The US grew at a slower pace than previously thought in 2Q23 (2.1% versus 2.4%), which is giving doves another arrow in their quiver this morning. But we caution. The S&P’s multiple is over 19x, so a soft landing could keep multiples high, but a slowdown in growth could drive bond prices higher and equities lower.
Visa and Mastercard are increasing merchant fees this fall. So, if you own a business that accepts credit cards, you’ll be paying more—and may be forced to pass along these costs to consumers. Merchants, per BBG, could pay up to $502mm in yearly fees because of the increase, tacking that onto the already $93bn they pay to the 2 companies, a number that is up from $33bn in 2012. So, expect to see people walking around with more debit cards, cash, and checks as merchants incentivize behavior.
OpenAI is on track to generate $1bn of revenue annualized as more companies try to figure out ways to incorporate AI.
Instacart filed its S-1 last Friday, expecting to list on NASDAQ as CART. Instacart is going public soon on the Nasdaq under the ticker CART. Bernstein pointed out how the company gave a lot of metrics but failed to allay concerns about how grocers won’t diversify their models or go direct with other partners. On a positive note, they hold 56% share of orders under $75, and 74% of orders over $75 versus digital peers—but that market is only 30% of the market. 70% of online grocery is done by retailer-owned sites/apps. Most worrisome was the customer concentration, with its 3 partners representing 43% of sales. UBER and DASH are checking out their share and margins and revamping their playbooks, no doubt.
China is having financial firms examine the books of shadow bank Zhongrong. Traders are sniffing out a state-backed rescue. If China can get investors comfortable that the real estate crisis will be actively (and successfully) managed, then, Bloomberg notes that oil could rally. If not, then we may see oil drop.
Comments out of the BOJ lead traders to forecast inflation hitting 2% in 2024 followed by rate hikes. They say that the central bank should have a better picture in 1Q24.
RBC’s proprietary data pointed to July pump visits growing +2.4% higher, and August is tracking positively as well. Their useful GOAT (Get Out And Travel) dataset also supports strong travel/oil demand outlook too. Plus, you might have read that there seems to be another military takeover in sub-Saharan Africa, now in Gabon, an OPEC member.