Archive for December, 2023

• Morning News: December 11, 2023
  Eddy Elfenbein, December 11th, 2023 at 7:04 am

  Argentina Prepares for Milei to Start Shock Therapy

  What India Needs to Ditch Coal

  OPEC+ Will Need to Maintain Oil Cuts to End-2024, Citigroup Says

  What Ails Offshore Wind: Supply Chains, Ships and Interest Rates

  Occidental to Buy Oil Driller CrownRock in $12 Billion Deal

  The Power Vacuum at the Top of the Crypto Industry

  Bitcoin’s 2023 Rally Frays During Brief 7.5% Drop Toward $40,000

  If You Fight Inflation With Fed Rate Hikes, You Don’t Fight Inflation

  What’s Next for Interest Rates? An Era of ‘Peak Uncertainty’

  Rate Cut Pivot Can’t Come Soon Enough for Debt-Strapped Companies

  Abu Dhabi Is the World’s Newest Wealth Haven for Billionaires

  Real Estate Titans Battle DeSantis Over China Property Crackdown

  US Awards $35 Million to Defense Firm BAE in First Chips Grant

  Boeing Picks a Frontrunner to Be Its Next CEO

  This A.I. Subculture’s Motto: Go, Go, Go

  TikTok to Invest More Than $1.5 Billion in GoTo to Restart Indonesia E-Commerce Business

  Jack Ma’s Biggest E-Commerce Rival Is Coming for Amazon

  Amazon Suit Claims International Ring Stole Millions in Fraudulent Refunds

  Pinterest, Snap Upgrades Signal Brighter Advertising Outlook

  Macy’s Is Said to Get $5.8 Billion Offer From Investor Group

  Corporate America Is Testing the Limits of Its Pricing Power

  Who Should Run Universities?

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• Morning News: December 8, 2023
  Eddy Elfenbein, December 8th, 2023 at 7:02 am

  China to Step Up Fiscal Support to Strengthen Economic Recovery

  China Proposes Cut to Transaction Fees on Funds to Boost Market

  China’s Electric Car Factories Can’t Hire Fast Enough

  EU Considers Restarting WTO Case Against US Over Steel Tariffs

  U.S. and Mexico Try to Promote Trade While Curbing Flow of Fentanyl

  The New World Bank Leader Has the Climate Crisis at the Top of His Agenda

  You’re Better Off Going All In on Stocks Than Bonds, New Research Finds

  Double Trouble: Investors Fight the Fed on Two Fronts

  Investors Might Panic as Inflation Falls Further — Here’s the Stock-Market Call of JPMorgan’s Resolute Bear

  US Unemployment Rate to Tick Up Amid Early Signs of Recession

  How Bosses Won the Fight for Power in 2023

  Hottest Job in US Pays $80,000 a Year, No College Degree Needed

  Apple Aims to Make a Quarter of the World’s iPhones in India

  Microsoft’s Partnership With OpenAI Facing UK Scrutiny

  Honeywell to Buy Carrier Unit for $5 Billion

  Yellow Rejects Bid to Revive the Collapsed Trucking Company

  The World’s Most Anonymous CEO Is About to Take Center Stage

  Americans Rush to Portugal Ahead of Changes to Expat Tax Breaks

  World’s Richest Families Add $1.5 Trillion in Wealth

  Hermès Created Europe’s Biggest Family Fortune After Spurning LVMH

  The Record Rush to Buy a Rolex or a Patek Philippe Is Over

  Zombie TV Has Come for Cable

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• Morning News: December 7, 2023
  Eddy Elfenbein, December 7th, 2023 at 7:07 am

  The Last Hope for the World’s Fastest-Sinking Megacity Is a Noodle Billionaire

  U.S. Spending on Clean Energy and Tech Spurs Allies to Compete

  Hottest Job in US Is Still in Demand Despite Wind Energy Woes

  Frontier Carbon Removal Fund Makes $57 Million Bet on Crushed Rocks

  Woodside Energy, Santos in Merger Talks to Create Global Energy Giant

  China’s Exports Snap Half-Year Slide

  China’s Weak Trade Data Signals More Economic Pain to Come

  Ukraine Funding Fight Stokes New Fears Over US Reliability

  After So Many False Dawns, the Market Is Convinced the Fed Will Finally Cut

  Robinhood Launches Crypto Trading Service in the EU

  Dimon Says He Would Shut Down Crypto If He Had Government Role

  Salesforce Signals the Golden Age of Cushy Tech Jobs Is Over

  What a Slowing Jobs Market Might Mean for Interest Rates

  AI Drive-Thru Firm Reveals Humans Needed on 70% of Orders

  Once Unstoppable, Alibaba Is Now Faltering

  From Unicorns to Zombies: Tech Start-Ups Run Out of Time and Money

  Blackstone-Backed Candle Media Seeks Debt Help After Deal Binge

  How the Biggest Boutique Fitness Company Turned Suburban Moms Into Bankrupt Franchisees

