Good morning. Happy Friday.
The Asian/Pacific finished the week on a high note. Japan, Hong Kong, South Korea, India, Taiwan and the Philippines did well; New Zealand and Indonesia posted losses. Europe, Africa and the Middle East are currently mostly down. South Africa is doing well, but the UK, Poland, France, Germany, Finland, the Netherlands and Austria are weak. Futures in the States point toward a down open for the cash market.
————— VIDEO: The Fed Cut Rates. Now What? —————
The dollar is up. Oil is up; copper is down. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Lower for longer
While the term “transitory” has fallen out of favor with the Fed, the word “recalibrate” is now in vogue. Chair Jerome Powell used the expression a total of 10x during his post-meeting press conference on Wednesday, and the markets are just loving it. Some time was needed to digest the new phrase, but it seems that it’ll be one to add to the central bank lexicon going forward.
Translation: The Fed’s past policy stance is being recalibrated to “lower for longer” to support the labor market and economic growth. As long as inflation doesn’t resurface, the easing cycle should continue through 2026 and beyond. The accommodative stance is unleashing some animal spirits, with bullish forces igniting hopes of a soft landing, healthy corporate profits and resurgent growth.
Risk assets responded in kind on Thursday, and then some. The Dow Jones Industrial Average hit 42,000 for the first time in its history, the S&P 500 scored its 39th record close of the year, and the YTD gains for the Nasdaq Composite also returned to 20%, fueled by a rally in tech. Economic data on the labor market further boosted sentiment, with the number of Americans filing for initial jobless claims falling to its lowest level since May.
SA commentary: “In my view, this is great for markets,” said Victor Dergunov, Investing Group Leader of The Financial Prophet. “It states that the Fed is serious about supporting the market. In a sense, the Fed put is back, which is excellent for high-quality stocks and other risk assets advancing from here. However, we must avoid a significant reversal. Also, it’s crucial that the market focuses on the positives and doesn’t panic because the Fed brought the bazooka out.” (37 comments)
New sneakers
Nike (NKE) turned some heads by announcing that its CEO John Donahoe will step down and be replaced by retired insider Elliott Hill. Hill spent his career at Nike in various senior leadership positions across Europe and North America, and then retired following his role as president of Consumer & Marketplace in 2020. The news sent Nike shares soaring 7.6% AH on Thursday, with investors appearing confident in Hill’s leadership as the footwear giant faces profit volatility, guidance shortcomings, competition headwinds, and a lack of strategic long-term clarity. (9 comments)
Compromised comms
Disney (DIS) will stop using corporate messaging platform Slack (CRM) following a cyberattack in which more than a terabyte of the company’s data was leaked online. The data from thousands of Disney’s Slack channels contained discussions about ad campaigns and studio technology, which were exposed by hacker group Nullbulge. Many teams have already started to transition to “streamlined enterprise-wide collaboration tools,” according to an internal memo, with most of Disney’s businesses expected to stop using the service later this year. (9 comments)
We understand?
In its latest quarterly results, FedEx (FDX) missed Q1 expectations and dropped its outlook for FY25, dragging shares 11% lower AH on Thursday. The package delivery behemoth blamed reduced demand for priority services, constrained yield growth, as well as higher operating expenses. The dimmed outlook will likely end a nine-day winning streak when the stock opens for regular trading today and reflects a very competitive pricing environment and challenging industrial economy. Rival UPS (UPS) shares also fell 2.4% AH following the results. (10 comments)
Today’s Economic Calendar
1:00 PM Baker Hughes Rig Count
2:00 PM Fed’s Harker: Economic Outlook
What else is happening…
Darden (DRI) rallies on earnings, Uber-Olive Garden partnership.
OpenAI funding round in final stages, investor list soon finalized.
Bank of Japan keeps interest rate steady, as expected.
Target’s CFO hire sparks intrigue at PepsiCo (PEP), Celsius.
Buffett’s Berkshire (BRK.B) continues to trim stake in BofA (BAC).
