Good morning. Happy Friday.
The Asian/Pacific markets posted huge gains. Japan, Hong Kong, South Korea, India, Taiwan, Australia, Singapore, Thailand and the Philippines did great. Europe, Africa and the Middle East currently lean up. Poland, Germany, Greece, the UAE, Hungary and Italy are doing well; the UK and Denmark are down. Futures in the States point toward down open for the cash market.
————— Leavitt Brothers Overview —————
The dollar is down. Oil and copper are down. Gold is up; silver is down. Bonds are up.
Stories/News from Seeking Alpha…
Better for sellers
Seismic changes are about to hit the real estate world. The National Association of Realtors is dropping its standard commissions to agents as part of a deal to end antitrust lawsuits, potentially giving American home sellers more negotiating power over the fee structure when putting their houses on the market. The changes will go into effect on Saturday after a court ruling found that requirements to post commissions reduced competition and kept rates artificially high.
How things work? In the U.S., each real estate deal typically includes two agents – one for the buyer and one for the seller. Until now, sellers usually forked over a hefty 6% commission, which was then split between the two agents involved with the transaction. Larger firms that have more sway over the market have generally held steady to their rates, and while smaller boutique firms would sometimes be willing to negotiate, it would still help steer agents away from the discount commissions that were seen in the Multiple Listing Service (MLS).
Any indication of agents’ compensation will now be eliminated from the MLS, including historical data, though it can be communicated by ads, phone, or in person. Secondly, while sellers can still incentivize a sale by sticking to past practices, they can also say that they want buyers to be on the hook. That’ll mean more paperwork, especially for buyers and their agents, who will have to sign several forms even before they go see or show a house (to clarify how the commissions will be paid).
Sector impacts: While the changes could save sellers money, they could force buyers to come up with more to pay for the fees, or incentivize agents to focus on higher-priced homes. Most agree that it can be quite a while before overall costs formally drop, though sellers may be willing to part with their homes for less if they are not paying as much for commissions. Others see the new rules as helping to re-energize the housing market, especially as mortgage rates begin to come down, with the potential for new business models or many part-time realtors leaving the industry.
Alive and well
Major stock market averages ended higher Thursday after jobless claims unexpectedly fell and retail sales bounced back. Index heavyweight Walmart (WMT) also helped counter recession worries with a series of upbeat comments and raising its outlook. “We have not seen any additional fraying of consumer health in our business,” said CFO John David Rainey, echoing a company viewpoint held for the last few quarters and helping lift other retail stocks. “The soft landing is back on the table,’ Investing Group Leader Leo Nelissen told Seeking Alpha. (70 comments)
S&P 500 recovers losses for August, including Black Monday 2024
Power it up
Wind turbines generated more electricity in the U.S. than coal-fired power plants in March and April, according to the Energy Information Administration, marking a new milestone in the country’s energy transition. Innovation has led to a lowering of costs to build renewable energy infrastructure, as well as tax credits under the Inflation Reduction Act and states mandating utilities need to support growth in clean energy. Fossil fuels still accounted for the majority of electricity generation in the U.S. during the first four months of 2024. See the full breakdown here. (3 comments)
The easing train
Atlanta Fed President Raphael Bostic, who is a voting FOMC member, is open to an interest rate cut next month, saying the central bank can’t “afford to be late” in starting monetary easing. “Now that inflation is coming into range, we have to look at the other side of the mandate, and there, we’ve seen the unemployment rate rise considerably off of its lows,” he declared. It’s notable, as just a few days ago, Bostic said “a little more” data was needed before he could back rate cuts. Elsewhere, St. Louis President Alberto Musalem also announced that the time was approaching for rate cuts. (3 comments)
Today’s Economic Calendar
8:30 Housing Starts and Permits
10:00 Consumer Sentiment
1:00 PM Baker Hughes Rig Count
1:25 PM Fed’s Goolsbee Speech
What else is happening…
Mpox outbreak: First case outside Africa reported in Sweden.
