Good morning. Happy Friday.
The Asian/Pacific markets did great. China, Hong Kong, South Korea, India, Taiwan, Australia, New Zealand, Malaysia, Indonesia, Singapore and Thailand posted solid gains. Europe, Africa and the Middle East lean to the upside. Poland, South Africa, Finland, Hungary, Portugal, Austria and Sweden are up; Denmark is down. Futures in the States point towards a slight down open for the cash market.
————— VIDEO: State of the Market —————
The dollar is down. Oil is up; copper is down. Gold is up; silver is down. Bonds are up.
Stories/News from Seeking Alpha…
Fraud and conspiracy
Sam Bankman-Fried, the disgraced founder of collapsed crypto exchange FTX, has been found guilty on all seven criminal counts related to fraud and conspiracy. Prosecutors presented evidence and testimony showing that SBF had siphoned billions of customer deposits and doctored balance sheets at FTX to bankroll speculative investments, donate millions of dollars in political contributions, and cover major losses at sister hedge fund Alameda Research. While an appeal is likely, SBF now faces decades behind bars, with Judge Lewis Kaplan setting a sentencing date for March 28, 2024 (SBF also faces a second trial earlier that month).
Quote: “Sam Bankman-Fried perpetrated one of the biggest financial frauds in American history,” U.S. Attorney Damian Williams, whose office led the investigation, said at a press conference outside the courthouse. “The cryptocurrency industry might be new; the players like Sam Bankman-Fried might be new, but this kind of fraud, this kind of corruption, is as old as time, and we have no patience for it. It’s a warning to every single fraudster out there who thinks that they’re untouchable, or that their crimes are too complex for us to catch, or that they’re too powerful for us to prosecute.”
Since his arrest in December, the former billionaire has maintained his innocence, claiming that unfortunate management mistakes, not criminal activity, were tied to the downfall of FTX. Earlier this month, three of Bankman-Fried’s business affiliates told the jury that he posted, or had influenced others to post, misleading messages on social media to falsely represent the health of FTX in an effort to put an end to a deposit run. All three witnesses also agreed to cooperate with prosecutors after pleading guilty to fraud and other offenses.
What it means for crypto: The knee-jerk reaction saw benchmark cryptocurrency Bitcoin (BTC-USD) lose $1,000 in value since the SBF verdict was released to trade at the $34,000 level, but the losses were mostly contained. Interestingly enough, the collapse of FTX in November 2022 came after crypto hit its lowest point over the past three years, which was mainly due to the Fed’s rate-hiking cycle and its impact on high-risk assets. Since SBF was arrested in December, things have actually been on the upswing, with Bitcoin even climbing 105% YTD and making crypto one of the best investment classes of 2023.
Go deeper: While the SEC and other agencies have expanded their crackdowns, like suing Coinbase (COIN) this past summer, the push for more regulation and enforcement could benefit investors by defining legal parameters and legitimizing the industry. There are also increased hopes for new spot bitcoin ETFs, which have been filed by several major financial firms, including Blackrock (BLK), and could draw in institutional players while keeping traders bullish. In the words of Assistant U.S. Attorney Nicolas Roos, who said in his closing statement before the jury, the SBF trial was “not about complicated crypto,” but rather about “deception, lies, stealing and greed.”