Lightest fall maintenance season for U.S. refineries in three years.
Mobileye surges as Intel (INTC) has no plans to divest stake.
Ford (F) faces strike threat at tool and die plant in Michigan.
Warner Music (WMG) to lay off more employees in restructuring drive.
Societe Generale: How four election outcomes could impact markets.
—————
Good morning. Happy Thursday.
The Asian/Pacific did great. Japan, China, Hong Kong, Taiwan, Australia, New Zealand, Indonesia, Singapore, Thailand and the Philippines posted solid gains. Europe, Africa and the Middle East are currently up big. The UK, Denmark, France, Turkey, Germany, the UAE, South Africa, Finland, Switzerland, Norway, Spain, the Netherlands, Italy, Austria, Sweden and Saudi Arabia are all participating. Futures in the States point toward an enormous gap up open for the cash market.
————— Free Online Course: Mini Masterclass in Trading —————
The dollar is up. Oil and copper are up. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
Fool me once
The Federal Reserve got aggressive on Wednesday, beginning its new easing cycle with a bang. The jumbo 50-basis point rate cut was nearly unanimous in an 11-1 vote, while a slim majority of policymakers (10 out of 19 officials) saw the need to lower rates by at least an extra half-point across meetings in November and December. It’s all being geared towards a soft landing, with the eyes of the FOMC now trained on the labor market as inflation moves closer to its 2% target.
Quote: “We are committed to maintaining our economy’s strength,” Fed Chair Jerome Powell announced at a news conference. “This decision reflects our growing confidence that with an appropriate recalibration of our policy stance, strength in the labor market can be maintained… To me, the logic of this – both from an economic standpoint and also from a risk management standpoint – was clear… You can take this as a sign of our commitment not to get behind.”
While there was plenty of chatter going on before the decision, many thought the central bank would start off on a cautious note, as seen in the most recent WSB poll. It also took the markets a while to digest the big cut and what that level might say about the economy. The S&P 500 (SP500) initially rose toward all-time highs but ended the day subdued, only for futures to take off overnight and point to a bumper rally in the session ahead.
Helping clarify matters was the Fed’s so-called “dot plot” – contained within the Summary of Economic Projections. It projected a Fed funds rate that would hit 3.4% by the end of next year (from the current 4.75% to 5% range) and fell from the 4.1% estimate in June. Jay Powell and Co. are clearly not taking any chances this time around after falling behind the curve in 2021 by forecasting a short-lived rise in inflation.
Bottom line: “Transitory” is no longer in the Fed dictionary. (266 comments)
Trading prices
Market makers are watching. The SEC has adopted rule amendments that will decrease the so-called “tick size” between buy and sell prices for certain national market system stocks. It’ll see the spread narrow to half a cent from a full penny, while access fees will also be reduced. “The reforms we adopted today will help promote greater transparency, competition, fairness, and efficiency in our $55T equity markets,” said SEC Chair Gary Gensler. “The reforms are pro-investors. They are pro-capital formation.” (1 comment)
Cash crunch
Boeing (BA) will furlough tens of thousands of white-collar employees amid a strike by its largest union that has halted 737 MAX, 777 and 767 production. “We are planning for selected employees to take one week of furlough every four weeks on a rolling basis for the duration of the strike,” CEO Kelly Ortberg wrote in a memo. Boeing is also at risk of a downgrade by credit-rating agencies if the strike is prolonged. Elsewhere, Stellantis (STLA) is facing the threat of strike, as union workers claim the automaker has not followed through on guarantees made in its labor deal last year. (14 comments)
Top economic risks
JPMorgan (JPM) CEO Jamie Dimon thinks people are overly focused on the soft/hard landing debate, warning that geopolitical tensions pose the biggest risk to global markets for the next 100 years. “The most important thing that dwarfs all other things is the war in Ukraine, what’s going on in Israel, in the Middle East, America’s relations with China and the attack on the rule of law that was set up after World War II,” Dimon declared. “That’s really far more important today than it’s been probably since 1945,” he added, pointing to threats from “evil axis” countries like Iran, North Korea and Russia. (18 comments)
Today’s Economic Calendar
08:30 AM Jobless Claims
08:30 AM Philadelphia Fed Manufacturing Index
08:30 AM Current Account
10:00 AM Existing Home Sales
10:00 AM Leading Indicators
10:30 AM EIA Natural Gas Report
01:00 PM Results of $17B, 10-Year TIPS Auction
02:00 PM Treasury Buyback Results
04:30 PM Fed Balance Sheet
What else is happening…
Reaction Roundup: SA analysts weigh in on Fed’s jumbo rate cut.
