Buffett shared on CNBC that Berkshire bought $20 bn of Treasuries over the past 2 weeks, and "the only question for next Monday" is whether to buy 3- or 6-month UST. On the duration side, Bill Ackman thinks that the 30-yr UST is overbought, because he is projecting the 30-yr yield to hit 5.5% if inflation stays high and sticky. Right now, the 10-yr yield is at a 9-mo high. The Treasury is going to issue $103bn of securities next week, a bit more than forecasted.
We’ve got $AMZN and $APPL prints later today. $APPL supposedly will have its 3rd year of revenue declines. $AMZN is expected to show solid high single digit growth, but everyone will be watching the cloud computing unit, and listening for the code word: AI.
Labor productivity is up—the greatest increase in 3 years, working to offset higher labor costs for companies. Productivity rose 3.7% annualized. Unit labor costs rose 1.6%. Why care? Well, higher productivity helps offset the inflationary impact of higher wages and other labor costs. Hourly comp was up 5.5%, net of inflation it was up 2.7%–the first increase in roughly a year.
The BOE increased its key rate by 25bps. They spoke of tough inflation that may require tighter borrowing conditions for longer.
Tesla’s China deliveries were soft. Even with all the discounts and incentives, buyers aren’t jumping in. Qualcomm gave a soft forecast for smartphone processor demand. Paypal’s profits were down, but more importantly, they had to sideline more cash to cover bad loans made to merchants.
Saudi Arabia extended its oil production cut another month and said they could keep the reduction going—or make it even more scarce. Output will be at around 9mm barrels/day. Our scuttlebutt is that players are closely watching how soft China demand is, plus the moves that Russia and the Wagner Group are making in Africa, which could create another dimension to the oil supply game.
BBG is out with a story on how Insight Partners, a vc firm out of NY, publishes stats on its interns in a “Hunger Games” fashion. Logging their phone calls, emails, meetings, etc. and then displaying rankings on a leaderboard sounds like a Hollywood movie in the making.
The BOJ intervened for a 2nd time this week, after the 10-yr yield hit a 9-yr high of 0.65%. The unscheduled move pushed the rate just below that level, but the rate is solidly above last week’s rate. Mizuho sees yields potentially reaching 0.7% in a week.