Before the Open (Oct 16-20)

Good morning. Happy Friday.

The Asian/Pacific markets suffered big losses. Japan, China, Hong Kong, South Korea, India, Australia, New Zealand, Singapore, Thailand and the Philippines all posted moderate or big losses. Europe, Africa and the Middle East are currently getting hit hard. The UK, France, Turkey, Germany, the UAE, South Africa, Finland, Spain, the Netherlands, Italy, Portugal, Israel, Austria and Sweden are down more than 1%. Futures in the States point towards a moderate gap down open for the cash market.

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The dollar is up. Oil is up; copper is down. Gold and silver are up. Bonds are down.

Stories/News from Seeking Alpha…

Graphite curbs

After choking exports of chipmaking metals gallium and germanium, China is stepping up its efforts to maintain its manufacturing dominance by restricting exports of graphite, a key material used in electric-vehicle batteries. Beijing’s move comes just days after Washington unveiled new restrictions on AI chip exports to China.

Dig deeper: Beijing will require special export permits for three grades of graphite starting December 1, the Ministry of Commerce and the General Administration of Customs said. Temporary controls on five less sensitive graphite items used in industries such as steel, metallurgy, and chemicals were dropped. The new curbs are “conducive to ensuring the security and stability of the global supply chain, and conducive to better safeguarding national security and interests,” the ministry said. It clarified that it was not targeting any particular country. Top buyers of graphite from China include the U.S., South Korea, Japan, and India.

Bigger picture: The U.S. has been targeting China’s access to advanced technologies over national security concerns, with the Biden administration issuing rules in Sept. to regulate U.S. investments in China in semiconductors and microelectronics, quantum information technologies, and AI. Beijing has pushed back by leveraging its dominance over certain materials. To note, China is the world’s top graphite producer and exporter. It also refines over 90% of the world’s graphite into the anode material used in EV batteries – the largest component by weight in such batteries.

Ivan Lam, senior analyst at Counterpoint Research, does not expect a major impact in the near term, as graphite exports haven’t been completely banned. But he said the material’s prices will likely increase due to supply and demand imbalances, including Russia – which was once a major graphite supplier. CLSA’s Christopher Richter said it would be a “bold” step to cut the world off from graphite, as that would likely bring EVs to a halt everywhere and probably escalate tensions between China, the U.S. and Europe. (2 comments)

Outlook slashed

SolarEdge Technologies (SEDG) plunged 21.2% postmarket on Thursday after slashing its outlook, citing “substantial unexpected cancellations and pushouts of existing backlog from European distributors” due to higher inventory and much slower installation rates. As a result, SolarEdge’s Q3 earnings will come in below the low end of its prior guidance, with much lower revenue expected in Q4 amid inventory destocking. The outlook dragged other solar stocks, including Enphase Energy (ENPH) -13.6% and Sunrun (RUN) -6.9%. SA Quant previously flagged the risk of SolarEdge performing badly, while Investing Group Leader JR Research detailed why investors are better off staying on the sidelines. (117 comments)

Net neutrality

The Federal Communications Commission has launched a new pursuit to revise regulation of broadband providers, by advancing a proposed rule that would re-establish “net neutrality.” This had been the FCC’s approach from early 2015 until 2017, when it was repealed by Trump-era FCC chair Ajit Pai. Now, a Democratic majority at the agency is reversing that approach. Related stocks include Comcast (CMCSA), Charter Communications (CHTR), AT&T (T) and Verizon (VZ). AT&T CEO John Stankey in an earnings call said the firm would participate in the process with the FCC constructively, but warned against taking early-1900s regulation and applying it against the internet. (28 comments)

Shelving phenylephrine

CVS Health (CVS) is pulling over-the-counter cold and cough medicines containing the controversial decongestant phenylephrine after a panel of FDA advisors last month agreed that the drug doesn’t work. The move comes as CVS and other OTC drugmakers and retailers face mounting lawsuits related to the drug’s effectiveness. The lawsuits have named companies including CVS, Walgreens Boots (WBA), Kenvue (KVUE), and Walmart (WMT). The FDA has yet to formally order that medicines containing phenylephrine be removed from shelves, though it usually follows the advice of its advisory committees. Nasal sprays containing phenylephrine do not appear to be an issue. (34 comments)

Today’s Economic Calendar
9:00 Fed’s Harker: Economic Outlook
12:15 PM Fed’s Mester’s Speech
1:00 PM Baker Hughes Rig Count

What else is happening…

Jerome Powell: Uncertainties complicate Fed’s job of reducing inflation.

