US FINANCIAL MARKET

US Two-Year Yield Falls to 4.8% Amid Fedspeak: Markets Wrap – Bloomberg, 11/28/2023

• Treasuries pushed higher, with traders wading through remarks from a slew of Federal Reserve speakers and the latest economic readings for clues on the central bank’s next steps.
• Two-year US yields dropped nine basis points to 4.8% ahead of a $39 billion sale of seven-year notes.
• The yield on 10-year Treasuries declined three basis points to 4.36%.
• The S&P 500 was little changed after the benchmark hit “overbought” levels in a rally that put the market on pace for one of its biggest November gains on record.
• The Nasdaq 100 rose 0.2%. The Dow Jones Industrial Average rose 0.3%.
• Micron Technology led losses in chipmakers after making a modest increase to its revenue outlook and projecting more operating expenses.
• Just a few days ahead of the “blackout period” in which Fed officials don’t talk publicly, Governor Christopher Waller said the recent slowing of economic activity may indicate policy is tight enough to contain inflation that still remains too high.
• Absent any big shocks, Waller noted he’s confident the US can pull off a soft landing.
• Fed Bank of Chicago President Austan Goolsbee noted inflation is coming down, but it’s not yet back to target.
• US consumer confidence rose for the first time in four months in November, aided by more optimistic views about the outlook for the labor market.
• Home prices hit a fresh record high, according to seasonally adjusted data from S&P CoreLogic Case-Shiller.
• PG&E said it will pay out a dividend for the first time in about six years as part of efforts by the California utility giant to restore its financial health after emerging from bankruptcy.
• Zscaler, a security software company, affirmed a forecast for 2024 calculated billings that fell slightly short of estimates at the midpoint.
• Adobe’s planned $20 billion purchase of design software maker Figma Inc. risks being blocked by Britain’s competition watchdog unless it offers up remedies to solve competition issues.
• Fast-fashion retailer Shein has filed confidentially with US regulators for an initial public offering that could take place next year, according to a person familiar with the matter.
• The Stoxx Europe 600 fell 0.4%.
• The Bloomberg Dollar Spot Index fell 0.4%.
• West Texas Intermediate crude rose 1.9% to $76.25 a barrel.
• Spot gold rose 0.8% to $2,031.21 an ounce.

Micron Lifts 1Q Revenue Outlook, But Expects Higher Operating Expenses – Market Watch, 11/28/2023

• Micron Technology expects revenue for its fiscal first quarter to come in better than it initially forecast, but the memory-chip maker also warned its operating costs will be higher.
• The company is now forecasting revenue of about $4.7 billion for the fiscal quarter, which ends Nov. 30.
• That is up from the company’s previous revenue guidance of $4.2 billion to $4.6 billion.
• Micron said the quarter benefited from a better balance of supply and demand that led to a better pricing environment.
• At the same time, Micron is now forecasting quarterly operating expenses of about $1.1 billion, up from its prior forecast of about $1.01 billion.
• The company is targeting an adjusted loss of about $1 a share, compared with a prior forecast of $1 a share to $1.14 a share.

Zscaler Stock Drops as Company Reporters Narrower Quarterly Loss – Wall Street Journal, 11/28/2023

• Shares of Zscaler fell after hours Monday.
• The cloud-based internet security company after the bell issued guidance for its current quarter and fiscal year.
• Investors may have concerns about its outlook after Zscaler kept its full-year billings forecast unchanged and moderately lifted its revenue outlook despite better-than-expected first-quarter results.
• Revenue climbed to $496.7 million, above analysts’ expectations, per FactSet.
• Adjusted earnings came in at 67 cents a share, above analysts’ estimates of 49 cents a share.
• Zscaler forecast revenue of between $505 million and $507 million, as well as adjusted earnings of between 57 cents a share and 58 cents a share for its fiscal second quarter.
• Analysts polled by FactSet expected $496.7 million in revenue and 52 cents a share in adjusted earnings.
• For fiscal 2024, Zscaler guided for revenue between $2.09 billion and $2.10 billion and adjusted earnings in the range of $2.45 a share and $2.48 a share.
• Analysts polled by FactSet expected $2.06 billion in revenue and $2.24 a share in adjusted earnings.

