November 27th - December 1st, 2023
Public equity and bond markets have remained relatively stagnant this week, reflecting a combination of mixed corporate earnings reports alongside improved consumer sentiment and economic indicators
The S&P 500 is down -0.24%, the Nasdaq is down -0.51%, and the Dow Industrials is up 1.12% WTD; despite mixed earnings, mostly positive economic news has helped stabilize equity prices and lower the VIX
The 10-Yr U.S. Treasury yield has decreased -0.132% to a current yield of 4.340%, whereas the 30-Yr U.S. Treasury yield decreased -0.102% to a current yield of 4.501%; despite quantitative tightening, the appeal of prevailing money market funds is enhancing the value of treasuries, fueled by the belief that interest rates have peaked
Crude oil prices increased 0.18% to a current $76.53/bbl while bitcoin decreased -0.12% to a current $37,760/coin; oil is largely unchanged in anticipation of geopolitical developments and the OPEC+ meeting
Wall Street is gearing up for rate cuts; interest-rate futures indicated last week a roughly 60% chance the Fed will lower rates by a quarter-of-a-percentage point by its May 2024 policy meeting, up from 29% at the end of October, according to CME Group data – the same data pointed to four cuts by the end of the year [WSJ]
Consumer confidence rose for the first time in four months; the Conference Board’s index rose from 99.1 in October to 102 in November thanks to US consumers’ optimism around short-term income, hiring prospects, and the slowdown in inflation [BBG]
Stocks and bonds have surged in November; with record investor balances in money-market funds, some analysts are optimistic that they have more room to run [WSJ]
Optimism among investors about a soft landing helped drive the most-actively traded gold futures contract to its highest close in six months on Monday; a decline in government bond yields have made gold more attractive in comparison, sending prices up 3.2% [WSJ]
In addition to equities and bond markets, housing prices, oil production volume, and the Indian rupee experienced significant developments this week
The Indian rupee has remained strong this year, the clearest sign that things are going well for the country; it has lost less than 1% of its value against the dollar this year, compared with a decline of more than 3% for the Chinese yuan, a roughly 9% fall in the South African rand and an 11% slide in the Japanese yen [WSJ]
While more than $2.2 trillion sat in the Fed's overnight reverse repurchase program facility this spring, that’s now below $900 billion; money-market funds have financed the wave of new Treasury bills being issued by the government [WSJ]
Americans are turning to ‘buy now, pay later’ more than ever to stretch their holiday shopping budget; the use of BNPL—which allows shoppers to spread payment over multiple installments—soared 47% from a year ago to $79 million on Black Friday, per Adobe [CNBC]
The US is now producing more crude oil than ever—13.2 million barrels per day, per the Energy Information Administration, topping the pre-Covid peak of 13.1 million; that copious amount is nearly double the volume from a decade ago and up from the ~5 million produced when Obama entered the White House, Bloomberg’s Steven Dennis points out [EIA]
Forecasters wanted to discount Black Friday this year, but they should have known discounts only make Black Friday stronger; despite analysts’ tepid outlook, the shopping holiday generated a record $9.8 billion in online sales in the US, a 7.5% increase over a year ago, according to Adobe Analytics [CNBC]
High home prices have proved more than sticky; the big reason: current homeowners, carrying mortgages that are far below today’s rates, are unwilling to move [WSJ]
M&A activity continues to remain depressed, although developments within pharmaceuticals, alternative energy, and insurance prove to be encouraging
Origin Energy’s board is leaning toward rejecting a new bid by Brookfield Asset Management and EIG Global Energy Partners that would see Brookfield pay $8.1B for Origin’s energy generation and retailing operations and EIG take the remainder of the assets [BBG]
Taisho Pharmaceutical Holdings’ management made a tender offer to take the Japanese drugmaker private at a ~$4.9B valuation [BBG]
John Bean Technologies offered $2.6B to buy all the shares of Icelandic food processing technology company Marel [BBG]
The German billionaire Schaeffler family increased its offer for electric vehicle specialist Vitesco Technologies to $4.2B after mounting shareholder criticism [FT]
PE firm TJC will acquire L3Harris Technologies’ commercial aviation solutions division for $800M [RT]
Trendy hometown Chicago food retailers Foxtrot and Dom’s Kitchen & Market are merging in an all-stock merger to create an entity called Outfox Hospitality [BBG]
Mark Cuban is working on a $3.5B sale of the Dallas Mavericks to Miriam Adelson, the largest shareholder of the Las Vegas Sands casino and resort company [AP]
Rocket Software, a Bain Capital portfolio company, will acquire Open Text’s Application Modernization and Connectivity business for $2.3B cash [PRNW]