Zero-day workweek
Will AI make all jobs obsolete in the future? Elon Musk thinks so. “There will come a point where no job is needed. AI will be able to do everything,” he told U.K. Prime Minister Rishi Sunak at an event at Lancaster House. The statements follow the U.K. government’s two-day summit in Bletchley Park, where world leaders and companies signed a landmark pact for safety testing of frontier AI models, including OpenAI, Google (GOOG, GOOGL) DeepMind, and Meta (META). While employment is still an option, markets will be closely watching the nonfarm payrolls report due today, where “we will see whether there is a soft landing or not,” according to SA analyst Christopher Robb. (45 comments)
iOutlook
Shares of Apple (AAPL) fell 3.4% to $171.60 AH on Thursday following the tech giant’s fourth consecutive quarter of declining revenues. Investors also seemed disappointed by guidance despite an earnings beat, strong services business performance and a 3% growth in iPhone sales. On the conference call, CFO Luca Maestri forecast Q1 total revenue to be similar to last year, while iPhone revenue will likely grow Y/Y, even with one week less than a year ago. Investing Group Leader Jonathan Weber also said the results were not impressive, given Apple’s expensive valuation, while Livy Investment Research believes Apple’s persistent revenue declines are a telling tale of increased vulnerability to consumer spending headwinds. (21 comments)
Physical retail
A year after opening its first location, Amazon (AMZN) is shuttering physical apparel stores as the e-commerce giant focuses its brick-and-mortar plans on its grocery business. The shift follows last year’s move to close all physical bookstores, as well as Amazon 4-star and Amazon Pop Up shops in the U.S. and U.K. A company spokesperson said physical retail still remains important for Amazon, which will continue to invest in growing Amazon Fresh and Whole Foods Market. The latest developments come ahead of the holiday season, where spending is expected to return to pre-pandemic levels. (1 comment)
Today’s Economic Calendar
8:00 Fed’s Barr’s Speech
8:30 Non-farm payrolls
9:45 PMI Composite Final
10:00 ISM Service Index
12:45 PM Fed’s Kashkari’s Speech
1:00 PM Baker Hughes Rig Count
3:30 PM Fed’s Barr’s Speech
What else is happening…
Palantir (PLTR) surges on upbeat guidance; S&P 500 inclusion ahead?
SpaceX’s (SPACE) Starlink at ‘breakeven cash flow’ ahead of possible IPO.
Shell (SHEL) rallies on $3.5B stock buyback as gas trading lifts Q3 profit.
Block (SQ) pops after earnings beat, strong guidance and $1B buyback.
SolarEdge slides after Q3 miss; Guggenheim ‘gives up’ on company.
Novo Nordisk (NVO): 80% of insured U.S. patients pay <$25 for Wegovy.
Bank of England holds benchmark interest rate at 5.25% as expected.
Eli Lilly posts Q3 beat on diabetes drugs; pushes Alzheimer’s prospects.
Broadcom CEO met Chinese officials last weekend over VMware deal.
Swift profits: Live Nation (LYV) reports earnings above expectations.
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Good morning. Happy Thursday.
The Asian/Pacific markets did great. China is weak, but Japan, Hong Kong, South Korea, India, Taiwan, Australia, New Zealand, Indonesia and Thailand posted big gains. Europe, Africa and the Middle East are up big. The UK, Denmark, France, Turkey, Germany, Greece, South Africa, Finland, Hungary, Spain, the Netherlands, Italy, Portugal, Israel, Austria and Sweden are up 1% or more. Futures in the States point towards a moderate gap up open for the cash market.
————— Online Course: Jason Leavitt’s Masterclass in Trading —————
The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
‘Proceeding carefully’
“We’re not confident that we haven’t, but we’re not confident that we have.” That statement can sum up the entirety of Fed Chair Jay Powell’s press conference on Wednesday, which outlined that the central bank is still not sure whether it is done with a hiking cycle to “sufficiently bring down inflation to 2% over time.” Stocks still jumped despite a lack of confidence from the Fed about “achieving such a stance,” while bond yields fell back despite an FOMC that continues to “proceed carefully.” At the time of writing, S&P 500 futures (SPX) are up another 0.5%, while the yield on the 10-year Treasury (US10Y) is down 1 bp to 4.70%.
Between the lines: In its last set of economic projections, the Fed implied one more hike for the remainder of 2023. While Powell tried to distance himself from any conclusions drawn from that dot plot, the fact that it’s now being called into question signals a more dovish turn for the central bank, charging up investor hopes that the hiking cycle is over. Wednesday’s decision to hold rates in a range of 5.25%-5.50% also resulted in the FOMC skipping a rate hike for two consecutive meetings, marking the longest period without an increase since the Fed began its aggressive hiking cycle in March 2022. There was additional good news for the economy, with Powell explaining why a recession is no longer indicative in the near term and why recent stronger-than-expected data is not problematic.
