Good morning. Happy Friday.
The Asian/Pacific markets leaned up. Japan, India, Taiwan, Singapore and the Philippines did well; Hong Kong was weak. Europe, Africa and the Middle East are mostly quiet. Russia and Finland are up; Turkey, Greece, South Africa and the Netherlands are up. Futures in the States point towards a flat open for the cash market.
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The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
To be jolly
Season’s Greetings! Best wishes to all of our Wall Street Breakfast readership as we go into the holiday season. WSB won’t be published on Sunday and Monday, but preparations are underway for some special newsletter editions next week.
Get ready for the last major economic report of the year. The inflation reading from the Bureau of Economic Analysis will be released today at 8:30 AM ET and is likely to show just how far things have come since the beginning of 2023. The Federal Reserve’s resolve to hike until necessary has had its intended effect, and the pace at which monetary policy was raised has produced fruitful results. Some thought the last mile would be the hardest, but a series of rate cuts are now forecast for the new year, with many confident that the U.S. economy will achieve a soft landing.
By the numbers: The core personal consumption expenditures price index is expected to have risen 0.2% in November from October, representing an increase of 3.4% Y/Y. That’s some really great progress, given that the figure was above 5% just over a year ago, and shows that the Fed is continuing to get close to its 2% goal. In fact, the central bank appears to have already reached its target when examining the H2 annualized pace of inflation, or by chain-linking the index, giving way to the bull sentiment that has been felt across markets in recent weeks.
“Consider the two most common barometers of monetary policy: interest rates and the money supply,” Alexander William Salter writes in Disinflation Dream Come True, comparing the metrics against the natural rate of interest. “Continuously compounded, headline inflation was a mere 0.59% last month. Core inflation, which excludes volatile food and energy prices, was 1.96%. Even the higher number is below the Federal Reserve’s 2.0% target.”
PCE vs. CPI: The core personal consumption expenditures price index is the central bank’s preferred inflation gauge as it has a broader scope than the traditional consumer price index. For example, CPI only covers out-of-pocket household expenditures, instead of other expenses that are incurred in the broader cost ecosystem. PCE also better reflects how consumers substitute their purchases and uses certain calculations to smooth out price swings, making it a better tool for the Fed to size up the macroeconomic environment and make policy decisions. (2 comments)
Upping the ante
Trade tensions between Beijing and Washington are continuing to rise, with China banning the export of technology for extracting and separating rare-earth metals due to national security concerns. The move lifted uranium stocks such as Energy Fuels (UUUU), MP Materials (MP) and EnCore Energy (EU) on Thursday. The ban comes as the U.S. and Europe seek to reduce their reliance on China for rare-earth metals, as it is the world’s top producer accounting for about 90% of the global refined output. China has already brought in rules to restrict exports of several metals this year as it leverages its critical mineral dominance to fight back against trade curbs from the U.S. (18 comments)
Retail shocker
Nike (NKE) slid 11.7% in postmarket trading on Thursday after posting a mixed Q2 earnings report and issuing cautious guidance for the rest of its fiscal year. Margins and profit topped estimates, but soft North America sales dragged down Nike’s total revenue. $2B in cumulative cost savings are hoped to be identified over the next three years, including the simplification of product assortment, increasing automation and streamlining the organization. CFO Matthew Friend further warned of a “highly promotional” retail environment, which pushed other apparel and footwear names lower, including Under Armour (UAA) -5.8%, Lululemon (LULU) -1.9%, and Foot Locker (FL) -7.2%. (24 comments)
Losing control
Following a dispute over oil-production quotas, Angola said it would leave the OPEC cartel about 16 years after it first joined the group. “We feel at the moment Angola does not gain anything by remaining in the organization and, in defense of its interests, it has decided to leave,” said Angolan President João Lourenço. Many oil majors operate in the country, which produces about 1.1M barrels of oil, including TotalEnergies (TTE), Chevron (CVX) and Exxon Mobil (XOM). Several other nations have also quit OPEC in recent years, such as Qatar, Indonesia and Ecuador, but for different reasons. (72 comments)
Today’s Economic Calendar
8:30 Durable Goods
8:30 Personal Income and Outlays
10:00 New Home Sales
10:00 Consumer Sentiment
1:00 PM Baker Hughes Rig Count
SIFMA Early Close at 2:00 PM
What else is happening…
White House urges ‘serious scrutiny’ of U.S. Steel (X) sale to Nippon.
Red Sea attacks: Freight rates, shipping firm valuations sail higher.
