Good morning. Happy Friday.
The Asian/Pacific markets were mixed. India and Singapore moved up; South Korea and Hong Kong were weak. Europe, Africa and the Middle East currently lean down. The UK, Poland, Turkey, Germany, Spain, the Netherlands and Sweden are up; Denmark, Russia and Norway are down. Futures in the States point towards a down open for the cash market.
————— Leavitt Brothers Cyber Week Special —————
The dollar is up slightly. Oil is down; copper is up. Gold and silver are down. Bonds are up.
Stories/News from Seeking Alpha…
Watch till the end
Montana was set to become the first state in the nation to ban TikTok, which is owned by the Chinese tech giant ByteDance (BDNCE), but it looks like the move is running into familiar roadblocks. Federal Judge Donald Molloy has blocked the bill set to go into effect on Jan. 1, 2024, saying the measure “violates the Constitution in more ways than one” and “oversteps state power.” While individual users would not have been punished, the law could have imposed fines of $10,000 on any “entity” – namely the app stores of Apple (AAPL) and Google (GOOG, GOOGL), or TikTok itself – each time someone was “offered the ability” to access or download the TikTok app.
Preliminary injunction: “Despite the State’s attempt to defend SB 419 as a consumer protection bill, the current record leaves little doubt that Montana’s legislature and Attorney General were more interested in targeting China’s ostensible role in TikTok than with protecting Montana consumers,” Judge Molloy wrote in the 48-page filing. “While there may be a public interest in protecting Montanan consumers, the state has not shown how this TikTok bill does that. This is especially apparent in that the same legislature enacted an entirely separate law that purports to broadly protect consumers’ digital data and privacy. Users are [also] deprived of communicating by their preferred means of speech, and thus First Amendment scrutiny is appropriate.”
Response from Montana: “The judge indicated several times that the analysis could change as the case proceeds and the State has the opportunity to present a full factual record. We look forward to presenting the complete legal argument to defend the law that protects Montanans from the Chinese Communist Party obtaining and using their data.”
Response from TikTok: “We are pleased the judge rejected this unconstitutional law and hundreds of thousands of Montanans can continue to express themselves, earn a living, and find community on TikTok.”
Former President Donald Trump already sought to ban TikTok and force a sale of its U.S. business to an American company, and while a transaction with Oracle (ORCL) almost went through in 2020, the lawsuits piled up and an injunction was granted to prevent the app from being outlawed. The Biden administration later revoked the planned ban, ordering a national security review in its place, but Chinese tensions and data privacy concerns eventually swept both sides of the aisle and led to a notable House hearing in March. However, Congress has passed a bill to outlaw TikTok on federal devices, as well as a probe from CFIUS, while there has also been proposed legislation to ban the app in the U.S. (note that all American social media networks are blocked in China).
Go deeper: When things heated up earlier this year, many SA analysts commented on how restrictions on TikTok could impact rivals like Instagram Reels (META), YouTube Shorts (GOOG, GOOGL) and Snapchat Spotlight (SNAP). “This ban, if it materializes, is more about tomorrow than today for the likes of Meta Platforms,” wrote Tradevestor, in an article entitled, What A TikTok Ban Could Mean. Others, like Bluesea Research, explored what competition or a ban would mean for Google (see Global Trends Provide A Massive Tailwind), as well as Julian Lin, Investing Group Leader of Best Of Breed Growth Stocks, on what effects the developments were having on Snap (read Risks Are Rising But Stock Is Cheap).
