US consumer prices are up for the 2nd mo. So, equity bulls hoping for deflation signs are going to have to wait a bit longer. Core CPI (ex food/energy) increased 0.3% in Sep. Overall CPI was up 0.4% due to energy strength. There’s only about a 40% bet on another Fed hike this year. Shelter prices are up (biggest increase in hotel stays in 2 yrs). Services prices were up 0.6% m/m. UST yields climbed, with the 2-yr UST yield up 8bps to 5.1%. Dollar up too. Plus, alcohol prices are up the most in 11.5 years, per BBG.
UBS is reporting that CTAs quickly built a big short position in equities (-16% of AUM, which is a level they’ve only pushed past 4% historically). They’re also short bonds, and to unwind that position, UBS posits that they’d have to see a major bond rally (>40-50bps). They expect flows to continue to be bearish US small + mid cap, and bullish TWSE and NDX and gold.
Although the airline beat estimates (including on profit after a strong summer), mgmt. trimmed their full year outlook because of costs (energy and maintenance). Demand appears strong. Pair this news with the other story out today—that airlines are trying to find the fake parts in their fleets—including inside jet engines.
It’s in final review—watch out for a new US rule banning advanced AI chip sales to China, per Reuters.
Analysts are moving up US earnings forecasts the most since 1Q22, per Bloomberg, ahead of the prints.
Mgmt said they will cut $1bn in costs in 2024, after missing on profits. They’ll also cut cap ex by $600mm. Welcome, new CEO Wentworth.
We’ve been warning you about potential moves by the Chinese gov. The sovereign wealth fund has been buying shares in Chinese big banks. While it hasn’t moved the needle on stock prices, perhaps they’re just looking to profit on moves they make next. Bloomberg says they plan to do more purchases in the next 6 mo. Also, China banned new offshore brokerages accounts to keep money inside the mainland, per Reuters.
The unions identified staffing as the biggest challenge facing workers and are focused on improving conditions for existing workers and attracting new hires. Over 11% of union job positions are vacant. There’s a lot of reasons for the challenge—more old people needing more services, tons of burnout causing departures, not enough faculty at med schools, which limits the student population to be trained…and the list goes on. So, thank the folks that take care of you, since they are caught in the middle: organizations asking them to do more for less, and patients seeing care levels drop.
As snippets come out of the SBF trial, it’s REALLY hard to have empathy or sympathy for the kids involved. Ellison, the former GF of SBF, prepared 7 alternative balance sheets to conceal Alameda borrowing from FTX customers. Then, there’s that mere $1bn bribe in China to get assets unfrozen. And even Scaramucci is involved, connecting the motley crew with the Saudi Crown Prince. You can’t make this stuff up.