NetEase (NTES), Tencent dive as China eyes curbing gaming spend.
U.S. government opens investigation into frequent flyer programs.
Paramount-Warner Bros.: Streaming heavyweight or big loser?
Boeing (BA) delivers 787 to Chinese airline for first time since 2019.
Berkshire Hathaway (BRK.B) buys more Occidental (OXY) stock.
Carnival (CCL) results top expectations with record annual sales.
RBC’s (RY) $10.2B acquisition of HSBC (HSBC) unit approved.
Farm groups urge reopening of border crossings; railroad firms hit.
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Good morning. Happy Thursday.
The Asian/Pacific markets were mixed. China, Hong Kong, India and Australia did well; Japan, South Korea, Taiwan, Malaysia and the Philippines were weak. Europe, Africa and the Middle East are currently weak. Turkey is up, but the UK, France, Russia, Germany, Finland, Norway, Hungary, the Netherlands, Italy, Israel, Austria, Sweden and Saudi Arabia are down. Futures in the States point towards a moderate up open for the cash market.
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The dollar is down. Oil and copper are down. Gold and silver are down. Bonds are down.
Stories/News from Seeking Alpha…
Tariffs and sanctions
The push toward protectionist trade policies is continuing in the U.S., just under different branding in different administrations. “America First” and “Make America Great Again” have been replaced with “de-risking,” “diversifying” and “level the playing field,” but the results are often the same and built on platforms that seek to address national security concerns, the loss of manufacturing jobs, or risks associated with the supply chain. Billions of dollars in subsidies have even been doled out to the various American sectors to encourage domestic production, tariffs and quotas remain in place on many imports, and economic sanctions are increasingly being used as a tool to stabilize markets rather than deterrence.
Snapshot: There’s a myriad of reasons why things have gone that way, but one of the most important factors is that foreign adversaries have been using the structure to weaponize the system. In recent years, the U.S. has passed mega-spending bills like the Inflation Reduction Act, which poured billions of dollars into domestic energy production, after watching Vladimir Putin turn off the taps to the EU. The CHIPS and Science Act also offered generous tax credits and subsidies to shore up the domestic semiconductor industry, while export controls have been put in place, as Xi Jinping seeks advanced chip technology to promote a new world order.
The list continues to expand with the U.S. imposing fresh sanctions on shippers and traders that have been helping the Kremlin get around a fixed price cap on sea-borne crude and refined oil products. The move is meant to reduce reliance on Russian energy and Deputy Treasury Secretary Wally Adeyemo noted that the measures would “advance the goals of supporting stable energy markets.” Fresh reports have also suggested that the Biden administration is considering raising tariffs on some Chinese goods, including electric vehicles and solar products, to protect America’s green industry and limit reliance on Beijing in the clean energy supply chain.
What to watch: The world is years into a new era of trade practices, which once centered on liberalized and free-market policies to promote globalization and even democracy. There are other risks associated with the new outlook, like dependency on resources that have not yet been fully reshored or an uptick in inflationary forces from protectionist measures. These kinds of leanings have also caused strains with traditional American allies, like disenchantment surrounding subsidies for EVs manufactured in the U.S., or domestic content requirements central to the energy transition. (11 comments)
U-turns
The S&P 500 (SP500) was so close, only 20 points away from an all-time record high, when sentiment turned sour on Wednesday. The index abruptly slid 1.5% in mid-afternoon trade in a move attributed to overbought territory and one of this year’s hottest trades. Things are looking better this morning, with futures pointing to a rebound on Wall Street, while traders will decide whether fresh economic data can build on the favorable housing market and consumer confidence numbers that bolstered bets for a Fed-engineered soft landing. Nike (NKE) will also report earnings after the bell, giving a fresh look into consumer spending.
Grab the popcorn
Shares of Warner Bros. Discovery (WBD) fell 5.7% on Wednesday, while Paramount (PARA) declined 2%, as the two studios were said to have held talks on a potential merger. Warner Bros. CEO David Zaslav met with Paramount chief Bob Bakish to discuss a potential deal, although no formal talks are underway. The development comes at a time when Paramount’s controlling shareholder Redstone has held talks about the sale of its movie studio and other assets to Skydance, a deal that SA Investing Group Leader Howard Jay Klein thinks is risky as the value of Paramount’s library is questionable. Recall that Paramount is also in talks to sell BET to a management-led investor group. (189 comments)
Milei moves
Argentina’s new president has announced sweeping reforms to boost the economy, including scrapping laws that prevent the privatization of state-run firms such as Aerolineas Argentinas and oil company YPF (YPF). “The goal is to start on the road to rebuilding our country and transform the enormous amount of regulations that have blocked, stalled and stopped economic growth,” Javier Milei declared. The initiatives, which are expected to face pushback in Congress, were announced just hours after Argentines began protests against Milei’s recent shock measures that included devaluating Argentina’s peso by over 50%, as he brings in “drastic” changes to the country that’s saddled with sky-high debt and inflation. (2 comment)
Today’s Economic Calendar
8:30 GDP
8:30 Initial Jobless Claims
8:30 Philadelphia Fed Manufacturing Index
8:30 Corporate Profits
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
4:30 PM Fed Balance Sheet
What else is happening…
Alphabet (GOOG, GOOGL) may restructure ad sales unit.