“I think everyone has been very gratified to see that we’ve been able to achieve, you know, pretty significant progress on inflation without seeing the kind of increase in unemployment that has been very typical of rate-hiking cycles like this one. That’s a historically unusual and very welcome result, and the same is true of growth.”
Explainer: “There are really two processes at work here,” Powell added. “One of which is the unwinding of the distortions to both supply and demand from the pandemic and the response to the pandemic, and the other is restrictive monetary policy, which is moderating demand and giving the supply side time and space to recover. A significant increase in the size of the labor market now, both from labor-force participation and from immigration, is a big supply-side gain that is really helping the economy. And it’s part of why GDP is so high – because we’re getting that supply. So we welcome that. But I think those things will run their course, and we’re probably still going to be left with some ground to cover to get back to full-price stability. And that’s where monetary policy and what we do with demand are still going to be important.” Also check out the U.S. Treasury’s latest quarterly refunding announcement.
Big milestone
Microsoft’s (MSFT) business-focused social network LinkedIn now has over 1B members, with about 80% of its recent sign-ups coming from outside the U.S. The platform also announced the addition of certain generative AI tools for its paying members, which include a new “job seeker” experience that would assess if a particular job is a good fit. LinkedIn will initially test these tools with Premium subscribers, a group whose sign-ups jumped 55% Y/Y during Q1, though SA analyst Poonam Arora expects LinkedIn growth to dwindle due to the saturation of the subscriber base. Last month, the company also announced around 668 job cuts amid slowing revenues. (5 comments)
Top Thrill & Kingda Ka
Cedar Fair (FUN) and Six Flags (SIX) have officially inked a deal to merge, lifting the stocks during yesterday’s session amid the reports and again in premarket trade. The combined entity will have a pro forma enterprise value of around $8B, with dozens of amusement and water parks across North America. The news comes after Six Flags bid $70/share for Cedar Fair in 2019, a cash-and-stock deal that was rejected by Cedar Fair. Last year, SeaWorld (SEAS) offered to buy Cedar Fair for $60/share, which was also rejected. Note that private equity firm Centerbridge last year built a more than 5% stake in Cedar Fair, saying it could get interest from other amusement park chains if it put itself up for sale. (11 comments)
Full control
Disney (DIS) is expecting to pay about $8.6B to Comcast’s (CMCSA) NBCUniversal by Dec. 1 to buy the latter’s one-third stake in streaming service Hulu, paving the way for Disney’s 100% ownership of the company. This follows Comcast’s move to take advantage of a Nov. 1 trigger date to exercise its right to engineer the stake sale. Disney could pony up somewhat more than $8.61B, as Comcast has been floating a significantly higher valuation for Hulu. The two companies have been working with banks to ascertain a fair valuation, which SA analyst Juxtaposed Ideas believes may be valued at $45B, thanks to Hulu’s profitable growth trend. (23 comments)
Today’s Economic Calendar
Auto Sales
7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
8:30 Productivity and Costs
10:00 Factory Orders
10:30 EIA Natural Gas Inventory
4:30 PM Fed Balance Sheet
6:30 PM Fed’s Kathleen’s Speech
What else is happening…
Goldman Sachs lists 25 ‘conviction list’ stocks to buy.
Apple (AAPL) Q4 preview: China demand fears loom large.
Qualcomm (QCOM) automotive strength spurs strong results.
CVS Health (CVS) swings to profit as opioid overhang clears.
PayPal’s (PYPL) gets green light in U.K. to offer crypto services.
Roku (ROKU) jumps as Q4 sales forecast tops estimates.
Airbnb (ABNB) falls after warning of volatility in travel demand.
Druckenmiller: Entitlement cuts needed to balance U.S. spending.
Etsy (ETSY) slips as macro woes dent holiday quarter outlook.
Super Micro Computer (SMCI) rises as 2024 guidance raised.
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Good morning. Happy Wednesday. Happy Fed Day.
The Asian/Pacific markets leaned up. Japan, South Korea, Australia and New Zealand did well; India, Malaysia and Indonesia posted losses. Europe, Africa and the Middle East lean to the upside but are mostly quiet. Denmark, Poland, the UAE, Portugal and Saudi Arabia are up; Turkey and Austria are down. Futures in the States point towards a slight positive open for the cash market.