Tupperware Brands (TUP) slumps after confirming bankruptcy filing.
Maersk (OTCPK:AMKBY) sees container demand staying strong.
UBS: Apple (AAPL) iPhone shipments dip lower despite AI feature.
Waymo eyes outsourcing self-driving car production to Hyundai.
Tesla’s (TSLA) robotaxi event has analysts, investors guessing.
eBay (EBAY) called out as a potential short-squeeze candidate.
Sanders: Generic drugmakers can sell Ozempic for under $100.
CrowdStrike (CRWD) shows off new cybersecurity services.
U.S. soldiers moved to Alaska island amid Russian military activity.
—————
Good morning. Happy Wednesday. Happy Fed Day.
The Asian/Pacific markets leaned down. Taiwan and New Zealand were down. Otherwise the markets were quiet. Europe, Africa and the Middle East are mostly down. The UK, Denmark, Poland, Greece, South Africa, Switzerland, the Netherlands, Portugal and Sweden are down. Futures in the States point toward a positive open for the cash market.
————— Free Online Course: Mini Masterclass in Trading —————
The dollar is slightly down. Oil is down; copper is up. Gold is down; silver is up. Bonds are down.
Stories/News from Seeking Alpha…
Super Size Me?
Cheers can be heard from the investing world as the much-anticipated Fed easing cycle finally begins. It’s been four years since the FOMC last cut rates, and 14 months of holding them steady, so today’s rate decision, press conference and policy projections will all be a big deal. There’s been much debate over how fast the Fed will move as the starting gun is fired, so stay tuned for the headlines on Seeking Alpha starting at 2 PM ET.
Soft landing? While inflation data has drifted downward toward the Fed’s 2% goal, unemployment has risen faster than expected since the last FOMC decision in July. That has led to worries by the central bank about cooling labor market conditions, which is harder to stop once demand for workers has softened. It’s even prompted to talk about a stronger level of rate cuts, but the majority of Wall Street Breakfast subscribers (79.4%) still expect the Fed to trim its benchmark lending rate by 25 basis points, compared to some (20.6%) who see a 50-bps reduction.
While the pace of the initial cut will be revealed in the coming hours, a bigger area of focus will be the federal funds rate range for the end of 2024, next year, and in the longer term. Look to the FOMC’s dot plot for that insight. In the last Summary of Economic Projections, issued on June 12, the median fed funds rate projection was 5.1% at the end of 2024 and 4.1% for 2025, and how much that changes from the prior outlooks will be exceptionally important for investors.
SA commentary: “While the near-term volatility could persist, a more accessible monetary stance should lead to improved growth and increased liquidity, a highly constructive dynamic for high-quality stocks and other risk assets,” Investing Group Leader Victor Dergunov wrote in Finally, It’s Time To Cut Rates. “Corporate earnings remain healthy, and despite the potential temporary growth slowdown in AI and other segments, we could see improving and better-than-expected earnings in future quarters.”
AI infrastructure
Looking to meet growing demand, BlackRock (BLK) and Microsoft (MSFT) are planning a more than $30B artificial intelligence investment fund to build data centers and energy projects. The Global AI Infrastructure Investment Partnership would be one of the biggest investment vehicles ever raised on Wall Street through Global Infrastructure Partners. Abu Dhabi-backed investment firm MGX and Microsoft are the fund’s general partners, and Nvidia (NVDA) is providing expertise. The fund aims to mobilize up to $100B in total investment potential when including debt financing. (12 comments)
Risk premium?
