Looks like the Fed will hold steady at the next meeting, but Powell kept door open for rate hikes, saying they could hike if the data remained resilient and inflation remained high. In the Q&A, he said that policy is not too tight currently (cue the rate jump yesterday), but he also acknowledged geopolitical risks. Basically, he’s keeping his open door policy—open. If you missed his comments, you can read about them here: FT, Bloomberg.
RBC is out with a basket of stocks unduly punished by obesity drug headlines, saying that the impact of GLP1s is overstated. They report on a ratio of RRx to TRx (a proxy for refill rates) that is leveling out at a point below other diabetes and metabolic drugs. Side effects are real, so people reduce their dose or stop taking it. Also, they mention that studies from payers show that only 25-33% of folks who take the drug are on it 1 year later, and <20% lost more than 10% of their weight. They recommend $ETNB, $ABT, $ZBH, $SGRY, $HSY, $STZ, $KO, $WMT, $DPZ, and $COLD—just to name a few. Also, did anyone else see the story about how they’re working on weight loss shots for 6-year-olds? Maybe that’s the sign that their core adult market is not enough.
BofA says that the positioning in stocks is too bearish, so they’re flagging a “contrarian buy signal” which should drive a short-term equity rally, per Hartnett. Maybe they’re right. Did you see Amex’ results? Folks are still willing to pay annual fees for premium products. The Platinum card is at $695/yr. But we provide the other side as well. BBG is out with a story on vol. There’s more demand for short-term protection than the amount of vol available, most likely driven by heightened geopolitical events. The VIX curve is inverted, meaning that folks are more worried about the near-term than uncertain outer periods.
Housing affordability sucks, and that is a technical term. It’s at the worst level since the 1980s, with the current mo payments on a median-priced SFH at 33% of median household income (vs the long-term ave of ~21%, per RBC). At current prices, mortgage rates would have to drop to 3.5% to go back to the l-t ave affordability level. The worst versus historical comparisons include new hotbeds Miami and Ft Meyers, plus Charlotte.
We didn’t cover Musk’s cautious comments in our Arrows yet. But, could this be a smokescreen to cover the company’s pivot from being a volume car maker to becoming a Tier 1 supplier to OEMs? Maybe mgmt. is doing the math…
Blackstone raised an additional $3.2bn for its latest EZ real estate fund. This is its 7th EZ opportunistic fund. Now at roughly 10bn euros, the fund started investing in Sep with a target on logistics. But hasn’t there been a focus on logistics for years? Curious as to how the latest batch of funds will perform…
Chinese citizens are probably asking how much China should be spending abroad on its Belt and Road Initiative, when its economy is not doing too hot when compared to its steady-state pre-pandemic, and when considering the ticking timebomb of its property market that hasn’t bounced back despite stimulus measures, per Reuters. Sure, the recent economic data looked better than expected, but once pandemic comparisons subside, it will need to show consistent, attractive growth independently.
The co was strong in developed markets and in its consumer biz. Luxe and North Asia were a miss, mostly from travel retail de-stocking and weak sales in Hainan/South Korea. China was actually pretty solid. Beauty was strong. So, shareholders were relieved that they skated through earnings basically.
Forget EZ luxury and beauty names… take a look at the Chinese jewelry retailer Luk Fook. Holy cow (it would have been too easy to say Holy Fook)– +31% y/y for same store sales! Growth accelerated, and Golden Week was golden. It expects to beat its 2019 biz next year. So, now we know where the Chinese are spending.
The union SAG-AFTRA for striking Hollywood actors warned that they can’t dress up as their favorite film or TV characters because it would break the walkout’s rules, per CBS. So, they’re advising “generalized characters” such as ghosts, zombies or spiders. Maybe they’ll just dress up as Jim Jordan, a scary figure who keeps coming back to haunt those in his community and won’t take no for an answer.