Wait and see
Traders did not seem so impressed with the Cybertruck launch event at Tesla’s (TSLA) Gigafactory in Austin. Shares fell 1.7% during the regular session on Thursday and dropped another 2.1% AH, with the electric pickup needing to prove itself before getting a final round of applause. Starting prices of the futuristic vehicle will start at $60,990, more than 50% higher than quoted when it was first unveiled in 2019. The base edition will also only be available in 2025, while many of the touted specs like 0-60 in 2.6 seconds, 130 MPH top speed, and beastly torque and horsepower, will only be offered on its most high-end variant known as the “Cyberbeast.” Range also fell short of the originally promised 500 miles and would only reach close to there via a range extender that takes up a third of the truck bed. (254 comments)
The effectiveness
Thought the COVID vaccine controversy was over? Not yet. Texas is suing Pfizer (NYSE:PFE) over claims the company made about its coronavirus jab, as well as statements that called it “95% effective.” According to the suit, Pfizer expanded its “deception campaign across several fronts,” while “Americans were given the impression that Pfizer’s vaccine would end the coronavirus pandemic.” Texas Attorney General Ken Paxton is seeking more than $10M in fines for deceptive marketing and a court order barring the company from publicly speaking about the vaccine’s efficacy. Pfizer, which reported more than $74B of revenue in 2021/22 related to COVID immunizations, responded that its “representations were accurate, science-based, and helped protect against severe COVID-19 outcomes, including hospitalization and death.” (4 comments)
It’s voluntary
U.S. crude oil surrendered early gains and fell more than 2% Thursday, even after OPEC+ announced some member nations agreed to voluntary cuts approaching 2M bbl/day starting in January. Traders were disappointed by the smaller-than-expected numbers and lack of details on quota enforcement. At least 1.3M bbl/day of the cuts were also an extension of the voluntary reductions that Saudi Arabia and Russia already had in place, sparking skepticism over whether they will actually be delivered. Meanwhile, Angola already rejected its new output target, saying it will continue pumping as usual, while the biggest news may have been the addition of Brazil. (60 comments)
Today’s Economic Calendar
3:00 Fed’s Barr: “Bank Supervision and Regulation”
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
10:00 Fed’s Goolsbee Speech
11:00 Jerome Powell Speech
1:00 PM Baker-Hughes Rig Count
2:00 PM Jerome Powell Speech
2:00 PM Fed’s Cook Speech
What else is happening…
November rally: Dow (DJI) notches highest close in nearly two years.
Ford (F) updates investors with guidance on UAW deal impact.
Uber (UBER) could get the S&P 500 Index call-up today.
Disney (DIS) brings back dividend after more than three-year hiatus.
… Activist investor Nelson Peltz will seek seats on DIS board.
Walgreens (WBA) tool to help customers save on prescription drugs.
AbbVie (ABBV) to buy cancer drugmaker ImmunoGen (IMGN) for $10B.
Ulta Beauty (ULTA) takes off on quarterly beats, updated guidance.
Occidental (OXY) jet visits Buffett’s Omaha for second time this month.
Heating up in 2024? Panera Brands has confidentially filed for IPO.
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Good morning. Happy Thursday.
The Asian/Pacific markets were mixed. Japan, Hong Kong, South Korea, Australia, New Zealand and Indonesia did well; Singapore, Thailand and the Philippines were weak. Europe, Africa and the Middle East are currently doing well. The UK, Denmark, France, Germany, South Africa, Norway, Italy and Portugal are up; Russia and Israel are down. Futures in the States point towards a moderate gap up open for the cash market.
————— Leavitt Brothers Cyber Week Special —————
The dollar is up. Oil and copper are up. Gold and silver are down. Bonds are down.
Stories/News from Seeking Alpha…
Cyber Thursday
“It will be the biggest product launch of anything, by far, on Earth, this year,” Elon Musk said ahead of the highly-anticipated Cybertruck launch slated for 3 PM ET. As the curtains get pulled back, investors will be closely watching Tesla’s (TSLA) formal entrance into the pickup truck market, with an electric twist, following the introduction of the commercial-oriented Tesla Semi exactly a year ago. Production of the Cybertruck has already been delayed several times since being announced in 2019, and while today’s event will generate some big buzz, expect the company to only dole out the first ten or so EV pickups. Biden EV rule will impact qualifications for subsidies
Bells and whistles: Given all of the specs and enormous production challenges, it will be hard to reach high volumes initially, but keep an eye on pricing, speed, and the model’s variants. Cybertruck is also Tesla’s first high-voltage vehicle, giving it the benefit of faster charging, while its angular design has split the industry into lovers and haters. Armor glass and its ultrahard stainless steel exoskeleton, made from similar material used for rockets at SpaceX, should be able to withstand 9mm bullets, though it is costly, as well as complicated, to cast and weld together. The UAW goes electric with unionization efforts aimed at Tesla
“I mean, we dug our own grave with Cybertruck,” Musk said on Tesla’s (TSLA) most recent earnings call. “Cybertruck’s one of those special products that come along only once in a long while and special products that come along once in a long while are just incredibly difficult to bring to market, to reach volume, to be prosperous.” He went on to predict that Tesla will “end up with roughly a 0.25 million Cybertrucks a year… probably sometime in 2025,” though it will take “a year to 18 months before it is a significant positive cash flow contributor.” Wedbush Securities analyst Dan Ives notes that while the vehicle might not be a major sales driver for the company, the model’s introduction is significant to the broader growth story and could recharge the broad Tesla halo effect.
