Investors were relieved to hear that the new windfall tax on banks will be capped in Italy. Yahoo notes that shorts are capitulating when market risks still exist. That echoes a story by Reuters on how hedge funds are gaining back lost ground versus indexes because they removed their short positions, but now their positioning is most bullish since Dec 2021.
We’ll get the latest US CPI data in 1 day and PPI in 2. Inflation expectations are headed back to a 9-yr high, meaning that people expect high inflation for longer.
Bernstein puts out a great Most (1) – Least (10) Crowded list once in a while. Their list incorporates price performance, analyst buy ratings, evaluation of estimates, active manager positioning, and institutional trade persistence. At the top of the crowded list? Amazon, Spotify, Take-Two, Liberty Formula One, WWE, Goog, Trade Desk, and T-Mobile. Meta is almost there. The least crowded list is telecom heavy, with Altice, Dish, Cable One, Charter, Roblox, Roku, Snap, AT&T, Lumen and Warner Brothers.
Treasury auctions were off to positive start, with the 3-yr note sale ending with a lower-than-expected yield, per Bloomberg.
New contract demands by the UAW are expected to increase labor costs by $80B+ for each of the biggest US automakers, per Bloomberg.
Bloomberg notes that US airfares should rise by 10% into year-end. There’s a BBG piece out this morning that notes that US airlines and travel operators are warning about lower results this fall because of stagnant demand to travel in the US.
We almost mentioned Country Garden yesterday, but weren’t sure if anyone knew about that name. Well, it’s in danger of a default to the scale of Evergrande, which you may remember. They didn’t receive their coupon payment on Mon, and they have 30 days to do so. It used to be the country’s largest private sector developer by sales. They have 4x the projects of Evergrande. Why should you care? Well, the global economy is affected by China’s economy, so if they go bust, investors and Chinese consumers are going to retrench even more. Also to note, China’s CPI inflation turned negative for first time since early 2021, per the FT.
