The Treasury Department's assistant secretary for financial markets Josh Frost released a report on Wed detailing the gov’s plan to deal with the US’ big (and getting bigger) debt load, which includes selling more shorter-term notes (3-yr and 10-yr) instead of long-term notes (20-yr and 30-yr) that are dragging us down. Alongside the Fed’s decision to pause, rates declined—with the 10yr yield down closer to 4.65% as of this morn. Powell said they’re focused on whether rate hikes are finished or not, per Bloomberg. During his talk, he downplayed concerns over scarce bank reserves, saying he’s comfortable with continuing QT, per Bloomberg.
“Weak demand” is one of the top trending phrases on earnings calls, and if the pace continues, per NoSo, it would be the highest usage on record. Are they sand-bagging or telling us to stop the US stock melt-up?
SBUX beat on both the top and bottom lines. Stock is up. Same store sales up 8% versus expected 6%. More transactions + Larger orders = Consumer not stopping.
Ozempic and Wegovy who? Mondelez beat on organic sales and EPS. Tate’s and Oreos are going strong. Mgmt is not seeing an impact from GLP-1 offerings. We keep hearing from other mgmt. teams, though, singing a different tune. Target’s CEO was on CNBC telling a cautious holiday tale, including in grocery. He says folks are buying less. So, they’re managing inventory more tightly. Let’s boomerang a bit more and mention that PayPal upgraded its EPS guidance based on payments volume growth underpinned by resilient US consumer spending…so someone needs to analyze the data and figure out what’s going on.
Shopify stock popped after a big beat, plus an annual expected growth rate of the mid 20’s, including 4th q rev growth in the high teens. Mgmt has been managing costs more tightly, shedding labor, divesting its logistics unit and Deliverr.
The UK’s BoE left its rates at a 15-yr high (5.25%) at the same time its economy and inflation are weakening, per Bloomberg. Know when you made a poor decision? Business leaders in the UK are asking to rethink the tourist tax, per the London Times. Also, they’re announcing—don’t even think about rate cuts right now.
The EZ manufacturing downturn continued in Oct with new orders down hard, per Reuters. German unemployment was higher than forecasted, per Reuters. The EZ is having a tough slog.
Japan’s PM announced an $87.1 bn extra budget spend to boost growth, per Bloomberg. Everyone else is fighting inflation, and they’re encouraging it. Japan markets were up: Nikkei up 1.10% and Topix up 0.51%.
An ex-PBOC adviser claims that China’s 2024 growth could exceed that of 2023, per Bloomberg. The world hopes he is right.
AAPL earnings are tonight. Interestingly, positioning is low, per GS, at a 6 out of 10 (this is lightest GS has seen for AAPL into a Q in a very long time). Sentiment remains downbeat, with hedgies feeling neutral. So, if there are any surprises (good or bad), expect price action as folks jump in. Otherwise, could be muted.
More people are having a harder time finding work. While companies are still adding jobs, and the overall unemployment rate is low, the pace of hiring is slowing…so it is taking longer to find a new job.