Micron gains after forecasting smartphone, PC recovery.
U.S. plans auction of Gulf of Mexico oil and gas leases.
Tesla blamed customers for failures of parts it knew were faulty.
Apple (AAPL) to ramp up Vision Pro headset production.
Boeing (BA) 737 Max pre-delivery likely for China Southern.
Citigroup (C) plans to exit distressed debt trading business.
Packaged food stocks fall on General Mills’ (GIS) cautious outlook.
BlackBerry (BB) posts Q3 earnings beat, slight miss on revenue.
Weekly survey: Mortgage demand weakens despite drop in rates.
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Good morning. Happy Wednesday.
The Asian/Pacific markets were mixed. Japan, South Korea and Australia were up; China and India were down. Europe, Africa and the Middle East lean to the upside but are little changed overall. The UK, Russia, Israel and the Czech Republic are up; Turkey is down. Futures in the States point towards a down open for the cash market.
————— Audio Course: Guidelines to Successful Trading —————
The dollar is up. Oil and copper are up. Gold is up; silver is down. Bonds are up.
Stories/News from Seeking Alpha…
Just shy
The Dow Jones (DJI) did it last week. So did the Nasdaq 100 (NDX). Now it looks like it’s the S&P 500’s (SP500) turn to record a new all-time closing high. Following another session in the green on Tuesday, the benchmark index is only 30 points away from the upcoming milestone, meaning another move of 0.6% can bring it the vaulted trophy. S&P 500 futures (SPX) are inching down in the premarket, but one never knows what could happen during the regular session. The benchmark could also have to wait a little longer, or for a Santa rally to charge things up next week.
Snapshot: There’s been a shift in expectations for monetary policy since late October, sending equities on a broad seven-week rally. The most recent boost came during last week’s FOMC meeting, where Fed Chair Jay Powell formally lowered inflation forecasts for 2024 and telegraphed three rate cuts in the new year. “The question of when will it become appropriate to begin dialing back the amount of policy restraint in place… is clearly a discussion topic out in the world and also of discussion for us,” he declared. “I would say there’s a general expectation that this will be a topic for us looking ahead.”
Notably, the biggest contributors to the S&P 500’s (SP500) banner year have been the usual suspects, currently dubbed the Magnificent Seven. The group that includes Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), Meta (META), Microsoft (MSFT) Nvidia (NVDA) and Tesla (TSLA) is up a combined 75% in 2023, while the remaining 493 companies in the S&P 500 are about 12% higher, resulting in a 25% YTD gain for the index as a whole. The bull market has given big returns to many investors, and has just seen Wall Street’s fear gauge – known as the VIX – slide to its lowest level since the start of the COVID pandemic.
