s more supply than demand? That’s right. Prices drop. The median price of a new home sale in August was $430,300. That’s down 2% from last year. Housing affordability is at a three-decade low.

Homebuilders are cutting prices to get rid of their homes. Interestingly, the supply of new homes was already fairly tight. The problem is that higher mortgage rates are holding back demand.

Expect 10% Earnings Growth for Q3

This week is the final week of trading for Q3. In a few weeks. the Q3 earnings season will start up. The overall earnings results should be pretty good, but that’s largely because earnings one year ago were weak.

Right now, analysts expect earnings to be up nearly 10% compared with last year’s Q3. Wall Street sees the S&P 500 reporting earnings of $55.27 per share. (That’s the index-adjusted number. Every one point in the S&P 500 works out to about $8.35 billion.)

This is a big downward shift in expectations. In the middle of 2022, Wall Street had been expecting Q3 2023 earnings of more than $63 per share. Over the course of the last year, analysts gradually pared back their Q3 estimates by more than 13%. Recently, however, earnings estimates have increased a little bit. The first reports will start coming in in about two weeks.

As important as earnings are, we also want to see the kind of guidance that companies are willing to offer for the rest of this year and into 2024.

Last year was tough for earnings. For all of 2022, earnings were down just over 5% from 2021. That means earnings growth this year will be helped by favorable comparisons. For Q4, Wall Street currently expects earnings growth of close to 14%. If that’s right, it means the S&P 500 will deliver full-year earnings growth of 11.7%.

That would place full-year earnings at $220 per share and next year’s earnings at $245 per share. That means the S&P 500 is going for 17.5 times next year’s estimate. That’s a little pricey, but I don’t think it’s unreasonable. Right now, the worry isn’t valuations but rather that earnings growth is falling off.

Here’s the S&P 500 along with its earnings. The two lines are scaled at a ratio of 20 to 1. That means that whenever the lines cross, the S&P 500’s P/E ratio is 20.

The S&P 500 is the black line. Earnings are the red line. The green line is Wall Street’s earnings forecast.

The largest tech stocks are looking very stretched. Charlie Bilello points out that the 10 stocks in the S&P 500 now account for 30.5% of the index’s value. The other 490 stocks comprise the other 70%. The Russell 2000 index is down for this year.

There’s more news to come this week. Tomorrow, we’ll get the durable goods report. Wall Street is expecting a drop of 0.5%.

On Thursday, we’ll get the latest report on initial jobless claims. These reports have been quite good recently. We’ll also get the final revision to Q2 GDP. I’m not too concerned about this report since it covers a time period that began six months ago and ended three months ago. We’ll also get the report on pending home sales.

On Friday, we’ll get reports on personal income and spending. Along with this report, the government will include the PCE price data which is the Fed’s preferred measure of inflation.

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: September 26, 2023
Posted by Eddy Elfenbein on September 26th, 2023 at 7:05 am

Who’s Afraid of $100 Oil?

Can the U.S. Make Solar Panels? This Company Thinks So.

Slowing, Graying and in Debt, Can China’s Industrial Heartland Be Revived?

Ford Tried to Sell the Electric Mustang to China the Tesla Way—It Didn’t Work

Teetering China Property Giants Undercut Xi’s Revival Push

World’s Mega-Rich Are Betting on US Renters to Grow Their Billions

The Very Rich Are Often Bad Investors. Here’s Why

Only Richest 20% of Americans Still Have Excess Pandemic Savings

Banks in EU Largely Comply with ‘Basel Endgame’, Says Watchdog

Bond Traders Roiled by Fed See US Shutdown as Next Big Wild Card

Shutdown Would Blindfold Fed in Piloting Course on Rates

Dimon Warns World Not Ready for 7% Fed Rate

Wall Street Echoes Fed’s View on Growth, Higher-for-Longer Rates

UAW Fight Against Billions in Buybacks Forces Investor Rethink

Why Biden and Trump Are Courting Striking Autoworkers

Auto CEOs Make 300 Times What Workers Make. How That Stacks Up

Why Ford Has Been More Willing to Work With the UAW Than GM or Stellantis

Corporate America Promised to Hire a Lot More People of Color. It Actually Did

Cisco’s $28 Billion Splunk Deal May Ignite Software Deal Frenzy

As Its U.S. Shop Opens, TikTok’s Chinese Merchants Struggle to Sell Their Mops and Soap Dispensers

Sam Bankman-Fried’s Trial to Test Dueling Explanations for FTX’s Collapse

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Morning News: September 25, 2023
Posted by Eddy Elfenbein on September 25th, 2023 at 7:05 am