Toyota (TM) inks deal with Tesla (TSLA) for NACS charging standard.

Crude rises as U.S. forces thwart attacks; purchases for SPR planned.

Longer-term yields power on, US10Y hits 5% for first time in 16 years.

U.S. and Europe still unable to reach steel deal, risking return of tariffs.

Jazz Pharmaceuticals (JAZZ) exploring strategic options, including sale.

Deutsche Bank: U.S. cash outperforms major global fixed income assets.

Moody’s: Israel’s debt rating on review for downgrade as war escalates.

Seagen (SGEN) ticks higher as EU approves $43B sale to Pfizer (PFE).

Rite Aid investors to get $192.5M as Walgreens (WBA) settles buyout suit.

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Good morning. Happy Thursday.

The Asian/Pacific markets suffered big losses. Japan, China, Hong Kong, South Korea, Australia, Indonesia, Singapore and Thailand dropped more than 1%. Europe, Africa and the Middle East are currently getting hit hard. Turkey is up, but the UK, Denmark, Poland, France, the UAE, South Africa, Finland, Switzerland and Italy are down the most. Futures in the States point towards a flat-to-up open for the cash market.

————— Online Course: Jason Leavitt’s Masterclass in Trading —————

The dollar is down. Oil is down; copper is up. Gold and silver are down. Bonds are down.

Stories/News from Seeking Alpha…

Cybertruck woes

Tesla (TSLA) initially moved slightly higher in after-hours trading on Wednesday after posting Q3 results that were just under estimates, while margins continued to shrink. Tesla’s deliveries fell 6.7% sequentially, hurt by planned downtimes for factory upgrades, although the automaker still expects full-year deliveries of 1.8M vehicles. However, the stock dropped 4.2% after CEO Elon Musk tried to rein in expectations on the Cybertruck.

Dim outlook: “We dug our own grave with Cybertruck,” Musk conceded, warning that “there will be enormous challenges in reaching volume production with the Cybertruck, and then in making a Cybertruck cash flow positive.” He added that it will likely take 12-18 months before the truck is a significant positive cash flow contributor. The downbeat comments dragged Chinese electric vehicle makers’ Hong Kong-listed shares – BYD (OTCPK:BYDDF) and Li Auto (LI) fell about 4% each, XPeng (XPEV) declined 9%, while Nio (NIO) was down 8%.

E-truck roadblocks: Tesla is not alone in facing roadblocks in its electric truck journey. This week, GM delayed the opening of its second electric truck plant in Michigan. Ford temporarily cut one of three shifts at the Michigan plant tasked with building F-150 Lightnings, and had previously pushed back its EV production target. Some analysts believe these challenges present an opportunity for Rivian Automotive (RIVN) to build up its electric truck reputation. The Cybertruck is expected to challenge Rivian’s R1T, Ford’s F-150 Lightning and GM’s Chevrolet Silverado EV.

SA commentary: “Given Musk’s recession playbook of prioritizing vehicle sales over profitability and the upcoming Cybertruck launch (and subsequent ramp), Tesla’s margins are likely to stay under pressure in the near to medium term,” said Investing Group leader Ahan Vashi. He has advised long-term investors to hold out for a better entry point to initiate or increase bullish positions. Livy Investment Research said the recent selloff in Tesla was a result of waning confidence in the company’s fundamental prospects, cautioning that there is “limited near-term respite.” (104 comments)

More consolidation?