What’s in store for 2024? “The pivot from ‘higher for longer’ to rate cuts is bullish for the stock market as it could cancel the recession,” notes SA analyst Damir Tokic, while Investing Group Leader Victor Dergunov says that stocks could even go much higher next year. Zoltan Ban takes a contrarian view, predicting that the S&P 500 will decline to 3,500 due to various factors such as higher oil prices and a slowing economy. “There is little doubt that FOMO has crept back into the market the same way we’ve seen in the past,” Fear & Greed Trader cautions in Wall Street: Investing In 2 Different Worlds. (1 comment)
Out of charge
Bird Global (OTC:BRDS) has filed for Chapter 11 bankruptcy protection, just two years after the electric scooter rental company went public via a SPAC merger. Apollo Global (APO) unit MidCap Financial and certain lenders will provide $25M in new debtor-in-possession financing, while Bird entered into a stalking horse deal with existing lenders, which is subject to better offers. The firm had been battling a slump in sales, and last month flagged substantial doubt about its ability to continue as a going concern. “Bird’s go-public story has become a classic tale of how SPACs became the harbinger of wealth destruction against initially buoyant expectations of growth,” SA analyst Pacifica Yield warned back in June. (3 comments)
Failing to deliver
FedEx (FDX) slid 9.8% after the bell on Tuesday after missing estimates on both lines in its Q2 earnings report and cutting its revenue guidance. Amid ongoing demand weakness, the company reported adjusted earnings of $3.99 per share and revenue of $22.2B, down 2.6% Y/Y. The decline in revenue was led by FedEx’s largest unit Express, hurt by lower volumes and fuel surcharges. “With regard to Q3 expectations, we anticipate our typical seasonality, which implies a lighter quarter sequentially for earnings,” CFO John Dietrich said on an earnings call. The disappointing outlook also weighed on FedEx’s rivals, sending shares of UPS (UPS) 3% lower. (57 comments)
Daihatsu-gate
Toyota (TM) subsidiary Daihatsu, known for its “kei” smaller cars, has temporarily suspended all vehicle shipments in Japan and abroad after a probe found that its models were not tested properly for collision safety. “The investigation found new irregularities in 174 items within 25 test categories, in addition to the door lining irregularity in April and the side collision test irregularity in May,” Toyota disclosed. The findings impact 64 Daihatsu models, as well as some Subaru and Mazda vehicles, and come after Daihatsu in April admitted it had rigged side-collision safety tests. Toyota said a fundamental reform was needed at Daihatsu, including a review of its management, operations and structure. (1 comment)
Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 Current Account
10:00 Consumer Confidence
10:00 Existing Home Sales
10:30 EIA Petroleum Inventories
1:00 PM Results of $13B, 20-Year Bond Auction
What else is happening…
Biden has until Sunday to decide on Apple (AAPL) Watch patent dispute.
Consolidating control: Alibaba CEO Wu to head local e-commerce arm.
Nov. credit card metrics signal return to ‘seasonality’ vs. ‘normalization.’
Colorado Supreme Court bans Trump from ballot in historic ruling.
McDonald’s (MCD) partners with Accenture to bring AI into restaurants.
AB InBev (BUD) sells remaining stake in Russian JV to Turkish brewer.
Affirm expands pay-later service to Walmart (WMT) self-checkout.
Macy’s (M) continues to gain as buyout rumors underpin the stock.
Apple (AAPL) buying ESPN makes analyst Dan Ives’ 2024 wish list.
China keeps key lending rate unchanged amid efforts to revive economy.
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Good morning. Happy Tuesday.
The Asian/Pacific markets leaned to the upside. Japan, Australia, New Zealand, Indonesia and the Philippines did well; Hong Kong and Taiwan were weak. Europe, Africa and the Middle East are currently doing well. Denmark, Poland, Germany, Greece, Finland, Hungary, Spain and Sweden are up; Turkey and Norway are down. Futures in the States point towards a positive open for the cash market.
————— VIDEO: Where are We in the Big Picture – MoneyShow presentation —————
The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Steel of a deal
In an industry-shaking transaction announced just before WSB was published on Monday, Nippon Steel (OTCPK:NPSCY) of Japan agreed to acquire U.S. Steel (NYSE:X) for a whopping $14.9B. The all-cash transaction at $55.00 per share represented a 40% premium to the closing price of U.S. Steel (X) on Dec. 15, and sent the stock up 26% during the session to close at $49.59. Deep-pocketed Nippon hopes the acquisition will expand its global footprint at a time when many Japanese firms are looking for international growth as their country deals with a shrinking population crisis. Recall that the steel industry has also been in focus following the approval of the Infrastructure Investment and Jobs Act, which is expected to boost U.S. steel demand for investment in bridges, railways and other projects due to “Buy American” provisions in the legislation.
Money talks: A bidding war for U.S. Steel ensued in the summer after the company rejected an unsolicited $7.3B cash-and-stock bid from rival Cleveland-Cliffs (NYSE:CLF). To note, that deal was less than half of what Nippon would pay for the company only four months later. U.S. Steel (X) would go on to announce a strategic review process and invited several more offers, including those that were reportedly made by ArcelorMittal (NYSE:MT) and U.S.-based Nucor (NYSE:NUE).
It’s not without controversy. Having a 122-year-old iconic American steel giant be taken over by a Japanese producer is prompting unions and politicians to speak up. The United Steelworkers are urging regulators to “fully scrutinize” the transaction and determine if the combination “serves the national security interests of the United States and benefits workers.”