U.S. announces final drug prices after Medicare negotiations.
Deere (DE) rallies as results beat, outlook not as bad as feared.
DOJ defends Boeing (BA) plea deal as victims’ families cry foul.
Kroger (KR) plans $1B in price cuts if it can close Albertsons deal.
Wall Street fear gauge (VIX) sees largest 7-day drop in history.
CEO exit: Pershing doesn’t expect Chipotle (CMG) to miss a step.
PepsiCo (PEP) can be sued for Gatorade protein bar health claims.
Toyota (TM) may phase out gas-powered cars for all-hybrid lineup.
Plan from California’s Newsom would make refiners stockpile fuel.
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Good morning. Happy Thursday.
The Asian/Pacific markets leaned to the upside. Japan, China, New Zealand and Singapore did well. Europe, Africa and the Middle East currently lean up. Denmark, Poland, South Africa, Finland, Israel, Sweden and Saudi Arabia are leading. Futures in the States point towards a moderate gap up open for the cash market.
————— Leavitt Brothers Overview —————
The dollar is up. Oil and copper are up. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
A great big phony
Ever get the feeling that 5-star review is not all that real? Sounds auto-generated or too similar to the rest of them? Well, the Federal Trade Commission has taken notice too, as consumer complaints pile up in the age of generative AI and e-commerce popularity. New rules are set to combat fake reviews and testimonials, while the agency will be allowed to seek civil penalties against knowing offenders.
Quote: “Fake reviews not only waste people’s time and money, but also pollute the marketplace and divert business away from honest competitors,” FTC Chair Lina Khan declared. “By strengthening the FTC’s toolkit to fight deceptive advertising, the final rule will protect Americans from getting cheated, put businesses that unlawfully game the system on notice, and promote markets that are fair, honest, and competitive.”
Besides bans on false reviews and testimonials, prohibitions will be applied to the censorship of negative reviews or compensating third parties for positive feedback. The rules also target deceptive practices surrounding AI-generated reviews or offering incentives to customers in exchange for writing specific comments. Buying or selling fake engagement such as likes, followers, or views on social media will be outlawed as well, and clarity about business connections or ties will be required if engaging in the review of a product.
What it means: Businesses will have to be more careful about how they manage reviews and may need to implement stricter guidelines or disclosures. That could translate into great responsibility for companies like Amazon (AMZN), Facebook (META), Google (GOOGL), Tripadvisor (TRIP) and Yelp (YELP). While false advertising is already illegal, the new ruling allows the FTC to seek up to $51,744 per violation, but it will ultimately be left to enforcement and the courts, which can impose much lower penalties depending on the case or size of a business.
Refinancing surge
As borrowing costs continue to decline, U.S. mortgage refinancing witnessed the largest increase since the early days of the pandemic. The refi index surged 34.5% over the course of one week, according to data from the Mortgage Bankers Association, and was up an astounding 118% when compared to the same week a year ago. Overall mortgage applications also continued to climb, with the latest cooling consumer price index setting the stage for the Fed to embark on an easing cycle in September. (2 comments)
Robo delivery
Shake Shack (SHAK) is the latest to partner with Serve Robotics (SERV) in using autonomous sidewalk robots to deliver Uber Eats (UBER) orders in Los Angeles. The news sent Serve’s shares soaring nearly 10% on Wednesday and the stock is up another 4% premarket. The all-electric and AI-powered bots, which look like boxes on wheels, are equipped with advanced GPS technology and are designed to eliminate noise and congestion in crowded urban areas. Speaking of robotics, Apple (AAPL) is reportedly moving forward with a tabletop prototype that has a display similar to an iPad and a robotic limb. (19 comments)
Bipartisan crypto?