Secretary of State Antony Blinken is in the Middle East for the 10th time since the war in Gaza began nearly a year ago. The conversations in Cairo come after the Biden administration greenlit $1.3B in military aid for Egypt, overriding congressional requirements that the U.S. hold back some funding if adequate progress is not made on human rights. Tensions are also escalating in the region following a pager attack that was widely attributed to Israel and targeted thousands of members of the Lebanese terror group Hezbollah, but oil doesn’t appear to be pricing in any risk at the moment. (2 comments)
Next strike
As organized labor notches more wins, around 45K dockworkers have begun threatening industrial action at U.S. East Coast and Gulf of Mexico ports. “A strike on Oct. 1 seems more likely as time is running out,” warned the International Longshoremen’s Association. Negotiations for a new labor contract have stalled, but the United States Maritime Alliance, which represents port employers including ZIM (ZIM) and Maersk (OTCPK:AMKBY), is willing to resume talks “at any time.” A looming strike has raised supply chain concerns ahead of the busy holiday season, with retailers bringing in products earlier or rerouting shipments.
Today’s Economic Calendar
07:00 AM MBA Mortgage Applications
08:30 AM Housing Starts and Permits
10:00 AM Atlanta Fed’s Business Inflation Expectations
10:30 AM EIA Petroleum Status Report
11:00 AM Treasury Buyback Announcement
02:00 PM FOMC Announcement
02:30 PM Fed Chair Press Conference
04:00 PM Treasury International Capital
What else is happening…
Google (GOOGL) wins legal battle against $1.7B EU digital ad case.
JPMorgan may replace Goldman as Apple’s (AAPL) credit card partner.
U.S. Steel (X) gains as Nippon (OTCPK:NPSCY) review is extended.
Chevron (CVX) CEO: LNG export pause undermines energy security.
Albertsons falls on last day of FTC trial over Kroger’s (KR) $25B deal.
Instagram (META) launches Teen Accounts with parental controls.
Snap (SNAP) releases latest AR glasses, targeted at developers.
SpaceX doubles Starlink Wi-Fi order backlog with UAL contract.
DOT greenlights Alaska Air (ALK)-Hawaiian (HA) $1.9B merger.
Point72’s Steve Cohen said to no longer invest clients’ capital.
—————
Good morning. Happy Tuesday.
The Asian/Pacific markets leaned up. Hong Kong, Malaysia, Singapore and the Philippines did well; Japan was weak. Europe, Africa and the Middle East are currently doing great. The UK, Poland, France, Turkey, Germany, South Africa, Finland, Switzerland, Spain, the Netherlands, Italy and Sweden are posting solid gains; Denmark and Israel are up. Futures in the States point toward a moderate gap up open for the cash market.
————— VIDEO: State of the Market —————
The dollar is slightly up. Oil is flat; copper is down. Gold and silver are down. Bonds are down.
Stories/News from Seeking Alpha…
TikTok fate
What are the boundaries of the First Amendment? That’s a question that continues to be asked in the 21st century, as the tech revolution evolves from the dot-com era to social media and generative AI. At the forefront of the latest free speech discussion is TikTok, which has exploded in popularity in recent years and now has 170M users in the U.S. The app, however, is owned by Chinese parent ByteDance, prompting serious concerns that it can be used for espionage or algorithmic propaganda manipulation. Others call the worries overblown, even likening them to a new Red Scare.
Flashback: Former President Donald Trump 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, but their positions on the matter have since reversed following a national security review. President Biden signed the PAFACA Act in April, which effectively banned TikTok in the U.S. by 2025 (unless it was divested), while Trump has vowed to “save TikTok in America” after calling Facebook (META) the “enemy of the people.”