  Elon Musk’s SpaceX Valued at $175 Billion or More in Tender Offer

  JetBlue Airways Lifts 4Q Forecasts on Strong Holiday-Travel Demand

  Shopping for Luxury Online Has Fallen Out of Fashion

  Hot Glazed Doughnuts on the Menu, and Parisians Can’t Get Enough

  McDonald’s Unveils CosMc’s, Its Answer to Starbucks

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• Morning News: December 6, 2023
  Eddy Elfenbein, December 6th, 2023 at 7:07 am

  Mongolia Seeks $11 Billion Green Finance to Reshape Its Economy

  How Russia Punched an $11 Billion Hole in the West’s Oil Sanctions

  The U.S. Gas Startup at the Center of an Epic Feud With Global Energy Giants

  Exxon Boosts Buybacks 14% as Hunt for More Oil Accelerates

  FTC Investigates Exxon’s $60 Billion Deal for Pioneer

  The U.S. Can Afford a Bigger Military. We Just Can’t Build It

  India Stock Value Tops $4 Trillion, Narrowing Gap With Hong Kong

  Trafigura Targeted by US and Swiss Prosecutors Over Corruption

  UK Watchdog Says Savers Lapping Up Higher Interest Rates at Banks

  Here Are the Rookie Mistakes Being Made by Millennial and Gen Z Investors

  Wall Street Donors Keep Wallets Closed as 2024 Race Heats Up

  Mortgage Refinance Demand Jumps 14% as Rates Fall to Lowest Point Since August

  Another Part of Commercial Real Estate Is in For a Reckoning

  How Nations Are Losing a Global Race to Tackle A.I.’s Harms

  SEC Head Warns Against ‘AI Washing,’ the High-Tech Version of ‘Greenwashing’

  Apple Set to Avoid EU Crackdown Over iMessage Service

  Tesla Suffers Fresh Legal Setback in Sweden Over License Plates

  Truck-Stop Billionaire Fights Warren Buffett to Increase $18 Billion Fortune

  P&G Bought Gillette 18 Years Ago. It’s Still Paying the Price

  Years After Monsanto Deal, Bayer’s Roundup Bills Keep Piling Up

  CVS Says It Will Change the Way Its Pharmacies Are Paid

  Can Wegovy Fight Alcoholism? For Big Pharma, This Isn’t a Priority

  Cigarette Giant BAT to Take $31.5 Billion Charge on U.S. Brands

  Obamas’ Vision for Hollywood Company: ‘This Isn’t Like Masterpiece Theater’

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• CWS Market Review – December 5, 2023
  Eddy Elfenbein, December 5th, 2023 at 6:32 pm

  (This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

  Coming Soon: The 2024 Buy List

  Before I begin, I have a special announcement. Circle your calendars for Monday, December 25, 2023.

  This year, December 25 is a very important day that millions of people look forward to. That’s the day I’ll unveil the 2024 Buy List. In honor of our new Buy List, the New York Stock Exchange will be closed that day. I’m deeply honored by this recognition.

  I always announce the new Buy List a few days before the end of the year so no one can claim I’m somehow messing with the pricing.

  I’m going to add five new stocks and sell six current stocks. We got an extra stock in the portfolio this year when Danaher spun off Veralto. We’ll bring the Buy List back down to its normal size of 25 stocks.

  The new Buy List will go into effect on January 2 which will be the first trading day of next year. For track record purposes, the “buy price” of each stock will be the closing price from December 29 which is the final day of trading for this year.

  All the stocks will be equally weighted based on the end of the year’s closing price. This will be the 19th year that I’ve made our Buy List public.

  Our ETF, the AdvisorShares Focused Equity ETF (CWS) is based off the Buy List, and we try to make the fund track our Buy List as close as we can.

  Speaking of our Buy List, yesterday we had a very good earnings report from Science Applications International (SAIC). The company is an important IT resource for the federal government, especially the Department of Defense.

  

  SAIC beat Wall Street’s earnings forecast by more than 30%. The company also raised its full-year guidance for the third time this year. Yesterday, the stock jumped more than 13% for us. I’ll have more details in this week’s premium newsletter. You can sign up for the premium letter here.

  Is the Labor Market Starting to Crack?

  On Friday, the S&P 500 closed at 4,594.63 which finally exceeded its high from July 31st.