Devon Energy (DVN) is considering major acquisition targets as it seeks to gain scale in U.S. shale, and has held preliminary talks in recent months about a combination with Marathon Oil (MRO). Devon has also been eyeing CrownRock, a Permian Basin producer led by Texas billionaire Timothy Dunn that has been exploring a potential $10B sale. If either deal goes through, it would be Devon’s largest since its $2.6B takeover of WPX Energy. The update comes just a week after Exxon Mobil (XOM) said it will buy Pioneer Natural Resources (PXD) for $59.5B, a deal that analysts applauded. In any case, SA analyst UFD Capital believes Devon could be an attractive acquisition target. (46 comments)

Subscriber surge

Netflix (NFLX) soared 12.5% in postmarket action on Wednesday after it posted Q3 profit that topped estimates, saw its best subscriber growth in years and confirmed price hikes. The company added 8.76M global paid subscribers, easily topping the consensus estimate of 6.2M adds, and landed at 247.15M memberships – higher than the 244.41M expected. The subscriber surge was a result of “paid sharing, steady programming and the ongoing expansion of streaming globally,” Netflix said. Investing Group Leader Cestrian Capital Research said management’s outlook of further revenue growth and higher margins suggests scale and better revenue yield from content assets. (65 comments)

Third attempt

Erik Haas, Johnson & Johnson’s (JNJ) chief litigation lawyer, said the healthcare giant is weighing the possibility of another bankruptcy filing in its attempt to deal with tens of thousands of lawsuits related to its talcum powder products. If J&J goes ahead with the filing, it would be the third attempt to use bankruptcy as a way to handle talc litigation after it was beaten back twice. J&J is appealing a bankruptcy court’s decision to deny its subsidiary LTL Management’s filing, as the unit hadn’t shown that it was in financial distress. Haas said this argument was incorrectly applied. As part of its second bankruptcy attempt, LTL had offered $8.9B to settle all current and future talc claims. (19 comments)

Today’s Economic Calendar
8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
9:00 Fed’s Jefferson’s Speech
10:00 Existing Home Sales
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
12:00 PM Jerome Powell: Economic Outlook
1:20 PM Fed’s Goolsbee’s Speech
1:30 PM Fed’s Barr: “Stress Testing”
4:00 PM Fed’s Bostic: “The Role of Policy in Addressing Inequality”
4:30 PM Fed Balance Sheet
5:30 PM Fed’s Harker: Economic Outlook
6:00 PM Fed’s Logan’s Speech

What else is happening…

Ten-year Treasury yield (US10Y) hits highest level since mid-2007.

Federal Reserve observes muted economic activity – Beige Book.

Disney (DIS) breaks out ESPN figures in new reporting structure.

Cruise, GM (GM) and Honda (HMC) to launch robotaxis in Tokyo.

Nokia (NOK) reports Q3 earnings, plans up to 14,000 layoffs.

Pfizer plans to more than double COVID pill Paxlovid’s price.

Terex’s weak outlook sparks selloff in Caterpillar (CAT), peers.

Average 30-year fixed-rate mortgage touches 23-year high.

UBS analysts: Apple (AAPL) iPhone 15 demand looks weak.

BofA poll: Fund managers want to see lower government deficits.

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Good morning. Happy Wednesday.

The Asian/Pacific markets were mostly down. Thailand did well, but China, India, Taiwan and Singapore posted moderate losses. Europe, Africa and the Middle East are currently mostly down. Russi, Greece and Portugal are up; the UK, Denmark, France, Germany, the UAE, Switzerland, Hungary, the Netherlands, Austria and Sweden are down. Futures in the States point towards a moderate down open for the cash market.

————— Online Course: Jason Leavitt’s Masterclass in Trading —————

The dollar unchanged. Oil and copper are up. Gold and silver are up. Bonds are mixed.

Stories/News from Seeking Alpha…

Yields surge

Treasuries sold off sharply early Tuesday after Sept. retail sales figures came in much stronger than expected, while Wall Street’s major averages ended near the flatline. The 10-year Treasury yield (US10Y) jumped to as high as 4.84% on Tuesday, while the 2-year yield (US2Y) rose to 5.22%. See how yields are trading across the curve.