————— Online Course: Jason Leavitt’s Masterclass in Trading —————
The dollar is up. Oil and copper are up. Gold is up slightly; silver is down. Bonds are up.
Stories/News from Seeking Alpha…
Wait-and-see
While a refunding announcement from the U.S. Treasury will be closely watched by the market this morning, the latest monetary policy stance at the Federal Reserve is also on the radar this afternoon. The FOMC is widely expected to hold its policy rate at 5.25%-5.50% for the second straight meeting, but is also likely to keep the door open for further tightening if needed. The wait-and-see approach has led many investors to put a strong emphasis on incoming economic data, but there won’t be any new economic projections at this meeting, putting a bigger spotlight on Fed Chair Jay Powell’s policy statement and press conference.
Snapshot: A U.S. economy that’s continuing to exert surprising strength combined with geopolitical risks complicates the Federal Reserve’s job of bringing down price pressures. Less than two weeks ago, Powell indicated that persistently strong economic growth could lead to resurging inflation and require further tightening, but he’s also aware that the rate hikes the central bank has already implemented haven’t achieved their full impact yet. In addition, long-term Treasury yields have surged in recent weeks, doing some of the heavy lifting for the Fed.
Some are also questioning whether and how conventional economic models like growth-fueled inflation still apply. “Holding to the simple historical correlations of what growth and labor market conditions mean for inflation in the face of positive supply developments is a recipe for overshooting and causing an unnecessary downturn,” said Chicago Fed President and FOMC member Austan Goolsbee. Another reason why the traditionalist perspective on the current underlying economic environment “may miss the mark is the role of central bank credibility in keeping inflation expectations anchored now versus in past periods of high inflation.”
SA commentary: “The only problem with the ‘data-dependent’ approach is that the data does not support the hold,” writes SA analyst Damir Tokic. He cites the GDP growth rate for Q3 Q/Q at 4.9%, full employment, an extremely tight labor market, and widespread labor strikes that are inflationary. Tokic also flags the current core CPI inflation rate at 4.1%, which is double the Fed’s 2% inflation target, as well as a host of elevated global tensions. “So, this is not a data-dependent approach, this is really a ‘wait-and-see’ approach or even better a ‘wait-and-hope’ approach.” (34 comments)
Commission collusion
Digital real estate stocks – including Zillow (Z), Opendoor (OPEN) and Redfin (RDFN) – dove soon after a Missouri jury found powerful realtor groups and brokerages guilty of conspiring to inflate commission rates. Defendants were ordered to pay $1.78B in damages, though a final judgment in the case still needs to be issued before the verdict is finalized. The suit also included Re/Max (RMAX) and Anywhere Real Estate (HOUS) as defendants, whose shares fell on the announcement, though both companies have already reached settlements. It’s too early to see how things will play out, but the decision could rewrite the entire real estate model in the U.S. and change the way agents are paid. (12 comments)
Xenotransplantation
The second person to ever receive a pig heart transplant, Lawrence Faucette, has died close to six weeks after the procedure was carried out. United Therapeutics (UTHR), through its xenotransplantation unit Revivicor, provided the genetically-modified pig heart, while Eledon Pharmaceuticals’ (ELDN) investigational anti-CD40 antibody tegoprubart was used to prevent the body from rejecting the organ. During the first month after the surgery, Faucette had been engaged in physical therapy, but the transplanted heart started showing signs of rejection in recent days. David Bennett – the first patient to receive a pig heart transplant – died last year, two months after the landmark surgery.
WeBankrupt
WeWork (WE) continues to plunge, down nearly 40% in premarket trade, on reports that the company will file for Chapter 11 bankruptcy as soon as next week. It underscores the flexible office space firm’s dramatic reversal of fortunes over the past four years, with a market cap of $47B in 2019, and now worth just $185M. WeWork flagged going concern risks back in August and had been renegotiating leases on almost all of its locations. SA analyst Pacifica Yield also previously warned that WeWork would need “huge concessions” from lenders and landlords to avoid bankruptcy. (6 comments)
Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
8:30 Treasury Refunding Announcement
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
10:00 Job Openings and Labor Turnover Survey
10:30 EIA Petroleum Inventories
2:00 PM FOMC Announcement
2:30 PM Chairman Press Conference
What else is happening…
Druckenmiller: Yellen made the worst mistake in Treasury history.