Outlook: The market for full-size pickup trucks is large, with Ford Motor (F), General Motors (GM), and Toyota Motor (TM) all generating huge profits. A well-known Cybertruck reservation tracker even estimates that net reservations currently stand at 2.10M. The Cybertruck will compete against the all-electric models such as the Ford (F) F-150 Lightning, the GMC Hummer EV (GM), the Rivian (RIVN) R1T, the all-electric Chevrolet Silverado (GM), and the upcoming Ram 1500 REV (STLA). Further down the road, the Fisker (FSR) Alaska pickup truck and Canoo (GOEV) pickup trucks are expected to enter the market. (360 comments)
OPEC + COP
Crude futures continue to rise as OPEC and its allies are reportedly considering new oil production cuts of as much as 1M bbl/day, which could be announced at the start of the cartel’s high-stakes policy meeting. Saudi Arabia, which unilaterally cut production by 1M bbl/day in June, favors further cuts, while top African producers Nigeria and Angola reportedly have been resisting a downgrade of their individual quotas. Delegates said the rollover of most existing output curbs is the most likely scenario, but talks are continuing. COP28 climate talks will also kick off today in the United Arab Emirates, a hydrocarbon heavyweight within OPEC that plans to raise its oil production capacity to 5M barrels per day by 2027. (60 comments)
Health insurance giant
Aiming to better compete with larger rivals like UnitedHealth (UNH) and Elevance Health (ELV), Cigna (CI) and Humana (HUM) are reportedly looking to combine in a deal that could be worth about $140B, including debt. “With Cigna’s strength being concentrated in its Pharmacy Services Business, and Humana’s in its Medicare Advantage healthcare plan administration business, there are some obvious synergies that could be realized through a merger between these two healthcare giants,” noted SA Investing Group Leader Edmund Ingham. “The rumor that Cigna is looking to offload its own minor Medicare Advantage business may hint at an attempt to pre-empt and circumnavigate antitrust issues that could prevent a merger taking place.” (112 comments)
Foreign foray
Robinhood (NASDAQ:HOOD) tried to launch in the United Kingdom in 2016 and 2022, but it’s now hoping that the third time’s the charm. Early next year, the zero-commissions pioneer will offer the ability to choose from 6,000 U.S. stocks, along with 5% interest on cash they hold with the broker, though its British platform won’t initially include options or foreign shares. It’s a big deal for Robinhood, which just turned profitable in Q2 and has been looking to finally expand internationally as its next lever of growth. “There’s definitely an embrace of technology and innovation that I think will make the U.K. continue to be a great place to do business,” declared co-founder and CEO Vlad Tenev, adding that the U.K. has a “long history of being a financial hub.”
Today’s Economic Calendar
8:30 Initial Jobless Claims
8:30 Personal Income and Outlays
9:15 Fed’s Williams: “Exploring Innovations in Central Banking”
9:45 Chicago PMI
10:00 Pending Home Sales
10:30 EIA Natural Gas Inventory
3:00 PM Farm Prices
4:30 PM Fed Balance Sheet
What else is happening…
Next estimate of U.S. GDP growth comes in sizzling at 5.2%.
No news blockade: Google (GOOGL) inks deal with Canada.
Salesforce (CRM) rallies on strong earnings and forecasts.
Closing arguments set for DOJ trial against Spirit-JetBlue.
Occidental (OXY) in talks to acquire Permian’s CrownRock.
Venezuela to invade Guyana? Hess (HES) is watching.
Snowflake (SNOW) results suggest cloud slowdown is over.
In a flash: Pure Storage (PSTG) slides on disappointing guidance.
Henry Kissinger, who opened U.S. relations with China, dies at 100.
Consumer Reports names best and worst auto brands for reliability.
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Good morning. Happy Wednesday.
