Congressional leaders announced a bipartisan deal on top-line spending levels for the current fiscal year, which should help us avoid a partial shutdown on the 20th and give a path forward for both the Senate and the House to work on the details.
Boeing is down hard, on the back of this weekend’s newest in-air incident (you’ve probably seen the coverage of the panel blowing out of a brand-new Alaska 737 Max 9 jet). The FAA grounded 171 planes, orders were cancelled, and a plane full of people are less likely to fly in the future. So much for the CEO’s turnaround plan for 2024. Supplier Spirit is obviously down hard as well. You can read more here: Reuters. My favorite bit? That an iPhone survived the 16k fall and was still in working condition. I bet case companies are dying to find out if their case was on that phone.
Research analysts are pointing to EZ banks as a better stock pick than US peers—given valuation differentials as well as slower loan growth stateside, greater regulatory oversight, plus debt default concerns. The FT is out with a story about how large US banks face a sharp rise in bad loans due to unpaid debts and continued impacts of higher rates.
All the analysts are coming out with their full year predictions, and they don’t agree. MS’ Wilson is talking stalled equities, so his proposal is to go single-stock names plus factors/sectors—saying that the market can only improve if growth improves, per Bloomberg. JPM is warning of stretched positioning by investors. RBC is positive. And GS is predicting a good US corporate profit path—increasing +3% this year, at least.
Some investors are hoping buybacks fuel the market, per Bloomberg. S&P co’s spent nearly $800bn on buybacks in the past year, down ~20% from the same period the year before.
China sanctioned 5 US defense firms because they sold product to Taiwan. They also targeted French brandy imports, in an escalating trade dispute with the EZ, per the FT.
That was fast. Nvidia is planning mass production in 2Q24 of its regulatory-workaround-designed AI chip to comply with US export rules, per Reuters. China will be happy, somewhat.
Just when you think it couldn’t go from bad to worse. China’s equity markets fell overnight: Hang Seng -1.88%, Shanghai -1.42%, Shenzhen -1.85%, ChiNext -1.76%. They’re at a 5-yr low, per Bloomberg. In another Bloomberg story, Xi’s focus on high-value manufacturing could risk triggering a new trade war.
Fed futures are pricing in a 64% chance (v 67% pre-NFP and 91% on Jan 2nd) for the 1st rate cut by Mar 2024, post Fed’s Logan comments. Traders are pricing in 5-6 rate cuts during 2024, versus 7 during early Jan.
Being a Tesla Board Member, while enriching, has its challenges. Given the WSJ’s report on Musk’s drug use, it’ll be just another piece of evidence for disgruntled shareholders. (He’s not onto Ketamine, in case you aren’t keeping track as closely).