Dig deeper: Retail sales in Sept. rose 0.7% M/M to $704.9B, compared with the 0.3% increase expected, while core retail sales increased 0.6%. The auto dealers category showed a 6.3% Y/Y increase in a positive read-through for retailers including CarMax (KMX) and Carvana (CVNA). The health & personal care stores category, which includes companies like Walgreens Boots Alliance (WBA) and e.l.f. Beauty (ELF), powered 8.3% higher Y/Y. The category that includes Walmart (WMT), Target (TGT), and Costco (COST) showed a 2% Y/Y increase.

Market views: The Sept. retail sales growth rose slightly more than the rate of inflation, breaking a recent trend, Bankrate analyst Ted Rossman said, although he still expects a lukewarm holiday season. Meanwhile, expectations of a more hawkish Federal Reserve grew, as the odds of the FOMC maintaining rates at its Dec. meeting fell to 55%. “Markets are not waiting to hear from Fed officials,” Allianz Advisor Mohamed El-Erian tweeted. He said the yield moves were likely a result of growing economic uncertainty, substantial fiscal deficits, and a “genuine doubt about who will readily absorb the additional supply of government debt associated with high deficits.”

SA commentary: Resilient consumer spending reinforces the view that the U.S. economy likely expanded at a 4% annualized rate in Q3, according to ING Economic and Financial Analysis. “While Fed officials may be coalescing around the view that further rate hikes may not be needed, the prospect of rate cuts is in the far-off future and the yield curve needs to continue repricing for that,” they said. Meanwhile, SA analyst James Picerno noted that statistical odds look increasingly favorable for guesstimating that a yield peak is near, which suggests it’s timely to lift allocations to bonds. (70 comments)

War intensifies

Crude oil futures rose after hundreds of Palestinians were killed in a blast at a Gaza hospital on Tuesday, which rekindled fears of oil supply disruptions in the region. Palestinians have blamed an Israeli air strike for the blast, while Israel blamed a failed rocket launch by Islamic Jihad. As a result, Jordan canceled a summit it was scheduled to host today with U.S. President Joe Biden and Egyptian and Palestinian leaders. Even so, Biden arrived in Israel to meet Prime Minister Benjamin Netanyahu and the country’s war cabinet to understand their plans and objectives. The tragedy in Gaza and the resulting diplomatic setback pushed oil prices higher, with the front-month November WTI crude (CL1:COM) and December Brent crude (CO1:COM) up more than 2% each. (73 comments)

AI factories

Foxconn (OTCPK:FXCOF), the world’s largest contract electronics maker, and Nvidia (NVDA) will join hands to build artificial intelligence factories for various applications, including self-driving cars. At a Foxconn event in Taipei, Nvidia CEO Jensen Huang said these AI factories – or large data centers – will be used for training autonomous vehicles, language-based generative AI and robotics platforms. Foxconn, formally known as Hon Hai Precision (OTCPK:HNHAF), will use Nvidia’s latest chips – including the GH200 superchip that it is not allowed to sell in China – and software to build these data centers. The announcement comes a day after the U.S. unveiled new chip export curbs. (1 comment)

Plans delayed

General Motors (GM) confirmed that it will delay the opening of its second electric truck plant in Michigan by a year. The Detroit automaker pushed back the conversion of its Orion Assembly plant to “better manage” capital investment with evolving electric vehicle demand. “We also identified engineering improvements that we will implement to increase the profitability of our products,” the company said in a statement to Seeking Alpha. Some analysts believe Rivian Automotive (RIVN) can capitalize on the struggles faced by automakers in the electric truck category. The ongoing Detroit strike is expected to slow down the electric truck production timeline for GM and Ford (F), while Tesla (TSLA) has still not set a launch event date for its Cybertruck. (46 comments)

Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 Housing Starts and Permits
10:30 EIA Petroleum Inventories
12:00 PM Fed’s Waller: Economic Outlook
12:30 PM Fed’s Williams’ Speech
1:00 PM Fed’s Bowman’s Speech
1:00 PM Results of $13B, 20-Year Bond Auction
2:00 PM Fed’s Beige Book
3:15 PM Fed’s Harker: “Workforce Challenges”
4:00 PM Treasury International Capital
6:55 PM Fed’s Cook: “The Evolution of the Federal Reserve’s Employment Mandate”

What else is happening…

Tesla (TSLA) earnings preview: Eyes on guidance, Cybertruck update.