The Asian/Pacific markets leaned down. India and Singapore did well, but Japan, China, Hong Kong, Thailand and the Philippines were weak. Europe, Africa and the Middle East are currently doing well. Denmark, France, Germany, Finland, Switzerland, Spain, Italy, Portugal, Israel, Austria and Sweden are leading; Poland is weak. Futures in the States point towards a moderate gap up open for the cash market.
————— Leavitt Brothers: Cyber Week Special —————
The dollar is flat. Oil and copper are up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
That’s all folks
Dovish signals from the Federal Reserve are reinforcing what traders have been pricing in since the end of October, when the central bank held rates for the second consecutive meeting and a dot plot – that suggested one more hike – was called into question. Since then, stocks have risen at a rapid clip, with the S&P 500 (SP500) climbing out of correction territory in only 16 trading sessions, marking its fastest comeback since the 1970s. Besides lifting markets and risk assets, the prospect of cheaper money saw the 10-year Treasury yield drop overnight to below 4.30%, after touching 5.00% just prior to the last Fed meeting.
The latest: Two of the most hawkish FOMC officials, who led the charge for higher rates last year, are getting comfortable with holding policy steady, backing expectations that the central bank’s hiking cycle is done. Fed Governor Christopher Waller said Tuesday that he’s “increasingly confident” that monetary policy is now in the right spot to slow the economy and bring inflation back down to the 2% target. Governor Michelle Bowman also stopped short of endorsing an increase next month, conditioning the need for further hikes only on incoming data that “indicate progress on inflation has stalled or is insufficient to bring inflation down to 2% in a timely way.”
Investors appear to be even more enthusiastic, especially armed with the economic data to support them, including recent soft numbers on inflation and the job market. Odds that the central bank will even cut its target policy rate in the middle of 2024 have been on the rise, and some, like Pershing Square’s (OTCPK:PSHZF) Bill Ackman, are now even pricing in rate cuts as soon as the first quarter. As the conversation shifts from hikes to cuts, the U.S. dollar is on track to hit its lowest level in months, reflecting the revised rate expectations.
Currency considerations: “Fed-driven dollar weakness will be a story for 2024,” writes ING Economic and Financial Analysis. “The most likely path to a weaker dollar will probably have to come from softer U.S. macro data. Given our house view that a US slowdown is more likely in the next quarter rather than this one, we therefore expect EUR/USD to end the year around this 1.05/1.06 area and USD/JPY to end the year not far from 150. Into 2024, however, we expect the short end of the U.S. curve to start moving lower ahead of Fed easing next summer and the dollar to turn lower.”
Investing legend
Charlie Munger, Warren Buffett’s right-hand man, has peacefully died at a hospital in California at the age of 99. “Berkshire Hathaway (BRK.A) (BRK.B) could not have been built to its present status without Charlie’s inspiration, wisdom and participation,” Buffett said in a statement. Munger was vice chairman of Berkshire and one of its biggest shareholders, with an estimated net worth of about $2.5B. Together with Buffett, the pair transformed Berkshire from a textile manufacturer into a giant conglomerate in a partnership that lasted nearly six decades. Read Investing Group Leader Samuel Smith’s breakdown of Munger’s recent investment advice. (342 comments)
Up to date
Next year will be about building a “modern version” of Disney (DIS), according to CEO Bob Iger, who downplayed his earlier comments on potential asset sales. “I did not think everyone would run with a story that everything is being sold, which is not the case,” he declared at a town hall. Iger, who retook the helm last year and began a major overhaul, said it is now time to move on from fixing the brand to rebuilding it. As for finding ESPN partners, he said talks were held with sports leagues and tech companies, though the company is prepared to “go at it alone.” Note that Disney’s stock has struggled to hold on to gains since Iger’s return, declining 3.3% over the past year. (3 comments)
Shipping risk
The U.S. has warned ship operators of the growing threats while navigating the Red Sea, in the wake of recent attacks on commercial ships sailing through the critical trade route. “Exercise caution when transiting these areas and remain cognizant of evolving threats in this region,” cautioned the Department of Transportation Maritime Administration. The development has seen rising insurance premiums, as well as some shippers rerouting their vessels, including Denmark’s Maersk (OTCPK:AMKBY) and Israel’s ZIM Integrated (ZIM). Ships with Israeli links face a heightened risk due to the Gaza war, with Yemen’s Houthi rebels seizing cargo ship Galaxy Leader on Nov. 19, which was linked to Israeli billionaire Rami Ungar, while a Liberia-flagged chemicals tanker, connected to Israel’s Ofer family, had been attacked. (1 comment)
Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 Q3 GDP
8:30 International Trade in Goods (Advance)
8:30 Retail Inventories (Advance)
8:30 Wholesale Inventories (Advance)
8:30 Corporate Profits
10:30 EIA Petroleum Inventories
11:00 Survey of Business Uncertainty
1:45 PM Fed’s Mester’s Speech
2:00 PM Fed’s Beige Book
What else is happening…
Micron (MU) boosts guidance on improved pricing, supply/demand.
