Morning News: June 27, 2023
Posted by Eddy Elfenbein on June 27th, 2023 at 7:09 am

China Starts to Slow Yuan’s One-Way Slide

Inside Yevgeny Prigozhin’s Money-Making Machine

Inflation Is Proving Persistent as It Moves Through the Eurozone Economy

ECB Staff Preparing for New Era of Tighter Money

Banks Face Growing Capital Scrutiny With Stress Tests Up First

BNP CEO Faces $8.3 Billion Temptation After Ascent to Top

The Stock Market Isn’t as Calm as It Seems

America’s Biggest Power Source Wasn’t Built for Extreme Weather

A Giant Wind Farm Is Taking Root Off Massachusetts

More Data in the Cloud Means More Centers on the Ground to Move It

Tesla May Have Already Won the Charging Wars

Lordstown Files for Bankruptcy After Foxconn Deal Falls Through

Japan Wades Into the Chip Wars

IBM Can’t Acquire Its Way Into Tech’s Top Ranks

J&J’s Push to End Cancer Suits Meets Trial in Bankruptcy Court

AI’s Explosive Growth Exposes Gaps Between EU, US Regulation

Snowflake Adds Partnerships with Nvidia and Microsoft for AI Double Play

A.I. May Someday Work Medical Miracles. For Now, It Helps Do Paperwork

What Is Mark Zuckerberg Thinking?

Magic Mushrooms. LSD. Ketamine. The Drugs That Power Silicon Valley

Pickleball Injuries May Cost Americans Nearly $400 Million This Year, According to UBS

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Morning News: June 26, 2023
Posted by Eddy Elfenbein on June 26th, 2023 at 7:03 am

Wagner Mutiny Revives U.S. Fears Over Control of Russia’s Nuclear Weapons

Tech Startup Targets Missile Motors as Silicon Valley Moves Into Weapons

China Economy Gloom Worsens With Weak Consumer Spending Data

The U.S.-China Rivalry Is Complicating the World’s Debt Crisis

Philippines Agrees $1.14 Billion Loans with World Bank for Environment, Farming

Japan’s Top Currency Diplomat Escalates Warning Against Weak Yen

The Bank Robbers Who Are Stealing Their Own Money

Banks Rally, Lira Drops as Turkey Unwinds FX Support Mechanism

Where Stock Market Is Headed After Wild First Half: Five Charts

Morgan Stanley’s Wilson Says Stock Risks Rarely Been Higher

PacWest Sells $3.5 Billion Asset-Backed Loan Portfolio to Ares

Buy Now, Pay Later Programs Are Booming. Here’s Why Their Profits Aren’t

Apollo Leads $2 Billion Private Financing for Semiconductor Firm Wolfspeed

Palantir’s AI Surge Hardens Resolve of Stock’s Bears

What Is Happening in the Housing Market?

The Uneven Effect of Remote Work, in One List

New Rules Aim to Clamp Down on Corporate Greenwashing

China’s ‘Tesla Killer’ Stumbles as EV Price War Takes Toll

Deal for Formula 1 Team Reflects Growing U.S. Interest in the Sport

The Ultimate Score for Rich People? “Golden” Passports

Pill for Obesity Has Wall Street Salivating

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Morning News: June 23, 2023
Posted by Eddy Elfenbein on June 23rd, 2023 at 7:04 am

The World’s Empty Office Buildings Have Become a Debt Time Bomb

Debt Collectors’ Awkward Moment: Their Own Debt Is Now Sinking

Dollars Are So Scarce in Argentina That Yuan Use Is at a Record

Central-Bank Action Finally Cooling Global Economy, Data Indicate

Where’s the Recession We Were Promised?

Forget the Cost of Living. What’s the Cost of Thriving in America?

U.S. Equity Funds See Biggest Outflow in 12 Weeks

Big VC, Tech Got Backstop for Billions in Uninsured SVB Deposits

The 10 AI Startups Leading the Pack

AI Founders Vie for Big Wealth in Unicorn Frenzy

Why Is Apple Getting ‘Spatial’?