Senate Majority Leader Chuck Schumer aims to “get something passed out of the Senate and into law by the end of the year,” he said during a virtual Crypto4Harris town hall. “Crypto is here to stay no matter what. So Congress must get it right.” While Kamala Harris hasn’t formally shared her views on crypto, a move by senior Democrats to support the industry indicates she may pivot away from the Biden administration’s harsh stance. Crypto has become a major topic in the election, with Republican nominee Donald Trump calling for the U.S. to be “the bitcoin superpower of the world.” (8 comments)
Today’s Economic Calendar
08:30 AM Initial Jobless Claims
08:30 AM Retail Sales
08:30 AM Philadelphia Fed Manufacturing Index
08:30 AM Empire State Mfg Index
08:30 AM Import/Export Prices
09:10 AM Fed’s Musalem Speech
09:15 AM Industrial Production
10:00 AM Business Inventories
10:00 AM Housing Market Index
10:30 AM EIA Natural Gas Report
01:10 PM Fed’s Harker Speech
04:00 PM Treasury International Capital
04:30 PM Fed Balance Sheet
What else is happening…
Retail radar: Walmart earnings and sales data in the spotlight.
13F check: Buffett’s Berkshire adds Ulta (ULTA), sheds Snowflake.
Nike (NKE) shares gain as Ackman’s Pershing reveals stake.
Burry’s Scion Asset sheds Safe Bulkers (SB) and BP (BP).
Cisco (CSCO) climbs on results, plans to shed 7% of workforce.
Starbucks (SBUX) welcomes Brian Niccol with a lush package.
New CEO at Victoria’s Secret (VSCO), along with prelim earnings.
J&J (JNJ) to declare voting support for talc bankruptcy plan.
DraftKings backs off tax surcharge; Flutter rallies on strong results.
WHO declares mpox outbreak in Africa a global health emergency.
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Good morning. Happy Wednesday.
The Asian/Pacific markets mostly did well. Japan, South Korea, Taiwan, New Zealand, Indonesia, Singapore and the Philippines led while China and Hong Kong lagged. Europe, Africa and the Middle East are mostly doing well. Poland, the UAE, Greece, South Africa, Switzerland, Italy, Israel, Austria and Sweden are posting solid gains; Denmark and Hungary are down. Futures in the States point towards a positive open for the cash market.
————— Leavitt Brothers Overview —————
The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
One kellova deal
Too much munch? Not yet. Candy giant Mars has inked a $35.9B deal for snack maker Kellanova (K) – including assumed net leverage – in what is set to become one of the biggest M&A headlines of the year. The tie-up will pair the company behind M&M’s, Snickers and Skittles with the producer of Pringles, Cheez-It and Pop-Tarts, meaning the next time you reach for a quick packaged bite, it may ring the register of the same privately held conglomerate.
Snapshot: Kellanova shares are up on the news premarket, climbing 8% to above $80. That’s near the $83.50 per share level apparently agreed to by Mars in the all-cash deal, and up from the $60 level since reports of the merger first surfaced in early August. Kellanova was spun off from cereal-focused WK Kellogg (KLG) last year and has since posted a series of strong earnings, even raising its guidance for FY24 after its most recent analyst-beating results.
Not everyone in the packaged food industry has been so lucky. There are fears of slowing growth and a weakening consumer, prompting companies to look for ways to bolster sales and their bottom lines. Some are turning to new markets and innovation, but a merger with a successful company can also do the trick. Diversification for chocolate-heavy Mars is also necessary due to supply risks, especially with cocoa prices hitting record levels this year.
What to watch: The latest deal would be the largest packaged-food transaction since the merger between Kraft and H.J. Heinz in 2015, and some are even anticipating a new era of food-industry consolidation. That has raised the risk of antitrust hurdles, with the DOJ and FTC under the Biden administration aggressively challenging big mergers and acquisitions. Others have said there is limited overlap between the actual product lines between Mars and Kellanova (and remember that Mars successfully took over Wrigley for $23B in 2008).
