Enjoy your weekend? Well, it’s back to work with a data-packed week. Thurs is the Fed-fave PCE price index, which is expected to be up—on the back of healthy CPI and PPI readings. You’ve also got big UST and corp issuances this week ($35 bn) and mo-end repositioning.
Berkshire is hoarding cash (a record $167.6 bn last q) because they don’t see any attractive deals. So, where does that leave you, p/e—and institutional investors in the category? Op inc was up. Buffett is still hot on Japan, especially trading firms.
There are only 2 new supertankers coming online to the oil tanker fleet in 2024, the fewest in roughly 40 yrs and ~-90% below the annual ave this millennium. Add on Red Sea disruptions, and you’ve got a recipe for higher prices, no? GS is estimating only +$2 more per barrel for Brent. Similarly, Reuters is talking about UK exporters warning about Red Sea effects.
Ford paused its F-150 Lightning trucks because of a quality issue, per Reuters. Auto News reported that at least hundreds, if not thousands, of 2024 gas-powered F-150s were sitting in storage lots in Michigan since Dec. Jeep is cutting prices, per Bloomberg. BYD is launching an electric supercar to compete with Ferrari, for a cool $233k. Everyone and their brother are wondering about Rivian.
Zealand Pharma popped after posting solid results from a trial of a liver disease treatment that doubles as a weight loss drug. Are we headed towards chemical-induced slimming like in Shallow Hal, or are we going to find out in 20 years that it’s more like Wall-E? With Domino’s 4Q23 sales beating expectations due to “emergency pizza” promotions, we’ll see…
Chinese local govs can’t or won’t issue bonds to stimulate growth, so folks are expecting Beijing will borrow more, per Bloomberg.
As of today, AMZN is in the Dow. Walgreens is out. Next, for Project Oldschool Runway..
BBG is out with a story on cat bonds, which are basically a way for insurers to offload massive (cat-astrophic) risk to other people. But, those disasters only accounted for 14% of global losses last year. Bad thunderstorms and other secondary risks caused most of the damage, so they have to retool their risk metrics to reprice these bonds. Investors have been making a killing on them. But now that more folks are piling in, the old pros are changing their strategy, focusing on single-event risks and excluding secondary perils.
GS and MS are holding onto the riskiest parts of new CLOs (equity), to gain market share—especially new and key clients. These folks just got out of the hung buyout loans made at the end of the cheap-money era, so they’re back at it—but in a different security’s capital structure.
It was nice seeing one of my GOOG friends over the weekend. The topic of co perks came up, and you’ll be relieved to know that snacks remain in full swing at key tech co’s. Expensive drinks have seen pushback (ex caffeine-related ones), but pull that lever for unlimited gold fish and chocolate.