Cigna, which now has a market cap of ~$77B, is in talks to merge with $59B Humana in a cash-and-stock deal to create a US health-insurance powerhouse; a deal could be finalized by the end of the year [WSJ]
Blackstone will take Rover Group, an online marketplace in the fast-growing market for pet-care services, private in a $2.3B all-cash deal [BBG]
Broadcom is reviewing strategic options for two business units of cloud computing firm VMware, which it recently acquired for $69B [RT]
Recent developments across four key industries highlight inorganic growth developments, cost-reduction, and hiring volatility
Energy & Natural Resources
Occidental Petroleum Shares ticked up slightly on Thursday after the Wall Street Journal reported that the company is in talks to buy CrownRock, a major energy producer in the west Texas area of the Permian basin [WSJ]
A new Environmental Protection Agency proposal would require utilities to replace all lead drinking-water pipes across the U.S. within the next 10 years [WSJ]
Technology, Media, & Telecommunications
TikTok is moving aggressively into e-commerce via so-called social shopping, a potential threat to U.S. e-commerce giants such as Amazon; TikTok aims to hav $20B of merchandise sold on its platform this year [WSJ]
OpenAI rival Hugging Face says it’s seeing more client interest after Sam Altman fiasco [CNBC]
Big tech companies including Amazon, Google, Microsoft and Meta are making strategic trims and changing their budget strategies to keep tight controls on costs, even as their businesses and stock prices rebound from the tech downturn [WSJ]
Once a major customer for UPS and FedEx, Amazon has surpassed both carriers in the number of packages delivered to U.S. homes and is on track to widen the gap this year [WSJ]
Healthcare & Life Sciences
A healthcare hiring boom is helping offset weaker job growth in other areas of the softening U.S. economy, boosting its chances of skirting a recession; the industry could serve as a strong job generator for years to come as an aging population and Covid-19 fuel widespread worker shortages and greater needs for healthcare services [WSJ]
Eli Lilly’s diabetes drug Mounjaro performed better for weight loss than Novo Nordisk’s Ozempic in a real-world study of overweight or obese adults [CNBC]
A potential tie-up between the health-insurance giants Cigna and Humana would be huge, giving rise to a company worth some $140 billion that could advance important goals sought after by both managed-care providers [WSJ]
Financial Services
Goldman says sharp drop in volatility is opportunity for hedging; spreads and collars on the S&P 500 are now attractive [BBG]
Goldman Sachs had big ambitions in consumer lending; it didn't work, and now Apple is pulling the plug on its credit-card partnership [WSJ]
Outside of standard macroeconomic updates and M&A developments, the Israel-Hamas truce and international election developments led news cycles
The chief brokers of the Israel-Hamas hostage-prisoner exchange are pushing to prolong the truce in Gaza and start talks that would end the war. The U.S., while still backing Israel’s objective to destroy Hamas, is hoping to minimize the bloodshed [WSJ]
“Dutch Donald Trump'' wins big in the Netherlands – Europe’s rightward march gained momentum last week when Geert Wilders’s far-right People’s Party For Freedom won a surprising majority in Parliament, opening the door for the anti-Islam, anti-immigration populist to become prime minister of the historically socially liberal Netherlands [RT]
Charlie Munger died at 99 – the investing guru and right hand to Warren Buffett at Berkshire Hathaway died in a California hospital on Tuesday, according to a company statement; independent of being Berkshire Hathaway’s vice chairman, Munger was a rockstar investor who served as CEO of Wesco Capital until 2011, when Berkshire took over control of the company [WSJ]
Henry Kissinger has died at age 100 – the controversial giant of American foreign policy served as secretary of state and national security adviser under Presidents Richard Nixon and Gerald Ford and advised other US leaders for years after, shaping much of the nation’s Cold War policy—including engineering the opening of the relationship between the US and China [CBS]
You might be able to get a whole new kind of Shein haul soon, as the Chinese fast-fashion company has reportedly filed confidential paperwork with US regulators for an IPO that could happen next year; the company known for all things cheap and trendy was most recently valued at $64 billion, but it might be seeking a valuation of as much as $90 billion when it goes public [CNBC]
The Transportation Security Administration screened more than 2.9 million passengers on Sunday, making it the busiest day ever recorded at US airports [A]
It turns out that many of our nation’s lawmakers are as exhausted by being a part of the chaos in Washington, DC, as we are reading about it; so far this month, 13 members of Congress have announced that they will not be seeking another term, the highest number in over a decade, per Axios [B]
Gavin McManus
Dec 1, 2023