  There’s some unusual symmetry at work. The first trading day in December surpassed the peak from the last day of trading in July. Now the next-highest peak came on the second-to-last day in March 2022. We’re still below the all-time peak which came on the first day of trading in 2022.

  This week is Jobs Week. Tomorrow, we’ll get the ADP private payroll report. Then on Thursday, the government will release the latest report on jobless claims. That leads us up to Friday when we’ll get the official jobs report for November.

  Until now, the labor market had been the solid base of the economy. As the housing market started to feel the heat of higher mortgage rates, we’ve still seen robust hiring. That may be changing.

  This morning, we got the JOLTS report for October. That stands for Job Openings and Labor Turnover Survey. According to the JOLTS report, job openings dropped to a 2-1/2 year low in October.

  The number of job openings fell by 617,000 to 8.72 million. That was below Wall Street’s expectations for 9.4 million. There are now 1.3 job openings for each available worker. Not that long ago, the ratio was 2-to-1.

  

  Interestingly, the “quits rate” didn’t change much. That’s an important number to watch because it’s a good barometer of how easy it is to change jobs. Or more precisely, how easy workers think it will be to change jobs.

  During the pandemic, the quits rate got to 3%. You probably remember a lot of talk of the Great Resignation. Now the quits rate is down to 2.3%. Workers have quit quitting.

  CNBC noted that “the biggest sector decline was education and health services (-238,000), followed by financial activities (-217,000), leisure and hospitality (-136,000), and retail (-102,000).”

  On Friday, the ISM Manufacturing Index came in at 46.7. Any number below 50 means that the factory sector of the economy is contracting. This was the 13th month in a row that the ISM was below 50. That’s the longest streak in more than 20 years. Generally, recessions have been aligned with ISM readings below 45.

  For Friday’s jobs report, Wall Street expects to see a gain of 190,000 net new jobs. That would be an increase over October’s sluggish gain of 150,000, but as important as any jobs gain is, I’ll be curious to see any wage gains. Unfortunately, inflation has taken a big bite out of wage gains.

  The unemployment rate for October was 3.9%. If the rate for November is 4.3% or higher, that would trigger the “Sahm Rule,” meaning that the U.S. economy would be in a recession.

  I discussed the Sahm Rule a few weeks ago. It’s a simple rule to see if the economy is in a recession or not. The Sahm Rule is easy to calculate. It says we’re in a recession when the rolling three-month average for unemployment is 0.5% or more higher than the rolling three-month low over the last 12 months.

  I doubt that unemployment will rise that much, but it’s not unthinkable. This news is taking a lot of heat off the Federal Reserve. The Fed meets again next week, and you can dismiss any idea that the Fed will hike interest rates. In fact, you can dismiss the idea for this week and the following meeting next month.

  Futures traders are indicating that there’s a 65% chance of the Fed slashing interest rates by 0.25% in March. A weak jobs report might increase those odds.

  I like to follow the Treasury yield curve and see what maturity is the highest-yielding one. These tend to go in cycles, from longest maturity to shortest and back again. This is a good way of spotting the peak in the interest-rate cycle.

  Lately, the highest-yielding maturity has been in the very near term. From late August through October, the highest-yielding maturity was the four-month Treasury. Then, through most of November, it was the two-month Treasury. For the last few days, it’s been the one-month Treasury. The current yield for the one-month bill is around 5.5%.

  Notice in this chart how the one-month Treasury (the black line) is now higher-yielding than both the one-year (blue) and five-year (green) notes. In fact, there’s a noticeably growing gap between the black and blue lines.

  

  That growing spread is the bond market’s way of telling the Fed to knock it off. The market currently thinks there’s a good chance that interest rates will be more than 1% lower by this time next year. That would be very good news for investors.

  Friday’s jobs report will tell us a lot. Next Tuesday, we’ll get the CPI data for November. There’s a good chance the S&P 500 will make a new all-time high before the end of the year.

  That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

  – Eddy

  P.S. If you want more info on our ETF, you can check out the ETF’s website.