Canada Forces Google and Facebook to Pay News Outlets for Linking to Articles

Musk vs. Zuckerberg: The Billionaire Bout for the Social-Media Age

Reddit Wants to Grow Up. Will Its Community Let It?

Overstock.com Wins $21.5 Million Bid for Bed Bath & Beyond’s Assets

Starbucks Workers at Over 150 Stores to Strike Over Pride Décor Row

3M Reaches $10.3 Billion Settlement in ‘Forever Chemicals’ Suits

Beef Dodged Fake Meat’s Threat, But Is Still No Match for Chicken

Sweet and Fruity E-Cigarettes Thrive Despite Teen-Vaping Crackdown

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Morning News: June 22, 2023
Posted by Eddy Elfenbein on June 22nd, 2023 at 7:01 am

How India Profits from Its Neutrality in the Ukraine War

Countries on Front Lines of Climate Change Seek New Lifeline in Paris

Turkish Central Bank Jacks Up Interest Rates in Reversal for Erdogan

Bank of England Pushes Interest Rates Up by a Half Point

Swiss Central Bank Signals More Tightening to Come After Latest Rate Hike

Le Maire: High Investment Key to Avoid Recession

Biden’s Trade Challenge: Kicking the China Dependency Habit

America’s Top Fast-Fashion Retailer Tries to Shed Its Chinese Image

Powell Defies Critics and Makes Case for Why Rates Must Rise

Private Equity’s Race to Poach Junior Bankers Finds Its Limit

On Wall Street, Lawyers Make More Than Bankers Now

After $29 Billion Wipeout, Star Invesco Investor Plots Comeback

Insider Trading Bromance Ends With Betrayal and Guilty Verdict

China’s Cloud Computing Firms Raise Concern for U.S.

Twitter CEO Intervened to Mend Google Relationship After Cloud Payment Issue

FTC Sues Amazon Over ‘Manipulative’ Tactics Used to Enroll Millions in Prime

Ford Gets $9.2 Billion to Help US Catch Up With China’s EV Dominance

Paris Air Show Brings So-So News for Boeing. It’s Better for Airbus

Bosses’ New Task Is Figuring Out Who’s High at Work

How ‘A Hazard of New Fortunes’ Explains America

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Morning News: June 21, 2023
Posted by Eddy Elfenbein on June 21st, 2023 at 7:07 am

E.U. Takes Aim at China in Proposed Economic Strategy

The U.K. Moves to Use Frozen Russian Assets to Help Ukraine Rebuild

U.K. Inflation Remains Stuck at 8.7 Percent

Business Leaders Join Biden in Welcoming Modi to the U.S.

Is the Inflation Battle Won? Not Yet

Fed Nominees Pledge to Cool Inflation

Forget the Fed, and Focus on the Economy

Wall Street Buys More T-Bills, Parks Less at Fed

Investors Are Putting America First Again

Money Funds With Record $5.5 Trillion See Case for Pile to Grow

KKR’s McVey Says Investors Too Cautious, Sees Stronger US Growth

Credit Suisse’s Demise Blamed on NY Bankers

If US Companies ‘Go Woke’, Do They Really Go Broke?

Arizona Is Running Out of Cheap Water. Investors Saw It Coming

What the Reddit Revolt Means for Social Media in an AI Era

American Companies Are Hostage to the Whims of TikTok

FedEx Quarterly Sales Fall 10% as Shipping Struggles Continue

At 3M, Lawsuits Threaten to Transform the Company

The Booming Business of Trying to Reach the Ends of the Earth

A Financial Decision That Could Haunt a Big MLB Star

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CWS Market Review – June 20, 2023
Posted by Eddy Elfenbein on June 20th, 2023 at 7:22 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.”)

