Not sure if most US investors care that the BOE left rates unchanged for the 1st time in roughly 2 years at 5.25% after a fall in inflation in Aug. Instead, investors focused on the Fed action from yesterday, with UST yields up again with the USD because jobless claims data just came in hot, supporting the higher-for-longer-and-don’t-even-think-about-rate-cuts-yet view. So, what do you do with that? It’s early for duration in fixed income, so the short end still looks attractive to pick up yield. Rates on munis don’t look as exciting, and neither does high yield versus their risks. So, select intl equities and some structured products may provide a better use of capital. But watch out for the down-dollar trade. We could see the USD holding stronger-for-longer, which has a host of other implications.
FedEx reported strong revenues and profits after solving its cost challenges for Ground and taking out a ton of general costs which should provide solid leverage for the next up-cycle. Q1 EPS $4.55, consensus $3.73. Mgmt narrowed guidance for FY24 EPS to $17.00-$18.50 (consensus $17.50).
Darden noted more “softness” from households making >$125k versus last year. With eating out so expensive these days, it’s not a surprise. Fine-dining is getting hurt. They say they’re not focused on cutting price but instead looking to offer value, even if traffic suffers.
Cisco is buying cybersecurity co Splunk for $28bn, which is roughly a 31% premium. Splunk is up, Cisco is down. The deal is about AI, in addition to security, plus more subscription s/w revenues versus one-time h/w purchases.
Rupert is stepping down as Chairman of Fox and News Corp. Also saying goodbye are BlackRock, State Street, Columbia Threadneedle, Janus, Hartford…and the list goes on…of companies closing ESG funds. BBG reports that more US sustainable funds closed in 2023 than in the prior 3 years combined. A third goodbye? Potentially Google to Broadcom. They may drop them as an AI chip supplier and say “hello” to Marvell. And a fourth? Anyone else fascinated how so many Chinese top officials keep disappearing? Foreign minister gone. Defense chief gone. Rocket Force staff gone. A fifth’s the charm. Goodbye to Instacart’s IPO surge.
Couldn’t help it. India is saying goodbye to Canadian visas, as the diplomatic row escalates between the two countries. If we didn’t have the writers’ strike, we’d probably be gearing up for a mini series about Indian gov agents assassinating a prominent Sikh leader on Canadian soil.