Microsoft nails $1B megadeal with Amazon (AMZN) for 365 cloud tools.

Shell (SHEL) inks 27-year LNG supply deals with Qatar for Netherlands.

Netflix (NFLX) subscriber growth, price hike in focus for Q3 earnings.

Hayman Capital founder Kyle Bass: Stop investing in Chinese stocks.

United Airlines (UAL) slides 4% as Israel, fuel prices weigh on outlook.

VMware (VMW) falls 8% amid China’s review of Broadcom (AVGO) deal.

U.S. Bancorp (USB) spikes as Fed exempts bank from Category II rules.

Sculptor Capital’s (SCU) founding partners sue hedge fund, Rithm (RITM).

Netlist plunges after appeals ruling in Samsung (OTCPK:SSNLF) fight.

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Good morning. Happy Tuesday.

The Asian/Pacific markets were mostly up. Japan, Hong Kong, South Korea and the Philippines posted big losses. Europe, Africa and the Middle East are currently split. The UK, Poland, Hungary and Saudi Arabia are up; Germany, South Africa, Finland, Switzerland, Israel, Austria and Sweden are down. Futures in the States point towards a down open for the cash market.

————— Online Course: Jason Leavitt’s Masterclass in Trading —————

The dollar down. Oil is up; copper is down. Gold and silver are up. Bonds are down.

Stories/News from Seeking Alpha…

Earnings watch

As the third-quarter earnings season kicks into high gear after banks were off to a strong start, most experts believe companies will beat expectations, given the low bar set by analysts in the backdrop of still-high interest rates and slowing demand. “I am seeing plenty of caution in outlooks ahead of this earnings season and the bar seems to be set quite low,” said Investing Group Leader Fear & Greed Trader.

Market views: LSEG’s Refinitiv expects overall Q3 earnings for S&P 500 (SP500) companies to increase 1.3% Y/Y. While this is a relatively small growth, it would mark the first increase after three quarters of flat or declining profits. “Growth expectations for 2023 are 2.3%, the lowest since 2020,” said analyst Tajinder Dhillon, noting that Q3 is expected to be a small contributor while Q4 will likely see a growth rate of 10.8%. On the other hand, analysts tracked by Bloomberg Intelligence are expecting S&P 500 companies’ Q3 earnings to dip 0.8% Y/Y, while Q4 will see a 6.2% rebound.

Sector watch: Refinitiv’s Dhillon expects the Industrials and Consumer Staples sectors to continue their streak of positive Y/Y earnings growth. Sectors expected to post Q3 earnings decline include Materials, Healthcare and Real Estate. Energy will likely see weaker earnings, on account of more difficult Y/Y comparisons. SA analyst David Trainer noted that 71% of S&P 500 companies have Street Earnings higher than Core Earnings, while Street Earnings are lower than Core Earnings for 27% of the companies.

Stocks to watch: This week will see earnings reports from big names including Tesla (TSLA), AT&T (T), Netflix (NFLX), Kinder Morgan (KMI), and Philip Morris (PM). Johnson & Johnson (JNJ) reported Q3 results that topped estimates, while Bank of America (BAC) also posted an earnings beat. Goldman Sachs (GS) and United Airlines (UAL) are scheduled to report later today.