Apple (AAPL) ending credit card partnership with Goldman (GS).
Real estate: U.S. home prices see eight straight months of gains.
GM (GM) unveils buyback and dividend boost after UAW strikes.
U.S. Steel (X) on the move with five parties expected to make bids.
All of Okta’s (OKTA) customer support user data stolen in hack.
Boeing MAX crashes: U.S. adopts new aircraft certification policy.
Adobe (ADBE)-Figma deal likely to ‘lessen competition’ in U.K.
Amazon (AMZN) unveils new generative AI chatbot called Q.
Report: Adelson family to buy majority stake in Dallas Mavericks.
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Good morning. Happy Tuesday.
The Asian/Pacific markets did well. China, Hong Kong, India, Taiwan, New Zealand, Thailand and the Philippines led, while Hong Kong and Singapore were weak. Europe, Africa and the Middle East currently lean down. Poland and Hungary are up; Denmark, the UK, Switzerland, Norway, the Netherlands and Sweden are down. Futures in the States point towards a down open for the cash market.
————— Leavitt Brothers: Cyber Week Special —————
The dollar is down. Oil is a small amount; copper is up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Prime delivery
Resilient consumers have not only helped the American economy rebound with a vengeance, but they’ve also shaped the winners and losers of the sprawling U.S. logistics industry. New internal data from Amazon (AMZN) reportedly shows the e-commerce behemoth set to take hold of the annual delivery crown for the first time, shipping a total of 4.8B packages in the U.S. before Black Friday and Cyber Monday, and predicting it will deliver about 5.9B by the end of 2023. Its closest rival UPS (UPS) only handled around 3.4B parcels domestically in the first nine months of the year, and said its volume in 2023 is unlikely to exceed last year’s 5.3B. FedEx’s (FDX) domestic parcel volume is even further behind, and both companies even include packages they hand off to the U.S. Postal Service for final delivery.
Flashback: It wasn’t long ago that logistics leaders thought the idea of a serious Amazon competitor was a pipe dream. In 2016, FedEx CEO Fred Smith even called such an idea “fantastical,” saying concerns about industry disruption were overblown. “In all likelihood, the primary deliverers of e-commerce shipments for the foreseeable future will be UPS, the U.S. Postal Service and FedEx,” he declared in a conference call with analysts.
Three years later, in 2019, FedEx and Amazon went through a very public divorce as the latter continued to scale its business and invest in its own delivery service. Amazon still works with UPS, but it only constitutes a minority of its operations, or about 11% of revenue. Helping Amazon take the lead were a number of innovations including flex drivers, same-day delivery centers, warehouse robots, and more recently, AI. Walmart (WMT) and Target (TGT) are also speeding up deliveries by fulfilling orders closer to customers, but with its store-less format, Amazon has been nimble and remains the clear industry leader.
Outlook: While Amazon (AMZN) has shown its power in residential delivery, its core strength is anchored in one-way operations and its existing network. That may already be changing as it expands its global reach and leverages other providers to deliver the same level of service or things like pick-up returns. “Earlier fears of big cancellation in Prime membership due to price hikes have been proved wrong,” SA analyst Bluesea Research noted in Amazon: Fear Of Saturated Market Is Overhyped. “Amazon’s subscription business is showing steady growth and the launch of new services also increases the growth runway for the subscription business.”