Restaurant jolt
In other consumer news, Starbucks (SBUX) sent shockwaves across the sector after it replaced its CEO Laxman Narasimhan with Chipotle Mexican Grill’s (CMG) Brian Niccol. Starbucks CFO Rachel Ruggeri will serve as interim CEO until September 9, when Niccol will officially take over. Wall Street analysts and activist Elliott Investment cheered the news, which sent Starbucks surging 24.5% on Tuesday, while activist investor Trian Fund Management cashed out of its SBUX holdings. Former Starbucks CEO Howard Schultz also reportedly said Niccol’s appointment was a “home run.” (53 comments)
Easing in sight
New Zealand’s central bank is the latest to reduce its benchmark interest rate, surprising markets with the first cut since March 2020 and a year before its own forecast. The Reserve Bank of New Zealand lowered its official cash rate by 25 bps to 5.25%, flagging more cuts ahead as the economy contracts faster than expected. The decision follows rate cuts by the EU, U.K. and Canada, all moving before the Fed. With wholesale inflation coming in cooler than expected, investors now eagerly await the CPI report due at 8:30 AM ET. Markets are certain that the Fed will lower rates in September, but are divided on the size of the cut.
Stepping down
Just a week after market turbulence rocked Japan, Prime Minister Fumio Kishida announced that he would resign next month amid waning popularity in the wake of political scandals. “Politics cannot function without public trust,” he declared. “I made this heavy decision thinking of the public, with the strong will to push political reform forward.” Public support for Kishida has weakened in recent years after revelations of the ruling Liberal Democratic Party’s ties to the Unification Church and undisclosed donations from fundraising events, as well as rising living costs that have outpaced wage growth.
Today’s Economic Calendar
07:00 AM MBA Mortgage Applications
08:30 AM Consumer Price Index
10:30 AM EIA Petroleum Inventories
What else is happening…
Report: DOJ considers push to break up Google (GOOG)
Home Depot (HD): Lower rates could breathe life into DIYs.
Activist Elliott seeks 10 board seats at Southwest (LUV).
Cashing out: Intel (INTC) sells stake in Arm Holdings (ARM).
Tilray (TLRY) to buy four breweries from Molson Coors (TAP).
BHP (BHP) workers go on strike at world’s biggest copper mine.
Google (GOOGL) reveals on-device AI in all-new Pixel 9 phones.
Paramount (PARA) starts layoffs; TV studio shuts after 11 years.
Boeing (BA) finds new 737 problems, further slowing deliveries.
United Auto Workers fires off a lawsuit against Trump and Musk.
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Good morning. Happy Tuesday.
The Asian/Pacific markets mostly did well. Japan, Hong Kong, Indonesia, Singapore and the Philippines led, while India lagged. Europe, Africa and the Middle East are quiet and little changed. Denmark and Saudi Arabia are up; the UAE and Hungary are down. Futures in the States point towards a moderate gap up open for the cash market.
————— Sign up for my MoneyShow Presentation, where I’ll be talking about trading with the RSI, MACD and Stochastic. —————
The dollar is down. Oil and copper are down. Gold is up; silver is down. Bonds are up.
Stories/News from Seeking Alpha…
Retail on the radar
This week is all about retail, especially for investors who are hoping to get a better assessment of the U.S. economy. Kicking off the festivities today will be earnings from Home Depot (HD), with comparable sales shedding a spotlight on the current spending habits of the American consumer. Walmart (WMT) will also report quarterly results on Thursday, the same day that July’s retail sales data will be published.
Speaking of macro: Nervousness has been present in markets since July’s weak jobs report that highlighted rising unemployment. It helped volatility spike last week, and while stocks have since recovered from a major selloff, the situation remains fragile. Fears could reignite if there are further hints of a slowdown, especially since consumer spending accounts for more than two-thirds of the economy, but the figures could also provide reassurance if the numbers go the other way.
The same situation will play out tomorrow. A hot consumer price index report could push stagflation fears back into the market and even cause a resurgence in recession worries. On the other hand, easing price pressures would calm investor nerves and may provide a relief rally, especially if positive retail earnings heat things back up. A report by the New York Fed yesterday also showed the three-year inflation consumer outlook hitting a record low, which will be yet another factor in expectations about whether the Fed will embark on a rate cut cycle as soon as next month.