Housing Starts Posts Largest Increase in 33 Years

We’ve been waiting for the housing market to hit rock bottom, and that may have happened. On Tuesday, the Commerce Department said that housing starts soared last month. It was the largest monthly increase in more than 33 years.

This comes at the same time that the Federal Reserve sees itself nearing the end of its rate-hike cycle. Last week, the Federal Reserve declined to raise interest rates. This was the first meeting in over a year in which the Fed decided to pass on a rate hike.

So far, the S&P 500 has been well behaved. At one point, the index reached a 16-month high. This happened even though the Fed stressed that it’s not done with its interest rate hikes. The S&P 500 is even getting to within 9% of a new all-time high.

This week, I want to focus on the Fed’s latest move because it reveals an interesting divide. The language coming from the Fed is very stern and hawkish, yet the expectations for what the Fed will actually do are much less so.

So who’s right? I don’t know, but I generally prefer to take the market’s view over what the Fed says it will do.

Still, there’s no need to be dogmatic on this issue and I concede that there are good reasons for the Fed to continue hiking. That case got a lot stronger this morning with the latest report on housing starts.

This is interesting to see because the housing market got completely walloped by the Fed’s rate hikes. The industry is gradually getting back on its feet.

For May, housing starts rose to 1.631 million. That’s quite good. Housing starts are now at their highest since April 2022. The number for April was revised down to 1.34 million. That increase of 291,000 was the biggest monthly jump since January 1990.

Not only that but building permits were up 5.2% last month. That was much better than expected. Permits are now at the highest level since October 2022. Suddenly, the housing market is getting hot. Of course, there’s been very little building going on, so at some point, the cycle needs to turn.

The difficult part about the Federal Reserve’s interest-rate policy is that it doesn’t impact the broad economy directly. Instead, the housing market stands in between the Fed and the economy. As a result, the housing market can be unfairly slammed whenever there’s an increase in inflation.

The Fed doesn’t meet for another five weeks, but the language coming from the Fed has already unnerved traders. A majority of Fed members thinks the central bank will have to increase rates two more times this year. Market participants disagree.

Inside the futures pits, traders can place bets on the direction of Fed policy. Right now, the latest prices imply a 77% chance that the Fed will hike rates by 0.25% at its meeting next month.

That’s probably right, but after July, the outlook gets a lot fuzzier. Traders simply don’t see the need for another rate hike after July. In fact, they see the Fed cutting rates by early next year. For 2024, traders see the Fed aggressively cutting rates. That’s due to fears of a recession.

Trex Is Up 40% YTD

Can we be headed for a recession if the housing market is getting better? It’s possible, but it’s unlikely. In fact, housing stocks have been rallying for several weeks. I like to keep an eye on the Home Construction ETF (ITB). It’s up over 66% in the last year.

The important thing about housing is that it touches so many different parts of the economy. From finance to lumber and materials to employment, so many economic sectors are beholden to housing.

On our Buy List, one of our favorite housing-related stocks is Trex (TREX). More housing starts means more decks to build. Thanks in part to the Fed, the deck-maker got completely wrecked last year. Not only was it our worst stock in 2022, but it was our worst stock by far.

Fortunately, we held on and Trex is up 40% for us this year. I think this is only the beginning. Last month, Trex said it made 38 cents per share for Q1. That beat Wall Street’s consensus by four cents per share. The stock popped 8% after the earnings came out.

For Q2, Trex said it expects sales to range between $310 million and $320 million. Wall Street had been expecting $309 million. The Q2 report will probably be out in early August.

Trex also got an important vote of confidence from its board of directors. The board approved a repurchase program of up to 10.8 million shares. That’s 10% of all the outstanding shares. This program has no expiration date.

For Q2, Wall Street expects earnings of 53 cents per share. I think we’ll see another nice beat. If the Fed starts lowering rates, that will be even better for Trex.