Forever chemicals
In a major victory for 3M (MMM), DuPont (DD), Corteva (CTVA) and Chemours (CC), a federal appeals court has vacated a lower court’s ruling that would’ve allowed nearly 12M Ohio residents to sue the companies as a group in a class action lawsuit. The court ruled the lead plaintiff had filed too broad a complaint, and hadn’t shown that toxic “forever chemicals” – called PFAS – found in his body could be traced directly to the companies. Recall that DuPont, Chemours and Corteva previously reached a $1.18B deal to resolve complaints of polluting public water systems with PFAS, while 3M agreed to pay up to $10.3B over 13 years. (14 comments)
IPO chatter
Fast-fashion giant Shein has confidentially filed for a U.S. IPO, targeting a valuation of $80B-$90B, which would make it the biggest U.S. listing by a Chinese-founded company. Shein has steadily grown to become the world’s largest fashion retailer, thanks to its “real-time retail” business model, under which suppliers have three days to produce new designs or risk being cut off. However, Shein has come under fire for alleged worker exploitation, which could bar its IPO if found to be true. “For the time being, investors should continue to collect information about this promising – but potentially complicated – listing,” cautioned SA analyst Luckbox Magazine. Meanwhile, the market is abuzz with reports of other potential IPOs, including Kim Kardashian’s shapewear brand Skims and social media firm Reddit.
OPEC drama
Crude prices have now fallen for five straight weeks – marking oil’s longest weekly losing streak since 2021 – but that could change as traders weigh the odds of further production cuts by OPEC+ at the group’s meeting on Thursday. Saudi Arabia reportedly asked OPEC+ members to reduce their oil production quotas in a bid to boost global markets, but some members have resisted. The Saudis, who have been making largely unilateral 1M bbl/day supply cuts since July, are now seeking further support from the cartel and its partners. Investing Group Leader HFIR expects OPEC+ to announce a coordinated cut, saying it’s needed to aid sentiment amid weakening demand. (8 comments)
Today’s Economic Calendar
9:00 Case-Shiller Home Price Index
9:00 FHFA House Price Index
10:00 Consumer Confidence
10:00 Richmond Fed Mfg. Index
10:00 Fed’s Goolsbee: “Who Owns Midwest Farmland? And Why?”
10:05 Fed’s Waller: U.S. Economic Outlook
10:45 Fed’s Bowman: “Monetary Policy and the Economy”
1:00 PM Money Supply
1:00 PM Results of $55B, 7-Year Note Auction
1:05 PM Fed’s Barr: “Modernized Community Reinvestment Act and Indian Country”
3:30 PM Fed’s Barr’s Speech
What else is happening…
WSB survey results: Climate trends not such an investment factor.
iRobot (IRBT) plunges amid EU warning on $1.4B sale to Amazon.
President Biden to use 1950 law to boost essential drug production.
Tesla (TSLA) sues Swedish government agency over strike impact.
Shopify’s record Black Friday may push up midsize online retailers.
YPF (YPF) soars as Argentina president-elect picks a new boss.
Divesting Bayer’s consumer health unit would cause huge tax bill.
Albemarle (ALB), other lithium stocks extend losses on weak pricing.
Broadcom (AVGO) lets go of VMware employees after closing deal.
Morgan Stanley lists most under-owned large-cap tech stocks.
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets closed mostly down. Japan, China, Hong Kong, India, Australia and New Zealand were weakest. Europe, Africa and the Middle East are currently little changed. Turkey and Portugal are up; Poland, Hungary, Israel and the Czech Republic are down. Futures in the States point towards a slight down open for the cash market.
————— Leavitt Brothers: Cyber Week Special —————
The dollar is down. Oil and copper are down. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Good cop, bad cop
The latest round of U.N. climate talks, known as COP28, gets underway this week in Dubai, with many of the parties looking for concrete pledges to combat the damaging effects of climate change. It’s a trend that’s been seen since the 2015 Paris Agreement to curb warming at 1.5 degrees Celsius above pre-industrial levels, where progress is yet to be made despite many workshops, gatherings and conferences. Greenhouse gases like carbon dioxide, methane and nitrous oxide even reached new record highs in 2022, while increasing temperatures, a loss of biodiversity and extreme weather events like floods and hurricanes have set off many environmental alarm bells.
Snapshot: Many scientists now say that 2023 is “virtually certain” to be the hottest year ever in recorded history. It doesn’t help that regional wars are sparking fears about energy security at the same time that fossil fuel manufacturing usage is being outsourced to developing nations, where deregulation of environmental protections has been used to advance their economies. This can even be seen among countries that are powering the green revolution, like nickel smelting for EV batteries, with further criticism being leveled at the sustainable commitments of some of the world’s most profitable companies.
