Everyone expects a pause today at 5.5%, with the potential for another rate hike shown in the revised dot plot by the Fed. But most investors are hoping for “patience” and “caution” with a final potential hike kicked into 2024 versus 2023. Whatever happens, they’ll get one more inflation release and jobs report, plus 3Q23 GDP data, before the next FOMC meeting on Oct 31-Nov 1. Wildcards are the UAW strike and the potential gov shutdown which could muddy the data waters. The only clear trend has been the reduced expectations for rate cuts.
Since July, the USD has been strong—catching investors, countries and companies off-guard. Japan and China have to protect their currencies. US companies’ earnings will be pressured. Foreign debts, commodities—basically anything priced in USD—is more expensive. Why? The unexpected strength of the US economy on a relative basis, and relatively attractive rate levels. CS estimated that for every 8-10% increase in the USD, on ave there’s a 1% decline in US co profits. Also, we know that emerging markets have a much harder time when the USD strengthens because they have to keep their rates up to keep money at home and prop up currencies. Below is the trading range for the UPP (USD ETF) on @mylongbow.
A drink in less than 5 min, is what customers are answering at SBUX. BBG is out with a story explaining how more than one-third of customers have to wait more than 5 min because of the insane number of drink combinations that people can –and do—order. Research firm Technomic estimates there are more than 383 bn possibilities for just a latte. When a drink costs the same amount as a sandwich, though, it’s hard to tell your customers to tone it down. Maybe give us simpletons a discount on our easy drinks?
In 2022, around 69% of young people aged 18-34 in Italy lived with their parents. Here, around 45% of Americans 18-29 are living with family these days, given the economic challenge of living independently. We’re now back to levels seen in the 1940’s when females stayed home until marriage. It’s more accepted socially, and there are a variety of reasons for the trend (per below). If higher rates keep cutting into growth, we may see that 45 number become more like Italy’s.
Luxury equities hit hard times, with slower Chinese growth and no signs of real stimulus for the Chinese consumer. But with analysts and investors already using that narrative, after a potential 3Q trough in earnings season, we may see an attractive non-consensus buying opportunity.
Tells you what investors think about IPOs that pop quickly. ARM and CART shown below.
Another story by BBG covers Dollar General and conditions so bad that investors are concerned. From rats to unsafe solutions asked of employees for combatting theft to expired food to machete-armed and watermelon-throwing customers, it sounds like pure misery. OSHA named them a “severe violator” of federal workplace safety law. Worse? Employees make less than at Walmart. But bananas are still a buck.
Is it my impatience, or do I just not care about the characters in the real life movie of SBF? His mom is in the news as the mastermind/puppeteer for the political action. Lawsuits abound. I can’t bother to click on the story to read more because it’s hard to feel anything for these characters.