We were all just getting on the US-growth-is-so-amazing bandwagon, right? GDP was only up an annualized 1.6%, missing projections by a country mile. Personal spending was up a measly 2.5%, and a big ole trade deficit punched a hole in growth too. But we still got a hot inflation reading…which is why everyone is dumping stocks today. The worst combo: slower growth and hotter inflation. The Fed won’t cut, and you’re stuck with a softer economy.
We didn’t expect it to hit so fast. If you like these notes (Arrows) and manage money (or have someone managing your money), hopefully you’re watching Wall Street Beats (www.wallstreatbeats.com). Yesterday, I kicked off the morning segment with thoughts on cheap protection because of low vol.
Well, Zuck’s not flaunting the American flag on his hydrofoil this morning to the sweet tunes of John Denver. He’s begging for patience from his swivel chair blasting Cher’s “If I Could Turn Back Time” and Akon’s “Sorry, Blame It on Me”. Meta’s 1Q24 earnings miss sounded the alarm about billions more of AI spending in op ex and cap ex alongside concerns re pullback from China-based advertisers and softness in retail/e-commerce spend, per Reuters. But we know they’ll innovate. It will just be more costly, because they are further behind than you had hoped.
Hiring for white-collar is running at 1/3 of the pace of overall job creation, per BBG. We’re talking professional services, finance, and even tech. They estimate that 120k corp positions are gone from Chicago, LA and SF in the past year. Flatlines are happening in Austin and Miami too, so no one is immune. The yellow flag is the big pullback in temp-help employment. That’s what co’s chop when times get tough, because they shed part-timers before full-timers. 420k of those jobs went poof in the last 2 years. Vanguard notes that demand is for people making <$55k/yr.
I had to read the story twice. BHP is trying to buy miner Anglo American for $39bn, per Reuters. BHP is already the biggest miner. It offered an all-share deal whereby AA who spin off some South African stakes. The combo would create a heavy with 10% of the global copper mine supply ahead of a global shortage.
Warning-only read this if you want bad chicken references. Chipotle told its employees to stop eating chicken in its own meals because customers are gobbling up the protein, hampering supplies. In response, employees are squawking, not keeping their emotions cooped up inside. The take-away nugget of insight is that demand for pollo is broiling hot.
Micron is going to benefit too—expected to receive $6.1bn in grants and up to $7.5bn in loans in the US Chips Act awards, per Reuters
We’ve been talking about the debt loads and rough times for lower-end consumers, and Reuters is out with a story on a similar delta in the food space. Folks either want premium or cheap, not the middle, especially here in the US. Input costs are up, freight is more expensive, SNAP got cut, global supply chains were expensively rerouted…and co’s jacked up prices so high that people are segregating their purchasing choices.