The Q2 earnings season will begin in less than one month. The upcoming earnings season will be an important one because it may show that not only are earnings growing again, but the rate of growth is increasing.

During last year, corporate earnings declined for Q2, Q3 and Q4. Inflation, the Fed, the war in Ukraine and the supply chain mess all took a toll on earnings growth. For Q1 of this year, the S&P 500 posted earnings growth of 6.4%. That was a relief. As of now, Wall Street expects Q2 earnings growth of 12.6%.

There is an important caveat. As in previous quarters, Wall Street is slashing its earnings estimate as earnings season approaches. Since the start of this year, analysts have pared back their Q2 forecasts by more than 13%. This is part of Wall Street’s typical game of lowering expectations so low that companies can easily exceed them and claim victory.

Interestingly, Wall Street hasn’t cut its forecasts for Q3 or Q4 very much. For this year, analysts expect the S&P 500 to post earnings of $218.22 per share. That’s the index-adjusted number. (Every one point in the index is worth $8.36 billion.) Over the last year, the earnings estimate for this year has been cut back by more than 12%.

For 2024, Wall Street sees the S&P 500 earning $244.81 per share. That means the S&P 500 is going for a tad under 18 times next year’s earnings. That’s not bad. I would expect the earnings multiple to increase if interest rates start to fall.

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: June 20, 2023
Posted by Eddy Elfenbein on June 20th, 2023 at 7:04 am

China Cuts Key Interest Rates, Hoping to Kick-Start Flagging Economy

ECB’s Muller Warns Wage Increases Could Delay Slowdown in Core Inflation

Macron’s Paris Summit Seeks New Life for Global Finance Agenda

What is the ‘Bridgetown Initiative’ Asking For at Paris Financial Summit?

Rate Cut Bets Build in Bond Markets From Australia to Sweden

Powell Faces Tricky Task of Explaining Rate Pause in Congress

Today’s Rate Hikes Threaten to Push Up Tomorrow’s Housing Costs

Hedging Failure Exposes Private Equity to Interest-Rate Surge

UBS to Face Penalties Over Credit Suisse’s Archegos Fiasco

World’s Biggest Offshore Center Backs Effort to Fight Corporate-Tax Avoidance

Masayoshi Son Ends Seven-Month Silence to Make Case for SoftBank’s Future

New Land Grab by Oil Giants Is Deep Underground

A Job With a Fair Salary? What Pay Transparency Laws Are Revealing

Return to Office Enters the Desperation Phase

Inside China’s Underground Market for High-End Nvidia AI Chips

Intel Spends $33 Billion in Germany in Landmark Expansion

Biggest Plane Deal in History: Airbus Clinches Massive Order from India’s IndiGo

Boeing, Airbus and the Battle for the Perfect Plane

Jack Ma’s Lieutenants Return to Oversee Tough Alibaba Reboot

Carlos Ghosn Sues Nissan for $1 Billion in Damages

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Morning News: June 19, 2023
Posted by Eddy Elfenbein on June 19th, 2023 at 8:09 am

Why It Seems Everything We Knew About the Global Economy Is No Longer True

Global Trade Needs Some Help as China Stumbles

These Businesses Are Getting Hit Hard by China’s Faltering Economic Recovery

Latest China Test for Western Firms: Consumers Switching to Homegrown Labels

While Yuan Struggles Other China Proxies Are Beginning to Soar

Mass Immigration Experiment Gives Canada an Edge in Global Race for Labor

Global Tax Mess Awaits U.S. Companies, and Congress Isn’t Helping

This Incredible Chart Shows the Close Relationship Between the S&P 500 and Fed Liquidity

JPMorgan Strategists Say Stocks Face Risks From Stalling Growth

Ermotti Suggests ‘Massive Downsizing’ Might Come to Credit Suisse’s Investment Bank

SVB Securities to Be Acquired in Management Buyout

Warren Buffett Raises Stake in Five Japanese Trading Houses

Where Housing Prices Have Crashed and Billions in Wealth Have Vanished

Lots of Hiring, but Not So Much Working

AI Could Change the Future of Yogurt — And Turn Danone Around

He Went After Crypto Companies. Then Someone Came After Him.