Things are now being hashed out in the legal system, where the case was presented before a three-judge panel in the U.S. Court of Appeals. “For the first time in history, Congress has imposed [an] extraordinary speech prohibition based on indeterminate future risks,” argued Andrew Pincus, a partner at Mayer Brown representing TikTok. “Data would be extremely valuable to a foreign adversary trying to compromise the security states, [for] knowing what Americans’ patterns are, who their contacts are, where they go, who they interact with, and what sorts of content interests them,” countered DOJ lawyer Daniel Tenny, adding that much of the government’s evidence is under seal as it could harm national security.
Outlook: The battle is likely to end up at the Supreme Court, which would decide on remedies or uphold a ban that may benefit rivals like Instagram Reels (META), YouTube Shorts (GOOG, GOOGL) and Snapchat Spotlight (SNAP). China has warned that any “such practice of resorting to hegemonic moves” would “inevitably come back to backfire on the United States itself,” though it’s important to note that Beijing doesn’t allow any American social media companies to operate within its borders. More importantly, the case will cement the U.S. national security playbook for dealing with China, which has already seen trade wars, export curbs and a heavy dose of protectionism.
Dig up the badges
Amazon (AMZN) workers will soon return to the pre-COVID setup of being in the office five days a week, according to a letter from CEO Andy Jassy issued to employees. “Before the pandemic, it was not a given that folks could work remotely two days a week, and that will be true moving forward – our expectation is that people will be in the office outside of extenuating circumstances or if you already have a Remote Work Exception approved,” he wrote. Amazon will also bring back assigned desk arrangements in certain locations and cut down the number of managers on teams. (77 comments)
Shrinkration
Cuba has reduced the size of its subsidized bread rations for citizens after the country ran short of wheat flour. The move comes against the backdrop of food shortages and a deepening economic crisis that has led to the exodus of almost half a million Cubans to the U.S. over the last two years. The bread ration is part of a decades-old subsidy scheme created by the late Fidel Castro for deeply discounted necessities, though the government currently provides only a fraction of the products under the program, which often arrive late and are of poor quality. (4 comments)
No more parties
Tupperware Brands (TUP) is reportedly preparing to file for bankruptcy as soon as this week and is planning to enter court protection. The preparations come after protracted negotiations between the company and lenders over how to manage its over $700M debt load. Demand has waned significantly in recent years and company announced in June that it will close its last remaining U.S. factory. The brand has also been impacted by intense competition, bad management decisions, a lack of innovation and its reliance on direct sales. (6 comments)
Today’s Economic Calendar
FOMC Meeting
08:30 AM Retail Sales
09:15 AM Industrial Production
10:00 AM Business Inventories
10:00 AM Housing Market Index
10:00 AM Fed’s Logan Speech
01:00 PM Results of $13B, 20-Year Bond Auction
02:00 PM Treasury Buyback Results
What else is happening…
WSB survey results: Cautious Fed seen taking cautious stance.
Group of Democratic Senators push Powell for 75-bps rate cut.
Microsoft rewards shareholders; Intel to make AI chips for Amazon.
Target (TGT) preps for the holiday shopping season rush.
BP (BP) will seek to sell U.S. onshore wind power business.
Boeing (BA) freezes hiring to help conserve cash amid strike.
Japan nears deal with U.S. to curb chip tech exports to China.
Red Lobster officially exits bankruptcy with a fresh start.
Smartsheet (SMAR) gains as PE firms near $8B acquisition.
Fossil fuels: AI boom driving resurgence of U.S. gas-fired power.
—————
Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets leaned up. Hong Kong, Taiwan, Thailand and the Philippines posted gains; New Zealand was weak; Japan and China were closed. Europe, Africa and the Middle East currently lean down. Poland, Turkey, Portugal, Israel, Austria and the Czech Republic are down. Futures in the States point toward a negative open for the cash market.
————— VIDEO: State of the Market —————
The dollar is down. Oil and copper are up. Gold is down; silver is up. Bonds are up.