A number of Senators are also voicing opposition, like Pennsylvania’s John Fetterman, who represents one of the most important states involved in the American steel industry. “It’s absolutely outrageous,” he declared. “Steel is always about security – both our national security and the economic security of our steel communities. I am committed to doing anything I can do, using my platform and my position, to block this foreign sale.” Fellow Democratic Senator Bob Casey of Pennsylvania has also expressed his disapproval, as well as Republican Senator J. D. Vance of Ohio, showing some bipartisan support against the foreign takeover.
SA commentary: “The management teams at both firms believe that there will not be any major regulatory issues at play. Obviously, this is something we will have to watch,” wrote SA Investing Group Leader Daniel Jones, who gave U.S. Steel (X) a Strong Buy rating just days before the big buyout. “Even if the deal were to fall through, I think there is a decent chance that another buyer could step in and pick up United States Steel at a price that is high enough to result in little to no downside from where the stock currently is trading for.” (11 comments)
Calling time
Apple (AAPL) will soon halt sales of its Watch models in the U.S. amid an ongoing patent dispute with Masimo (MASI). Apple will no longer sell its Watch Series 9 and Watch Ultra 2 from December 21, to comply with an International Trade Commission ruling on an intellectual property dispute pertaining to watches with a blood oxygen feature. That hasn’t stopped bumper forecasts from being assigned to the tech giant. Apple is expected to be the first stock to hit a $4T market cap by the end of 2024, according to Wedbush, given the pace of growth and monetization. Apple had hit $3T this year, making it the world’s most valuable company. (109 comments)
Do not pass go
Nikola (NKLA) founder Trevor Milton has been sentenced to a four-year prison sentence by a federal court judge in New York City for securities and wire fraud. A U.S. federal grand jury indicted Milton in 2021, charging him with three counts of criminal fraud for lying about “nearly all aspects” of the business, while in 2022, a jury convicted Milton of misrepresenting important details about the company’s products and technology. In October, an arbitration panel also awarded Nikola about $165M plus interest in a proceeding against Milton. SA Investing Group Leader Henrik Alex describes Nikola as an unmitigated disaster, with further disappointment likely next year. (36 comments)
International response
It’s official! The U.S. and nine other countries have formed a naval task force to protect commercial vessels sailing through the Red Sea from Houthi attacks. Ships have been damaged and crew safety threatened, forcing companies to stop their vessels from entering the Bab el-Mandeb Strait. Under the new mission, military ships in the region will be positioned in a way that would provide umbrella protection to as many vessels as possible. The world’s biggest container shipping lines halted shipping through the Red Sea over the weekend, while oil major BP (BP) joined them on Monday as freight rates and additional war risk premiums pushed higher. (6 comments)
Today’s Economic Calendar
8:30 Housing Starts and Permits
12:30 PM Fed’s Bostic: “U.S. economy, outlook for business, and the Federal Reserve’s role”
4:00 PM Treasury International Capital
6:00 PM Fed’s Goolsbee’s Speech
What else is happening…
Adobe (ADBE), Figma terminate merger amid regulatory hurdles.
BOJ maintains ultra-loose monetary policy, dovish guidance.
Fed’s Daly: Rate cuts ‘appropriate’ in 2024 as inflation cools.
Kenvue notches legal win over Tylenol’s alleged links to autism.
Google (GOOG, GOOGL) to pay $700M to settle Play Store lawsuit.
Southwest Airlines (LUV) fined $140M over 2022 holiday meltdown.
Texas signs bill for arresting migrants who enter U.S. illegally.
Enphase to cut 10% of workforce, stop manufacturing at two sites.
Tennessee sues BlackRock (BLK) over ‘misleading’ ESG strategies.
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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 and Indonesia posted the biggest losses. Europe, Africa and the Middle East are currently doing well. The UK, Denmark, Russia, Norway, Israel and Saudi Arabia are up; Turkey and South Africa are down. Futures in the States point towards a positie open for the cash market.
————— Audio Course: Guidelines to Successful Trading —————
The dollar is down. Oil is up; copper is down. Gold and silver mixed a little changed. Bonds are split.
Stories/News from Seeking Alpha…
On the high seas
2020 was COVID, and 2021 was the supply chain. 2022 was inflation, and 2023 was interest rates. Now, the biggest investing risk going into 2024 looks like it will be geopolitics. Traditional relationships and alliances are breaking down, and a more polarized world has given way to structural market risk. It can also be hard to plan for such wildcards, though broad hedging and defensive plays could play a key part in investing strategy for the new year.