Easing sanctions

The Biden administration and the Venezuelan government have agreed to a deal in which the U.S. would ease sanctions on Venezuela’s oil industry in exchange for allowing an open, internationally monitored presidential election next year. Venezuela’s government and opposition will resume long-suspended talks today in Barbados, where the Maduro government and Venezuela’s U.S.-backed opposition will sign a deal to include commitments for a freer vote in 2024. Oil prices steadied on hopes that U.S. sanctions would ease, with WTI crude oil futures (CL1:COM) staying flat after a 1.8% slide on Monday amid Middle East tensions. (84 comments)

Default setting

Google’s (GOOG, GOOGL) search deals account for roughly half of all U.S.-based search queries, a government witness said during a hearing for the landmark antitrust trial that the tech giant is facing. “The power of the defaults is very significant,” said Massachusetts Institute of Technology professor Michael Whinston, who was hired by the Department of Justice to provide analysis for its case that Google’s deals are anticompetitive. While claiming that Google’s deals block out rivals such as Microsoft (MSFT) and DuckDuckGo from up to 50% of all U.S.-based searches, Whinston said another 20% of all domestic searches are made via Google Chrome. Earlier in the case, Microsoft CEO Satya Nadella also warned of Google’s monopoly and flagged the risk of AI cementing its lead. (39 comments)

Swift success

At the movies this weekend, it was Taylor Swift’s world and other films were just living in it. Taylor Swift: The Eras Tour, which documents the pop superstar’s latest tour, dominated the weekend box office to end with $92.8M domestically. That’s a full 70% of the domestic industry box office, and it makes for the second-best October domestic opening of all time, just behind 2019’s Joker. On a worldwide basis, Swift’s film drew $123.5M. The success is especially notable as Swift bypassed traditional distributors to deal directly with AMC Entertainment (AMC). Note that this isn’t the only concert-film bonanza this year, as AMC is distributing Renaissance: A Film by Beyoncé on Dec. 1. (41 comments)

Today’s Economic Calendar
8:00 Fed’s Williams’ Speech
8:30 Retail Sales
9:15 Industrial Production
9:20 Fed’s Bowman: “Responsible Innovation in Money and Payments”
10:00 Business Inventories
10:00 Housing Market Index
10:45 Fed’s Barkin’s Speech
5:00 PM Fed’s Kashkari: “The Intersection of the Federal Reserve in the Health Care Sector”

What else is happening…

WSB survey results: Joann Fabrics (JOAN) may file for bankruptcy next.

Allstate (ALL) stock gains on report activist Trian Fund has taken a stake.

Shell (SHEL) hits multiyear highs on strategy shift, rising energy prices.

Microsoft’s (MSFT) LinkedIn lays off 668 people in broader restructuring.

Suncor (SU) to stick to climate goals; CEO chides Canada energy policy.

Cathie Wood is optimistic about spot Bitcoin ETF; expects bond rally.

Jeff Bezos overtakes Bernard Arnault to be the world’s second richest.

Activist Starboard takes over 5% stake in Fortrea Holdings (FTRE).

Duke Energy (DUK) eyes further cuts for Florida customer bills.

Hennessy Funds is bullish on stocks – these in particular.

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Good morning. Happy Monday. Hope you had a good weekend.

The Asian/Pacific markets were weak. Japan, China, Hong Kong, South Korea, Taiwan, New Zealand, Singapore, Thailand and the Philippines posted big losses. Europe, Africa and the Middle East are currently mostly up. Poland, Russia, Hungary, Portugal, Israel and Saudi Arabia are leading; Turkey is down. Futures in the States point towards a positive open for the cash market.

————— Online Course: Jason Leavitt’s Masterclass in Trading —————

The dollar down. Oil and copper are up. Gold and silver are down. Bonds are down.

Stories/News from Seeking Alpha…

Caving in

Popular drugstore chain Rite Aid (RAD) has filed for Chapter 11 bankruptcy protection, buckling under its more than $3B debt load and opioid-related liabilities. Rite Aid, which has been shuttering stores across the U.S., also received a commitment for $3.45B in new funds from certain lenders. Meanwhile, the pharmacy chain will sell its Elixir Solutions business to MedImpact Healthcare, a pharmacy benefits company.

Bigger picture: Rite Aid joins other drugmakers that have declared bankruptcy due to opioid litigation, such as Mallinckrodt (OTC:MNKTQ), Endo (OTC:ENDPQ), and Purdue Pharma. Drug distributors AmerisourceBergen, Cardinal Health (CAH), and McKesson (MCK) and pharma giants Johnson & Johnson (JNJ) and Teva (TEVA) have all agreed to pay billions of dollars to settle their opioid-related liabilities. As for Rite Aid, the Department of Justice earlier this year alleged that the company deliberately filled unlawful prescriptions for opioid painkillers, including fentanyl and oxycodone.