Tesla (TSLA) wins Autopilot case in California involving fatal crash.
AMD (AMD) slips as ongoing gaming weakness hinders guidance.
Gene therapy from CRISPR-Vertex is embraced by FDA panel.
BP (BP) boss dismisses takeover speculation, defends Q3 results.
EV push: Toyota (TM) to invest $8B in U.S. battery plant.
Nvidia’s (NVDA) valuation drops below $1T amid China worries.
Bayer (OTCPK:BAYZF) ordered to pay $332M in Roundup cancer trial.
AB InBev (BUD) gains as pricing actions offset lower beer volumes.
Caterpillar (CAT) falls amid investor concerns about future growth.
S&P CoreLogic Case-Shiller: Home prices rise more than expected.
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Good morning. Happy Tuesday. Happy Halloween.
The Asian/Pacific markets leaned down. Japan did well, but Hong Kong, South Korea, Taiwan and Thailand were weak. Europe, Africa and the Middle East are mostly up. Denmark, Poland, France, Germany, the UAE, Finland, the Netherlands, Italy, Sweden and South Africa are leading; Russia is down. Futures in the States point towards a positive open for the cash market.
————— VIDEO: Will the Mega Caps Bring the Market Down —————
The dollar is unchanged. Oil is up; copper is unchanged. Gold is flat; silver is down. Bonds are up.
Stories/News from Seeking Alpha…
Go big or go home
It took over six weeks, but it looks like a strike that threatened to upend the American auto industry is coming to an end. General Motors (GM) has become the last of the Big Three Detroit automakers to ink a tentative deal with the United Auto Workers union, which had threatened to expand its strike to GM’s key engine plant in Tennessee (the automaker’s largest facility in North America). In total, the series of walkouts that began on Sept. 15 ended up involving nearly 50,000 workers, with the labor action costing GM, Ford (F) and Stellantis (STLA), as well as their suppliers, billions of dollars.
Quote: “We wholeheartedly believe our strike squeezed every last dime out of General Motors,” UAW President Shawn Fain declared. “They underestimated us. They underestimated you. We have shown the companies, the American public and the whole world that the working class is not done fighting. In fact, we’re just getting started.”
Union members will get hefty double-digit pay raises that are said to cost GM nearly $7B over the next 4.5 years. Higher labor costs will also hit the bottom line of Ford, which last week suspended its guidance and said the new deal with the UAW would add $850 to $900 to the cost of each car. Other terms in the contracts include restricting the use of lower-paid temporary workers, as well as having influence over what plants stay open as the automakers shift to electric vehicles.
“GM has moved firmly into a medium-term downtrend, with buyers giving up the critical $30 support zone decisively,” wrote SA Investing Group Leader JR Research. “Investors are right to question whether General Motors’s 2030 business plan is still on track, notwithstanding management’s optimism.”
Outlook: The new UAW contracts will significantly raise costs for the automakers, which will attempt to pass some of those along to consumers, seek out production efficiencies, or change their focus to the most profitable models. EV leader Tesla (TSLA) and non-union foreign brands like Toyota (TM) could also now be in the crosshairs of the UAW, and it may drive other industries to secure better compensation and working conditions. Pharmacy staff from CVS (CVS) and Walgreens (WBA) just went on strike in what has been dubbed as “Pharmageddon.” “This is more than an auto industry story,” according to the Anderson Economic Group. “It is a signal to the entire country that unionized workers can demand and get big wage increases.” (34 comments)
AI risks
President Biden has issued an executive order to manage artificial intelligence risks, establishing new standards for AI security, advancing equity and civil rights, and promoting innovation and competition. The order requires AI system developers to share safety test results and other critical information with the U.S. government, among other mandates. The development follows the G7 nations agreeing to a code of conduct for companies building advanced AI systems, while Biden’s move builds on previous actions the U.S. government has taken, including securing voluntary commitments from companies – including Amazon (AMZN) and Alphabet (GOOG, GOOGL) – for AI safeguards. (164 comments)
Federal borrowing
The U.S. Treasury has lowered its federal borrowing estimate for the current quarter on higher revenue expectations, although this would still be a record amount compared to prior fourth quarters. It expects to borrow $776B during Q4, $76B lower than its previous forecast, and $816B during Q1 2024 – also a record for that period. “In total, over those two quarters, marketable debt will have increased by $1.59T!” SA analyst Wolf Richter noted, before investors turn to the quarterly refunding statement due tomorrow. Most WSB readers think across-the-board spending cuts would immediately address the budget deficit. Do you agree? Take the poll here. (4 comments)
Buyer’s remorse?