Greece, Battered a Decade Ago, Is Booming

China Developers Drop Most in 9 Months on Evergrande Woes

Hedge Fund Boom Turns Into Hangover on Brazil Rate Surge

Britain Grapples for Agreement Over Listing Rules Overhaul

Private Equity’s Slow Carnage Unleashes a Wave of Zombies

Ermotti Sees Good Momentum in Recovering Credit Suisse Funds

Why Traders Aren’t Buying the Fed’s ‘Higher-for-Longer’ Vision

Wall Street Is Hoping $100 Oil Ain’t What It Used to Be

Shutdowns Cost Billions as US Federal Workers Paid to Stay Home

Railroads to Receive $1.4 Billion for Fixes and Upgrades

Ex-Wall Streeters Help Washington Divvy Up $100 Billion to Win the Global Chip Race

Broadcom’s AI Business Won’t Be Easy to Chip Away

Amazon to Invest Up to $4 Billion in AI Startup Anthropic

Apple’s Cheapest iPhone 15 Is Winning Buyers After Upgrades

Booking’s €1.6 Billion Etraveli Deal Blocked by EU

Tata Steel Raised to Investment Grade by Moody’s

Lego’s Latest Effort to Avoid Oil-Based Plastic Hits Brick Wall

Where Did All the Dark-Suited Japanese Businessmen Go?

Why America Has a Long-Term Labor Crisis in Six Charts

Hollywood Screenwriters Reach Tentative Deal to End Strike

How a Storied National Airline Became Reviled in Its Own Country

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Morning News: September 22, 2023
Posted by Eddy Elfenbein on September 22nd, 2023 at 7:03 am

Higher Rates Are Supercharging Japan’s Banks

Real Estate Crisis Triggers New Alarms Over China’s Shadow Banks

China’s Ultra-Rich Gen Zs Flock Home as Global Tensions Rise

Shein Shifts Shipping Strategy to Bring China-Made Goods Closer to US Shoppers

To Beat Starbucks in China, Homegrown Chains Open a New Cafe Every Hour

The Hidden Threat to US Energy Security

Supply Chain Hurdles Complicate Food Companies’ Climate Pledges

UAW Expected to Announce More Auto-Plant Strikes on Friday

Auto Industry Finance Chiefs Watch for Ripple Effects From UAW Strike

Did Poverty Soar Last Year? It Depends How You Measure It

When Rates Drop, They Usually Plunge. The Fed Thinks Different

Fed Is Cutting Staff After More than a Decade of Payroll Growth

Wall Street Strategists Turn Ever Bullish Just as Stocks Slump

What C.E.O.s Mean When They Talk About ‘Moats’

Apple’s iPhone 15 Goes on Sale in Test of Holiday Resurgence

Microsoft’s Activision Deal Set to Clear Final UK Hurdle

Once Silicon Valley’s Star, Cisco Looks to Splunk for Fresh Mojo

Lachlan Murdoch Inherits Media Empire and Daunting Task as Rupert Retires

Amazon Prime Video Content to Include Ads Starting Next Year

Holy Fish and Chips, Batman! DC Studios Moves Hub to England

Deion Sanders Is Writing College Football’s New Playbook

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Morning News: September 21, 2023
Posted by Eddy Elfenbein on September 21st, 2023 at 7:04 am

Russia Temporarily Limits Diesel and Gasoline Exports

Trudeau’s Mega Pipeline Promises to Redraw Global Oil Flows

Chevron Agrees to Regulator’s Plan to End Australia LNG Strikes

Hong Kong Says It Calls the Shots, Not Beijing. Investors Are Wary

Naira Plunges Toward 1,000 on Street Amid ‘Stampede’ for Dollars

Pound Slides to Six Month Low as BOE Rate Hikes Grind to Halt

Sweden’s Central Bank Raises Rates to 4%, In Line with Expectations

Higher Interest Rates Not Just for Longer, but Maybe Forever

Fed Signals Higher-for-Longer Rates With Hikes Almost Finished

What Fed Rate Moves Mean for Mortgages, Credit Cards and More

Klaviyo Shares Soar in Debut, Pointing to IPO Resurgence

Ex-Goldman Bankers Make a Fortune With Controversial Bet on Coal

BlackRock, State Street Among Money Managers Closing ESG Funds

Corporate America Brings Its New Skinny Look to Stock Market

Defense Department Awards Chip Funding to Fuel Domestic Research

GPUs Transformed AI. Now They’re Here for Quantum

Cisco to Buy Splunk for $157-a-Share in $28 Billion Deal

Toshiba Shareholders Approve $13.5 Billion Deal to Take Company Private

FedEx Earnings Rise Despite Weakened Demand

The United Auto Workers Is Overplaying Its Hand, Risking Our Economy and the Election

The Newest Addition to the Office Wardrobe? Serious Athletic Sneakers

The Lawyers Sam Bankman-Fried Once Trusted Are Drawing Criticism

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