• Morning News: December 5, 2023
  Eddy Elfenbein, December 5th, 2023 at 7:05 am

  China Evergrande’s Crash Was Accelerated by Questionable Accounting

  Moody’s Cuts China Credit Outlook to Negative on Rising Debt

  European Countries Differ Over Windfall Taxes on Banks

  U.S. Export Controls Need to ‘Change Constantly’ Even If It’s Tough for Businesses, Secretary Raimondo Says

  Did Markets Go Too Far, Too Fast Is Debate to Dominate December

  Apollo CEO Says It’s Getting Harder to Beat Public Markets

  US Examined Hindenburg Allegations Before Giving Loan to Adani

  The Supreme Court Battle That Could Rewrite the Tax Code

  The Pentagon Wants to Root Out Shoddy Drugs. The FDA Is In Its Way

  Nurse Shortages Are Set to Get Even Worse With Mass US Visa Delays

  Signs of a Weakening Job Market, in Five Charts

  Spotify’s Layoff Memo and the Art of Delivering Bad News

  Meta, IBM Create Industrywide AI Alliance to Share Technology

  The Heat Rises at COP28

  It Could Be a Vast Source of Clean Energy, Buried Deep Underground

  A Pipeline Giant Is Helping to Push Texas’s Power Grid to the Brink

  Can This Startup Revive Soviet-Era Hydrofoil Tech?

  Tesla Risks Car Shipments to Sweden Blocked Across Nordic Region

  TuSimple Winds Down U.S. Operations as It Looks for Buyer

  Yellow Rivals Scoop Up Truck Terminals in Bankruptcy Auction

  The Rise of Temu’s Chinese Parent Will Reshape E-Commerce

  Podcast Companies Begin to Advertise Like Hollywood Studios

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• Morning News: December 4, 2023
  Eddy Elfenbein, December 4th, 2023 at 7:04 am

  How Suspects Laundered Billions in Singapore for Years

  World’s Most Indebted Developer Evergrande Wins Breathing Room

  China Rips US for Seeing It as ‘Enemy’ After Raimondo Remarks

  Why More Chinese Are Risking Danger in Southern Border Crossings to U.S.

  Here’s How to Invest in Gold as It Hits an All-Time High

  Bitcoin Surges Past $42,000 as Crypto Rally Gathers Steam

  Bull Market in View After S&P 500 Hits Fresh Year-High

  Goods Deflation Is Back. It Could Speed Inflation’s Return to 2%

  Why Biden Touts Jobs When Americans Care About Prices

  The IRS Froze a Big Tax Credit. It Didn’t Stop All the Money From Flowing

  Billionaire Tax Rests on a Disputed $14,729 Refund at the Supreme Court

  Nobody Wants to Be a Bank Examiner Anymore

  Alaska Air Agrees to Buy Hawaiian in $1.9 Billion Deal

  Ego, Fear and Money: How the A.I. Fuse Was Lit

  Why Doctors and Pharmacists Are in Revolt

  Supreme Court to Hear Challenge to Controversial Purdue Pharma Deal

  Ozempic and a Protein Shake: Food Makers Prep Weight-Loss-Drug Side Dishes

  Elliott’s Push at Phillips 66 Looks Familiar

  Spotify to Cut 1,500 Jobs After Spending Spree

  Virgin Galactic Shares Plunge in Premarket After Branson Rules Out Further Investment

  CEOs Try to Beat Their Rivals in Softness and Cuddle-ability

  Global Advertising Growth Is Expected to Slow in 2024, Excluding Elections Spending

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• Morning News: December 1, 2023
  Eddy Elfenbein, December 1st, 2023 at 7:03 am

  Oil’s Wild Ride Is Driven by a Disruptive Band of Bot Traders

  Climate Protesters Get in Fed’s Face as Policy Clash Grows Louder

  European Banks Stuck in Trough Amid Profit Concern, Goldman Says

  Fears of a New World War Prey on Hedge Fund Titans and Policymakers Alike

  Wall Street Seeks to Rally Americans to Fight Against Bank Rules

  Fed’s Interest Rate Hikes Are Probably Over, but Officials Are Reluctant to Say So

  A Grad-School Number-Cruncher Shakes Up the World of Bond Quants

  A $6 Billion Settlement Threatens to Upend US Bankruptcy Deals

  Binance’s VIP Traders Got Sneak Peek of Record US Crypto Penalty

  Microsoft Is Happy Being the Co-Pilot on the OpenAI Rocket Ship

  Yaccarino’s Memo to X Staff Calls Musk ‘Candid and Profound’

  Advertisers Say They Do Not Plan to Return to X After Musk’s Comments

  Alibaba Gets Rare Wall Street Downgrade as Rival Gains Traction

  Judge Halts TikTok Ban in Montana

  Nelson Peltz Launches Fresh Proxy Fight Against Disney

  With Offices Sitting Empty, Landlords Are ‘Handing Back the Keys’

  Airbnb Is Conquering Italy. One City Is Fighting Back

  Is the Holiday Shopping Season Going to Be a Success? The Answer Is Murky

  Americans Are Finally Turning Frugal After Splurging Over Summer

  Neiman Marcus Rejects $3 Billion Takeover Bid by Saks

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