X Corp. is now worth about $19B – well below the $44B paid by Elon Musk to buy the social media platform in 2022 – even as the world’s richest man ramps up efforts to transform the app into a one-stop shop for a wide range of services. Musk has been working to transform X into an “everything app,” even floating the idea of X serving as an online dating interface while planning to turn the app into a financial hub. Other features include voice-and-video chat, which could bring X in line with social media apps like Instagram and Facebook. Will it be able to compete over the long term with rival platforms from Meta (META) and other companies? (14 comments)
Today’s Economic Calendar
FOMC meeting begins
8:30 Employment Cost Index
9:00 Case-Shiller Home Price Index
9:00 FHFA House Price Index
9:45 Chicago PMI
10:00 Consumer Confidence
3:00 PM Farm Prices
What else is happening…
New U.S. chip curbs put $5B worth of Nvidia’s (NVDA) orders at risk.
Bank of Japan tweaks yield curve control policy, holds interest rates.
Apple (AAPL) takes wraps off ‘scary fast’ Macs with updated M3 chips.
McDonald’s (MCD) beats on both lines as price hikes boost sales.
Truist downgrades Krispy Kreme (DNUT) on weight loss drug overhang.
Broadcom (AVGO) CEO believes VMware (VMW) delay is bureaucratic.
Pinterest (PINS) jumps as earnings, monthly active users top estimates.
Tesla (TSLA) stock drops to close at lowest level since May.
SEC charges SolarWinds’ (SWI) information security chief with fraud.
White House oil plan for Alaska seen as major threat to future drilling.
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets were mixed. China, India and Thailand did well; Japan and Australia were weak. Europe, Africa and the Middle East are mostly up. The UK, Denmark, Poland, France, the UAE, Russia, South Africa, Norway, Spaing, the Netherlands, Italy, Israel and Austria are all doing well. Futures in the States point towards a moderate gap up open for the cash market.
————— VIDEO: Will the Mega Caps Bring the Market Down —————
The dollar is down. Oil is down; copper is up. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
Fiscal health
This week’s FOMC announcement on interest rates would typically be the big-name event for investors, but not this time around. While a Fed hike in December is up for debate, no one expects the central bank to raise rates this week, especially given recent economic data, tightening financial conditions, the cautious tone of policymakers and global geopolitical uncertainty. Instead of the FOMC decision, another headline on Wednesday will draw the attention of the market as the U.S. struggles with a big debt problem and climbing yields that continue to make servicing that debt more expensive.
Refunding announcement: To satisfy the federal government’s borrowing needs, the U.S. Treasury Department sells many types of bonds that span popular 2-year (US2Y), 10-year (US10Y) and 30-year (US30Y) securities, floating-rate notes, inflation-linked bonds and other types of debt with differing maturities. Every quarter, the Treasury details its menu of debt that it plans on issuing, in what is known as its “quarterly refunding” statement. Investors have recently taken a renewed interest in the announcement, given the volatility in the Treasury market and what it means for other sectors of investment and the broader economy.
Heavy borrowing by the Treasury has been a big factor behind the recent run-up in long-term yields, which last week hit their highest levels since the financial crisis in 2007. Other types of spending and tax-revenue shortfalls have also added to the national debt, which doubled in the fiscal year through September and now stands at nearly $34T. The Fed’s most aggressive tightening of monetary policy in decades has prompted further worries over the amount of borrowing, with Fitch stripping the U.S. of its AAA sovereign rating before the last Treasury refunding announcement in August, citing factors like an expected fiscal deterioration and growing debt burden.