SA commentary: “We may see more volatility in the days ahead, as bears attempt to sway investor sentiment by wrangling over how each economic report is either inflationary or recessionary, but they are likely to be failed attempts to breathe life into a narrative that has fallen flat for nearly two years now,” wrote Investing Group Leader Lawrence Fuller. “If you forecast a recession or an end to the bull market, you will eventually be right, as both are natural stages of each economic and market cycle. If you are early by a year or more, then you are not doing anyone any favors, including yourself.”
Not just coffee
As activism envelops Starbucks (SBUX), the coffee chain is apparently weighing whether to add Elliott Investment Management’s Jesse Cohn to the board in a potential settlement. Nothing is certain at this point, but Elliott may also propose divesting the coffee chain’s China business, which would echo the spinoff of Yum! Brands (YUM) business in the Asian market (YUMC). Another activist investor Starboard Value has also taken a stake in Starbucks, but it’s unclear if it intends to push for operational changes despite the company continuing to log successive quarters of falling sales.
Mayday!
Shares of JetBlue (JBLU) are still under pressure after cratering 21% on Monday for its largest session loss on record. The catalyst for the plunge was a plan to raise more than $3B in debt, the majority backed by its loyalty program called TrueBlue. Included in the proposal was a $400M convertible note offering to repay maturing bonds, but the move triggered a credit downgrade at all “Big Three” rating agencies. Among the concerns are weakened credit metrics, negative free cash flow, and pressure on margins on earnings.
Price wars
To lure in price-sensitive consumers and compete with McDonald’s (MCD) $5 Meal Deal, KFC (YUM) is expanding its $5 Value Menu to include chicken nuggets and Famous Bowls. The fast food chain will also offer free delivery on Thursdays for any order on the KFC app or website starting September 5, coinciding with the start of the football season. Competitors like Wendy’s (WEN) and Burger King (QSR) have also introduced their own value meal offerings after the success of the $5 Meal Deal at McDonald’s, which it said has boosted foot traffic by luring away customers from rival chains. (20 comments)
Today’s Economic Calendar
06:00 AM NFIB Small Business Optimism Index
08:30 AM Producer Price Index – Final Demand
01:15 PM Fed’s Bostic Speech
What else is happening…
WSB survey results: Don’t play around with central bank independence.
J&J (JNJ) said to make headway in settling talc baby powder litigation.
NASA watchdog finds quality control lapses in Boeing (BA) SLS work.
Scotiabank (BNS) to buy 14.9% stake in KeyCorp (KEY) for $2.8B.
Judge rules against RFK Jr. in fight to be on New York ballot.
Marathon Digital (MARA) dips on proposed $250M debt offering.
LL Flooring (LL) files for Chapter 11 bankruptcy, but secures financing.
Oxy Petroleum (OXY) says CrownRock launches sale of 30M shares.
Marathon Oil (MRO) investor sues to block ConocoPhillips (COP) deal.
Are the Magnificent 7 a better hedge than the overall S&P 500 (SP500)?
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets leaned to the upside. Hong Kong, South Korea, Taiwan and Malaysia did well; Singapore and the Philippines were weak. Europe, Africa and the Middle East are mostly quiet. Poland, Greece, Norway and Italy are up; Denmark and Israel are down. Futures in the States point to a positive open for the cash market.
————— Sign up for my MoneyShow Presentation, which is August 20 at 3:20 est. —————
The dollar is up. Oil and copper are up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Fed independence
As election season kicks into high gear, much of the campaign content and messaging has centered around the economy. Monetary policy has also been in the mix due to its effects on borrowing costs, which impact everything from mortgage rates and car loans to credit cards and corporate balance sheets. The Federal Reserve is also at a key moment in its latest cycle, with calls to begin cutting rates before a downturn in demand and rising unemployment trigger trouble for the economy.
