The 10-yr UST yields are around 5% for first time since 2007, per the FT. So, you’re starting to see some investors adding duration, despite the potential for higher-for-longer rates, per Reuters. We may see the MOVE move today, as Powell is going to speak, per Reuters. Jobless claims fell to 198k, the lowest level since Jan. So, people are hustling out there…which should support demand and inflation.
NFLX’s password-sharing-elimination initiatives look to be paying off, along with its content driving subscriber growth outperformance. Mgmt seemed confident on next year’s guidance. Stock jumped almost 15% as I am writing this note. They’re increasing prices, so add that to your budget.
ASML guided to a flat 2024. US restrictions on semi equipment suppliers aren’t going to change the landscape much for the company. So, now bullish eyes are focused on (i) a shortened length of the semi downturn and (ii) inventory unclogging. But if the duration is extended, or inventories creep up, it means that next year figures may be too high still. On the other side of the world, TSMC said things are improving, and their 3Q23 beat expectations, per the FT.
Google is starting its Pixel 8 smartphone production in India in time for sales in 2024. An increasing number of companies are looking for ways to move supply chains/production outside of China.
Japanese exports rose more than expected in Sep, and its trade balance swung to a surplus. If you invest internationally, this should be considered as part of your portfolio. Equities closed down hard, so stocks are getting a bit more attractive. The Nikkei was down -1.91% and the Topix down -1.36%.
GS has a macro piece out, arguing that higher-for-longer rates, with lackluster earnings growth, will challenge deploying and maintaining high levels of balance sheet leverage (obvious, but point taken), so credit investors could have a harder time.
US banks keep reporting on the pain in commercial real estate loans, per Reuters. Provisions for credit losses are rising, and charge-offs are increasing due to non-performing/delinquent loans. WFH is still here, and it seems like a feature and not a bug of the labor market. GS did a big write-down (50% reducing to office-related CRE holdings) which spooked folks on the call. MS set aside $134mm for credit losses, after $161mm set aside last quarter. So, the pain train is still running.
The stock was down hard after forecasting lower-than-expected 4Q23 profit due to higher expenses. Reuters is out with a story about concern rising for US airline investors, worried that the travel boom may be in the late innings. They note double-digit declines in airfares y/y. Ongoing wars, and their effects on energy prices, will continue to weigh on costs and route disruptions.