Stories/News from Seeking Alpha…
Flight to safety
It’s the second assassination attempt on Donald Trump in two months. The incident occurred on Sunday at his golf course in West Palm Beach, Florida, where a man who was wielding an AK-47-style assault rifle hid in shrubbery along the perimeter. Several Secret Service agents fired on the gunman after he was spotted only a few hundred yards from where Trump was playing, prompting him to flee in a vehicle. He was later arrested 40 miles north of the golf course after license plate readers flagged his car on the I-95.
Mugshot: The media identified the suspect as Ryan Routh, 58, of Hawaii. In July, 20-year-old Thomas Crooks tried to assassinate Trump at a campaign rally in Butler, Pennsylvania, grazing his right ear with a bullet before he was killed by a Secret Service sniper. “Nothing will slow me down. I will NEVER SURRENDER!” Trump wrote after the latest incident, while rival Kamala Harris said she was “glad he was safe” and “violence has no place in America.”
These two episodes highlight the difficulties and tensions surrounding the 2024 election season. Things are very hot amid charged polarized campaigns, and big developments seem to be coming every other week, like President Biden’s withdrawal from the race. To note, there have been similar assassination occurrences in recent U.S. history, like the two attempts made on President Ford in 1975, which took place within 17 days of each other.
Market movement: Trump Media & Technology (DJT), which is known for its meme qualities and can follow Trump-related developments, rose 6% in early trading on Monday, though the gains are starting to fizzle before the market opens. The stock has fallen heavily since March on fears that the end of a lockup period could result in Trump selling a large chunk of his shares, but the former president pledged he wouldn’t do that on Friday, leading to somewhat of a rebound. For investors looking to play the elections through other market instruments, check out these politically driven GOP and Democratic funds.
Dragging on
The strike at Boeing (BA) could “go on for a while,” machinist union leader Jon Holden told NPR, saying workers have “the most leverage at the most opportune time that we’ve ever had in our history.” As many as 33,000 employees went on strike on Friday after rejecting a new labor contract, with the work stoppage expected to cost Boeing billions of dollars. “Historically, IAM 751 strikes have lasted 60 days on average,” Bank of America noted, adding that the planemaker will likely move closer to the union’s 40% wage hike demand. (2 comments)
Robo pact
Uber (UBER) and Waymo, the self-driving car company owned by Alphabet (GOOG, GOOGL), are expanding their existing partnership to bring autonomous ride-hailing to Austin, Texas and Atlanta. Paid ride offerings will be available in those locations starting in 2025. Uber and Lyft (LYFT) have ramped up deals with autonomous vehicle makers amid an increased adoption of the technology. Uber also inked a multiyear partnership recently to bring General Motors’ (GM) Cruise autonomous vehicles to its platform. (43 comments)
Winning streak
Larry Ellison, Oracle’s (ORCL) co-founder and technology chief, briefly overtook Amazon (AMZN) founder Jeff Bezos as the world’s second-richest person, after the software giant’s shares saw their best week since late 2021. Oracle gained 14.3% last week after its earnings topped expectations and its long-term targets impressed investors. The rally briefly lifted the net worth of Ellison, Oracle’s biggest shareholder, to $208.4B on Friday, but it has since come down to $197.7B. Bezos’ net worth currently stands at $204.4B, while Tesla (TSLA) CEO Elon Musk is No. 1 with a net worth of $252.8B. Take the WSB survey.
Today’s Economic Calendar
8:30 AM Empire State Mfg Survey
What else is happening…
Wall Street is alarmed about weaker consumer credit trends.
$150B OpenAI valuation requires change in corporate structure.
Gulf of Mexico drillers slowly resume activity in wake of storm.
Intel (INTC) is said to qualify for $3.5B in military chip grants.
Do queasy side effects mean the end of weight-loss drug hype?
Spacewalk win: Rocket Lab (RKLB) top weekly industrial gainer.
23andMe (ME) agrees to pay $30M to settle data breach lawsuit.
Cruise industry coasts into end of summer on another high note.
Bausch + Lomb (BLCO) exploring sale to handle planned spinoff.
Will U.S. gasoline prices drop below $3/gallon before the election?
—————