Note that Rite Aid’s bankruptcy filing also comes at a time when consumer confidence has been weakening in the backdrop of sticky inflation. In a July analysis, ratings agency Moody’s said defaults among retail and apparel would likely rise as profits continue to be dented by elevated costs, higher markdowns and muted consumer spending. Moody’s said home goods, apparel retailers and smaller companies were especially at risk, even mentioning Rite Aid specifically.

SA commentary: SA Quant has warned that Rite Aid is at high risk of performing badly, given its decelerating momentum and inferior profitability. Back in July, SA analyst WYCO Researcher said Rite Aid’s management was not doing enough to keep it out of bankruptcy court. “The biggest hurdle is negotiating the specific amount of an opioid settlement,” they warned. For an alternative pharmacy chain pick, Christopher Robb is buying Walgreens Boots Alliance (WBA) going into earnings on account of its high dividend and “dirt cheap” valuation levels. “Walgreens stock is a high-risk, high-reward contrarian play for long-term dividend compounders,” he said. (29 comments)

Offer withdrawn

Albemarle (ALB) has withdrawn its non-binding offer for Australian lithium miner Liontown Resources (OTCPK:LINRF), citing “growing complexities” with the proposed transaction as a factor in its decision. “Moving forward with the acquisition, at this time, is not in Albemarle’s best interests,” said its CEO Kent Masters. The decision comes after Albemarle was given four weeks to look over its books following a fresh takeover bid valuing it at around $4.2B, which was extended by an additional week. Although a lithium bull, SA analyst Ben Short has flagged some of the headwinds facing Albemarle, including contract issues and operational weaknesses. (19 comments)

Investor activism

Starboard Value has been building a stake in News Corp. (NWSA, NWS), and it seems the activist hedge fund may push for strategic and governance changes at the media giant. While details of the stock purchase were not disclosed, Starboard’s Jeff Smith is set to present investment ideas at two conferences this week. Starboard began building a stake in News Corp. before Rupert Murdoch said he would step down as chairman. Note that News Corp.’s revenue has been stagnant over the past several quarters. SA analyst Edgar Torres H believes News Corp. stock is overvalued, with its class A shares (NWSA) up nearly 19% in the last six months, while its class B shares (NWS) climbed 22%.

Rigged bet

Billionaire activist investor Carl Icahn claims that his short bet against malls may be manipulated against him. Icahn has had a short position against commercial mortgage-backed securities through the use of credit default swaps, or CDS, for the last four years. While the mall bet paid off during the COVID-19 lockdown and Icahn made about $900M in 2020, it hasn’t been working of late. Last year, Icahn Enterprises’ (IEP) CDS positions took a $742M paper loss, and its short credit positions have also been dropped. Icahn suggested that the recent market manipulation relates to Crossgates, a mall outside of Albany, New York. (71 comments)

Today’s Economic Calendar
8:30 Empire State Mfg Survey
10:30 Fed’s Harker: Economic Outlook
4:30 PM Fed’s Harker: Economic Outlook

What else is happening…

The mounting, potential impact of weight loss drugs on consumer stocks.

Sony (SONY) eyes potential purchase of Disney’s (DIS) India business.

Unions vote to restart strikes at Chevron’s (CVX) LNG sites in Australia.

Qataris scrap bid for Manchester United (MANU); Ratcliffe is sole bidder.

China central bank boosts liquidity support; keeps policy rate unchanged.

Eli Lilly (LLY) reports full phase 3 trial data for weight loss drug Mounjaro.

Honeywell (HON) sees strong demand for business jets over next decade.

BioNTech (BNTX) dips on warning of €900M write-off related to COVID shot.

As Nvidia (NVDA) speeds up its cadence, it could mean bad news for rivals.

UBS: ‘Softish’ landing in the U.S. economy will push stocks higher next year.

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