Issuance composition: Supply and demand will be in focus during this week’s refunding announcement given the recent volatility in the Treasury market. Will longer-term debt sales be ramped up to fund a widening federal deficit, or will there be a greater reliance on short-term bills due to the recent surge in yields? On the demand side, Treasuries remain one of the safest plays on the planet, but the auctions have become increasingly reliant on hedge, pension and mutual funds to scoop up large quantities of bonds, as foreign governments and U.S. banks reduce their purchases (including the Federal Reserve). Take the WSB survey.
Auto mess
After recently ratifying a new three-year labor contract with General Motors (GM) and Ford (F), Canadian labor union Unifor said more than 8,200 workers have gone on strike at Stellantis’ (STLA) facilities in Canada as negotiators failed to reach an agreement before Sunday’s midnight strike deadline. The walkouts in Canada come close on the heels of Stellantis and the United Auto Workers union in the U.S. reaching a tentative deal to put an end to a strike that began in September. Ford may also see its American labor woes end soon, with local UAW leaders approving its record tentative deal, but GM is still under pressure as the UAW expanded its strike to the firm’s Tennessee engine factory, its largest facility in North America.
In the crosshairs
Truist analyst Neal Dingmann has listed three potential oil and gas acquisition targets with “very good” inventory as consolidation continues in the energy sector. His predictions come as ConocoPhillips (COP) is considering a takeover bid for privately-held Permian Basin oil producer CrownRock, while Devon Energy (DVN) is also exploring a similar offer. “You have a host of large independents that potentially would like to get bigger and add more inventory,” said Dingmann, highlighting some additional suitors. He also prefers Exxon’s (XOM) deal to buy Pioneer Natural Resources (PXD) over Chevron’s (CVX) Hess Corp. (HES) takeover, which he called “kind of odd.” (11 comments)
Scary fast
Apple (AAPL) is set to unveil a new version of its Mac computer tonight at its “Scary Fast” event, a nod to Halloween. The segment represents about 10% of Apple’s yearly revenue, and the event will likely see refreshed MacBook Pro laptops and iMac desktops with Apple’s first M3 3-nanometer processors, which are expected to be more powerful than its M2 line. Apple’s Macs have been facing increased competition for performance power, in the wake of Qualcomm’s (QCOM) new CPU, and Nvidia’s (NVDA) Arm (ARM)-based PC chips. Apple will also post Q4 results on Thursday, the first earnings report since the launch of the iPhone 15, which is not faring well commercially. (61 comments)
Today’s Economic Calendar
10:30 Dallas Fed Manufacturing Survey
What else is happening…
Google (GOOG, GOOGL) commits $2B to OpenAI rival Anthropic.
HSBC profit more than triples in Q3; $3B stock buyback planned.
Kazakhstan nationalizes ArcelorMittal (MT) unit after fire at mine.
Evergrande (OTC:EGRNQ) gets last chance to avert liquidation.
Citi explores a Disney (DIS) trade-off: ABC and India for Hulu.
Pharma, PBMs spar over rising drug costs amid public scrutiny.
Pfizer (PFE) to shut two North Carolina facilities due to cost cuts.
Boeing (BA) assessing ransomware threat from Lockbit hackers.
Kazakhstan fears weigh on Chevron; Exxon faces merger skeptics.
Credit card metrics roughly at prepandemic levels – What’s ahead?
Correction: Wall Street Breakfast last Friday wrote that “crypto research firms Elliptic and BitOK estimated that Gaza-based terror groups had raised over $130M in crypto since May 2021, including $41M by Hamas and $93M by Palestinian Islamic Jihad.” These figures were based on wallets seized by Israel’s National Bureau for Counter Terror Financing, but Elliptic noted in a statement that in “no way does this mean that PIJ had ‘raised’ all of these funds or that they even all belonged to PIJ. It is not known what proportion of the funds received by those wallets are directly attributable to PIJ or other terrorist groups.”
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