Snapshot: One such risk is already on full display, with Iranian-backed Houthi rebels in Yemen conducting repeated drone and missile attacks on commercial vessels traversing the Red Sea. The Bab el-Mandeb Strait is a crucial shipping passage that facilitates a sixth of world trade and is important to global seaborne commodity shipments like crude oil. Insurance premiums have risen as a result, and have even prompted the world’s biggest container shipping lines to avoid the Suez Canal by diverting their cargoes toward the circuitous route around Africa. Among them are Swiss-based MSC and French CMA CGM, as well as Danish A.P. Moller-Maersk (OTCPK:AMKBY), German Hapag-Lloyd (OTCPK:HPGLY) and Hong Kong-based OOCL (OTCPK:OROVY), whose stocks have climbed 8%-17% over the past week amid rising prices.
The Houthis had originally said they would target Israeli-linked ships to show solidarity with Hamas, but that has since extended to all ships en route to Israel, and the assaults have even continued against other ships regardless of their destination. Defense Secretary Lloyd Austin is in Israel on Monday to discuss the latest developments and will travel to Bahrain and Qatar this week to follow up on the talks. It comes as American troops in Iraq and Syria have been targeted by Iranian-backed proxies over 90 times since mid-October, and as the U.S. enters the coming year with its smallest military force since 1940 (active-duty troops will drop to 1,284,500).
What’s on the table? American ships like the USS Carney and fellow destroyer USS Mason have been neutralizing threats in the Red Sea since the start of the Hamas-Israel war, but a larger force is now needed. The new plan appears to be an expansion of Combined Task Force 153 into a broader maritime alliance that will initially be called Operation Prosperity Guardian. The Pentagon is also deliberating whether to directly strike Houthi military targets in Yemen to protect maritime security, though until now there have been fears of potentially fueling a broader conflict against Iran and its proxies. Take the WSB survey.
Only ZEVs
Canada is moving ahead with its electrification plans, with new rules expected to be issued tomorrow requiring all new passenger cars sold in the country to be zero emissions by 2035. The regulations are aimed at shortening wait times for EVs and ensuring enough affordable zero-emission vehicles are available to meet the demand. Canada wants ZEVs to represent 20% of all new car sales in 2026, 60% in 2030 and 100% in 2035. Brian Kingston, CEO of the Canadian Vehicle Manufacturers’ Association that represents Ford (F), Stellantis (STLA) and GM (GM), said stronger incentives are needed to make ZEVs more affordable, instead of a mandate on “what Canadians can and cannot buy.” (11 comments)
No grail
Illumina (ILMN) plans to divest its cancer detection unit after a Fifth Circuit Court of Appeals ruled that the FTC was correct in finding the $7.1B purchase of Grail was anticompetitive. The FTC had ordered Illumina to shed Grail in April, with the European Commission following suit in October. Illumina, which won’t appeal the court’s ruling, plans to divest Grail either through a sale or a capital markets transaction, with the goal of finalizing the terms by the end of Q2. Illumina has already received buyer interest for Grail, which it acquired in 2021, and SA analyst Main Street Investor believes the divestment could unlock significant shareholder value. (5 comments)
Soft landing
Economists may have what to celebrate as inflation is projected to near the Fed’s 2% target next year without a recession or a surge in unemployment, according to the Congressional Budget Office. Inflation is expected to fall to 2.1% in 2024, reflecting softer labor markets and slower increases in rents, but will tick up to 2.2% in 2025. The CBO also expects real GDP growth to slow to 1.5% in 2024 amid a slowdown in consumption, investment, and exports. SA Investing Group Leader Lawrence Fuller said traders should be wary of the overly optimistic bullish sentiment even though a soft landing is near, while Mott Capital Management believes the Fed showed its cards too soon. (4 comments)
Today’s Economic Calendar
10:00 Housing Market Index
What else is happening…
IPOs 2024: Watch for Fanatics, Reddit, Shein, and more.
Chuck E. Cheese exploring sale, may be worth over $1B.
Apple (AAPL) facing expansion of China iPhone ban.
Scandinavian investors join Tesla (TSLA) labor fight.
Elon Musk: Don’t shun fossil fuels amid green transition.
KKR buys $7.2B RV loan portfolio from BMO Financial.
Fashion executives see upcoming uncertainty for the industry.
Nvidia (NVDA) stock outlook: What to expect next year.
Alex Rodriguez’s SPAC Slam to merge with Lynk Global.
Redfin: U.S. housing market to shift in buyers’ favor in 2024.
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