Meanwhile, a backlash against Dr. Sultan Al Jaber erupted as soon as the head of ADNOC, the state-owned oil company of the United Arab Emirates, was appointed president of the COP28. The climate talks this year are also taking place in the UAE, a hydrocarbon heavyweight within OPEC that plans to raise its oil production capacity to 5M barrels per day by 2027. Others argue that is the type of leadership needed to pursue this type of agenda, and can help other fossil fuel leaders enter the climate conversation to transition the globe to a low-carbon economy. The UAE maintains strategic ties ranging from the United States and the European Union to China and Russia.
“Everyone needs to be part of this process and everyone needs to be held responsible and accountable,” Al Jaber declared in a recent interview. “That includes all industries and in particular heavy emitting industries like aviation, transportation, aluminum, cement, steel, as well as the oil and gas industry. We need to provide the necessary insurance and the hedging mechanisms to protect the private sector, and incentivize them to come on board to help fix the climate finance challenge. Everyone must be consulted. Everyone must be given the opportunity to contribute.”
What to watch: There will be some notable absences at the COP28, including President Biden, who has championed a climate agenda and his signature Inflation Reduction Act that granted $369B in American clean energy subsidies and tax breaks. China’s Xi Jinping will also be missing, meaning both leaders of the world’s largest greenhouse gas emitters will be absent on the global stage. Like past summits, negotiations at the COP28 will ultimately boil down to questions of fairness and trust, as well as accountability and enforcement mechanisms. Another topic that could also derail the talks is climate reparations, or “loss and damage” payments, to countries that cannot afford to defend themselves against climate risks. Take the WSB survey.
Shopping spree
Black Friday online shopping in the U.S. has been a bright spot for retailers, with consumers spending a record $9.8B, according to Adobe Analytics. The record spending, which was widely expected, was driven by shoppers hunting for the best deals online amid deep discounts and flexible payment options. Thanksgiving online spending also rose to a record $5.6B, and consumers aren’t down yet, with Cyber Monday still expected to be this year’s biggest online shopping day. MasterCard data also showed that online sales surged, while in-store shopping was less popular. (13 comments)
Gold rush
Gold advanced to a fresh six-month high over the weekend, rising further above the $2,000 an ounce mark, as expectations that the Federal Reserve has reached the end of its rate-hiking cycle pushed the dollar index lower and lifted non-yielding bullion. “Evidence shows that commonly cited fundamental drivers of gold’s price are on shaky ground,” wrote SA analyst Ralph Wakerly. He cited the Socionomic Theory of Finance as a way to discern sentiment around gold prices, with a review of gold trader positioning at the extremes to demonstrate strong support for the theory. (1 comment)
Zero-day options
This year’s trending trade on Wall Street – zero-day options – has now reached the Treasury and commodity markets, with Nasdaq listing new contracts tracking popular ETFs investing in oil (USO), natural gas (UNG), gold (GLD), silver (SLV), and long-term Treasuries (TLT). While they have become increasingly popular, analysts warned that 0DTEs could worsen market volatility if the options reach a big enough scale. Traders use this strategy to make a quick buck and hedge against short-term market moves caused by major events such as CPI reports and the Federal Reserve’s policy meetings. (7 comments)
Today’s Economic Calendar
10:00 New Home Sales
10:30 Dallas Fed Manufacturing Survey
11:30 Results of $54B, 2-Year Note Auction
1:00 PM Results of $55B, 5-Year Note Auction
What else is happening…
WHO: Pneumonia outbreak in China is no reason for alarm.
The AI gold rush is here. Buy ‘picks and shovels’ to benefit.
Novo Nordisk (NVO): Huge reality check awaits investors.
Activist Elliott takes over $2B stake in Crown Castle (CCI).
Will Binance’s crypto dominance persist post-settlement?
Tesla’s battle to avoid unionization in Sweden escalates.
Beijing exchange bars stock sales by major shareholders.
Alibaba (BABA) shuts Quantum computing lab amid rehaul.
Amazon Web Services likely to ‘shine’ at re:Invent conference.
Moody’s: Health insurers’ outlook is stable despite headwinds.
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