The Space Industry Is Taking Off. Space Law Is Still a Mystery

Florida Is Losing Its Affordability Edge After Drawing a Flood of New Arrivals

Celebrities Use AI to Take Control of Their Own Images

Talk of a U.S. TikTok Ban Is Shaking Up the Creator Economy

MoviePass Swears It Won’t Do That Again

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Morning News: June 16, 2023
Posted by Eddy Elfenbein on June 16th, 2023 at 7:02 am

Africa’s Richest City Is Crumbling Under Chaos and Corruption

Saudi Arabia Arrives in Paris, Shopping for Deals

Ueda Holds Stimulus as BOJ Side Steps Tightening Wave for Now

The Global Economy Looks Like It’s Out of Sync

A Bull or a Bear Market? It Doesn’t Matter

Private Credit’s Quiet, Unstoppable Rise Comes With Unknown Risk

Student-Loan Repayments Are Coming Back. Retailers Are in for a Big Shock

Retailers Are Trying to Fix Their Supply-Chain Forecasts

Who’s to Blame for All Those Hidden Fees? We Are

Forget TikTok, AI Is the Latest Obsession in Congress

Venture Capital’s AI-Run Lettuce Farms Are Starting to Go Bust

Teamsters Will Likely Authorize a UPS Strike Friday

There’s No Uber or Lyft. There Is a Communal Tesla

Why Toyota Would Put a Fake Stick Shift and Fake Engine Noises in an Electric Car

Micron Invests Another $600 Million in China Despite Partial Sales Ban

When a Huawei Bid Turned Into a Hunt for a Corporate Mole

A $1.7 Billion Opioid Settlement Is at Risk of Falling Apart

Amazon’s Freevee Embraces the Judy-Verse

New Grads Have No Idea How to Behave in the Office. Help Is on the Way

Why Did Washington Fall So Hard for the Bankman-Fried Brothers?

Crispin Odey’s One-Week Downfall Was Decades in the Making

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Morning News: June 15, 2023
Posted by Eddy Elfenbein on June 15th, 2023 at 7:06 am

Venezuela Makes Long-Shot Bid to Revive Ruined Economy With Gas

Russia’s Big Economic Problem: Not Enough Workers

China Cuts Rates to Prop Up Flagging Recovery

As Ties to China Turn Toxic, Even Chinese Companies Are Breaking Them

Goldman’s Biggest Office Beyond New York Attests to India’s Rise

Lawsuit Seeking $14,729 Tax Refund Could Lead to Corporate Windfall

After Surging Early in the Year, Retail Spending Could Be Cooling

The US Is In Its Third Inflation Wave, and Corporate Profits May Be a Major Reason Why

Powell Indicates at Least Two More Rate Hikes Ahead After Pause

‘Do You Even Want Us to Exist?’ A Bank Chief Fights to Survive

Two Crypto Platforms Halt Withdrawals in Echo of 2022 Woes

Microsoft’s Sudden AI Dominance Is Scrambling Silicon Valley’s Power Structure

How A.I. Is Helping Architects Change Workplace Design

How Nvidia Became ChatGPT’s Brain and Joined the $1 Trillion Club

Tentative Agreement Ends Worker Slowdowns and Stoppages that Crippled West Coast Ports

Boeing Supplier’s Labor Standoff Puts 737 Output Hike at Risk

Cancer Drug Shortages Force Doctors to Ration Vital Medications

Oregon Town’s Marijuana Boom Yields Envy in Idaho

The Beyoncé Effect: Sweden’s Inflation Feels the Hit

Americans Now Think You Need at Least $2.2 Million to be Rich—but Gen Z and Millennials Feel the Wealthiest Despite Cost-of-Living Squeeze

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