Closing below the 4328 level last week was a big deal technically on a medium-term basis. Coming into today, the idea of higher-er and longer-er, as written by RBC, is reflected in markets, with investors realizing that most traders have never worked during a time when yields have been this high. The USD hit its highest level since March. The 10-yr UST yield is up, and mining shares are spooked again with China’s property problems still in sight, per our note below. Also, munis got smoked after the Fed meeting. Although we had been looking at the nice tax-adjusted yields beforehand, we didn’t bite….and we’re glad we didn’t. Gives us room this week to make new, more attractive decisions. Short term yields have been a great bridge this year.
Obviously, traders are watching rising oil prices because they’re a major driver of inflationary forces and, thus, central bank decisions. RBC notes that there has not been any demand destruction at these higher levels. Folks are driving. They note that consumers are bending but not breaking (or braking, for a nice pun)—and are adjusting spend from various areas to keep consuming. Russia’s ban on diesel/gas exports may be just the beginning salvo ahead of winter. Stockpiles at Cushing risk falling to the lowest level in almost a decade, per Bloomberg’s MLIV blog. GS not scared of higher oil prices…
The S&P 493 (the SPY minus 7 tech biggies) is up just 4% this year.
Some stocks were down a lot more than expected last week. The GS tax loss selling basket is down more than -18% YTD. So, if you’re looking for asymmetry…
Media stocks are up today, as screenwriters reached a tentative deal with Hollywood studios, settling 1of 2 walkouts that have shut down production. Union boards may vote tomorrow. Then, the striking actors will have to find a solution.
The SEC gathered thousands of private messages from folks at more than a dozen major investment companies (e.g., Carlyle, Apollo, KKR, TPG, Blackstone, Citadel). Apps like WhatsApp are the focus. We’ve already seen some firms pay hefty fines because of lack compliance and bad behavior. Looks like we’ll see more.
Amazon may spend $4 bn on a minority stake in generative AI start-up Anthropic, per the FT and Bloomberg.
META supposedly wants to attract younger users with an upcoming release of AI personality chatbots. I don’t know about your kids, but mine don’t even know that Meta exists.
Chinese formed long lines to get the new iPhone 15 from AAPL despite Huawei competition concerns. So much for the gov-kinda-ban.
The Eurozone was leading on the ESG front until the Russian invasion. Now, it’s about country security and their economies. Germany scrapped their plan for more stringent building standards, per Reuters.
China’s property stocks are down because Evergrande scrapped its restructuring plan given worse-than-expected property sales per Bloomberg and Reuters.
A Senior Nomura banker was banned from leaving mainland China, per the FT.
\Bloomberg says that > 21M Chinese are expected to travel during Golden Week. So, we’ll be watching where they go, what they do, and how they spend.
Our politicians are at it again, not getting along, so we’re facing another potential government shutdown. Aside from all the important implications we cover each time (late pay checks, lack of spending in key areas), this time the Fed may not get critical info for fall decisions.
Costco plans to start providing medical care through a deal with online marketplace Sesame: online primary care visits for $29, mental health visits for $79, and 10% off on other services. So, you can buy a cheap hotdog and then see a doctor about your poor eating habits.
German electricity prices are 2x as high as before the invasion. Demand was destroyed.
Earnings estimates have begun to come in, and instead of raising estimates, most recently, analysts are reducing them. Seems like when the market is up, they raise expectations. When the market is down, like last week, they lower them. The Street cut its aggregate Q3 2023 S&P estimate to $55.74/share last week, down 0.6% from the prior week. Now 3Q23 numbers are at levels closer to the start of August, erasing all upside revisions of the past 7 weeks. For 4Q23, analysts cut their numbers by 0.4% last week.