Snapshot: Last week, Republican nominee and former President Donald Trump announced that a president should have “at least say” when it comes to the Federal Reserve, while VP candidate JD Vance followed up with support over the weekend. “Well, not direct,” he responded to CNN’s Dana Bash, when asked if a president should direct the Federal Reserve on how to handle interest rates. “The president [already] has a say in the sense that he appoints the Federal Reserve’s governors. The political leadership of this country should have more say over the monetary policy. That fundamentally should be a political decision.”
“I couldn’t disagree more strongly,” Democratic presidential nominee Kamala Harris told reporters during a campaign stop in Arizona on Saturday. “The Fed is an independent entity, and as president, I would never interfere in the decisions that the Fed makes.” Business leaders have also weighed in on the latest exchange, with Bank of America CEO Brian Moynihan noting that, “if you look around the world’s economies, and you see where central banks are independent and operate freely, they tend to fare better than the ones that don’t.”
Outlook: While it’s not exactly clear what “having say” means, the Federal Reserve hasn’t always been that independent since its founding in 1913. Congress and the executive branch heavily controlled policy until the Monetary Accord of 1951, which formally separated government debt management from monetary policy. However, there have still been other presidents since then, like Truman, Johnson and Nixon, who have also clashed with their Fed chairs. “Independence is essential, literally essential,” Jerome Powell said during his semi-annual testimony last month. “I think that’s broadly understood, particularly on Capitol Hill, among both sides of the aisle.” Take the WSB survey.
Mideast risks
With the latest reports indicating that Iran will attempt an attack on Israel this week, the Pentagon has revealed the deployment of a guided missile submarine, a rare public announcement aimed at reestablishing deterrence in the region. Defense Secretary Lloyd Austin has also accelerated the timeline for the arrival of the USS Abraham Lincoln strike group, putting energy and other sectors on watch. Attacks on U.S. assets have ramped up over the past week, with several U.S. and coalition personnel injured in a drone attack in Syria on Friday following a rocket strike that wounded five American personnel at the Ain al-Asad airbase in Iraq. (5 comments)
Final count
The U.S. and China have come away from the Paris Summer Olympics tied with 40 gold medals, though Team USA notched an overall victory with 126 total medals. Another clear winner of the Games was Comcast-owned (NASDAQ:CMCSA) NBCUniversal, which drew a 14-day Total Audience Delivery average of 31.6M viewers during the Paris and U.S. prime-time periods. That’s up 77% from the 17.8M logged in Tokyo in 2021, translating into big advertising dollars. More in the making? NBCUniversal has the rights to the Olympic Games through 2032. (2 comments)
Fire warning
An electric vehicle blaze in South Korea is sparking questions as well as talk about new rules for the industry. A major fire on Aug. 1 that took eight hours to put out – and destroyed or damaged about 140 cars – was found to have been caused by an unplugged Mercedes-Benz EV (OTCPK:MBGYY) that was parked below a residential building. In fact, over 600 such fires have occurred in underground parking lots in the country over the past decade. South Korean officials are now weighing whether to require electric vehicle makers to disclose their battery brands at a time when EV sales growth is slowing globally. (21 comments)
Today’s Economic Calendar
2:00 PM Treasury Statement
What else is happening…
Earnings Scorecard: About 73% of the S&P 500 names beat on EPS.
Disney (DIS) unveils six new themed lands in big parks push.
Ukraine’s Zelenskyy acknowledges military incursion onto Russian soil.
Cisco (CSCO) to cut ‘thousands’ more in second round of 2024 layoffs.
Psychedelic drug developers face setback after rejection by the FDA.
Tesla (TSLA) pivots to pricier Cybertrucks; halts orders for cheapest version.
MarketWise (MKTW) founder Porter Stansberry resigns as CEO.
Trump says Microsoft (MSFT) told him Iran was behind campaign hack.
Harris also pledges to end taxes on tips for service industry workers.
Marvel Studios’ (DIS) Deadpool & Wolverine surpasses $1B worldwide.
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