Cyber Monday Sales Hit Record $12.4 Billion Even as Savings Dwindle – Bloomberg, 11/28/2023

• US shoppers spent $12.4 billion on Cyber Monday, a record result demonstrating the continued resilience of consumers despite dwindling pandemic-era savings and high interest rates.
• Spending increased 9.6% from a year ago, making it the biggest online shopping day ever, according to Adobe, which compiles the data.
• Adobe had earlier adjusted upward its online spending forecast for the day based on stronger-than-expected spending on Black Friday and the popularity of buy-now-pay-later offerings that let shoppers stretch their budgets with credit.
• Buy-now-pay-later usage also hit a record high on Cyber Monday, Adobe said, contributing $940 million in online spending, up 42.5% over the previous year.
• The firm also said consumers used such credit facilities for increasingly large purchases.
• Cyber Week — the five days from Thanksgiving through Cyber Monday — generated $38 billion overall, up 7.8% from last year.
• Black Friday topped projections at $9.8 billion, up 7.5% from a year earlier.
• Thanksgiving spending of $5.6 billion was up 5.5%, Adobe said.
• So far this season, from Nov. 1 to Nov. 27, consumers have spent $109.3 billion online, up 7.3% from 2022.

US ECONOMY & POLITICS

US Home Prices Hit Record With Eight Straight Months of Gains – Bloomberg, 11/28/2023

• Home prices in the US extended their climb, reaching a fresh record high.
• A national gauge of prices rose 0.7% in September from August, according to seasonally adjusted data from S&P CoreLogic Case-Shiller.
• On a year-over-year basis, prices climbed 3.9% in September, compared with a 2.5% annual increase in August.
• Detroit, San Diego and New York were among the cities with the biggest price gains.
• The western part of the US remained the weakest, the data showed.
• In the four weeks through Nov. 19, new listings increased 5.2% from a year earlier, the biggest gain in more than two years, according to a report by Redfin.

US Consumer Confidence Stabilizes With First Rise in Four Months – Bloomberg, 11/28/2023

• US consumer confidence rose for the first time in four months in November, aided by more optimistic views about the outlook for the labor market.
• The Conference Board’s index increased to 102 this month from a downwardly-revised 99.1 in October, data out Tuesday showed.
• The median estimate in a Bloomberg survey of economists called for a reading of 101.
• A measure of expectations advanced amid a rebound in consumers’ assessment of short-term income and hiring prospects, while the group’s gauge of current conditions ticked lower.
• The share of consumers who said jobs were “plentiful” rose.
• Still, the difference between those saying jobs are currently “plentiful” compared to “hard to get” — a metric watched closely by economists as a gauge of labor-market strength — was little changed.
• A metric of expected inflation eased and a larger share of consumers said they expect lower interest rates in the coming year.
• The perceived likelihood of a recession over the next year fell to the lowest level in 2023, though around two-thirds still expect one to happen.

Senate Races to Finish Border Talks, Pass Ukraine, Israel Aid – Wall Street Journal, 11/28/2023

• Senate Republicans and Democrats are headed for a showdown over the government’s power to admit immigrants into the U.S. on humanitarian grounds, one element of tougher border restrictions GOP lawmakers are demanding to win their support for President Biden’s aid package for Ukraine, Israel and Taiwan.
• While bipartisan talks have made progress on tightening the initial screening process for migrants seeking asylum—a central demand of Republicans—a separate policy known as humanitarian parole has now emerged as a sticking point in negotiations, lawmakers said.
• Senate Majority Leader Chuck Schumer (D., N.Y.) said he hopes to hold a vote on the overall aid package next week.
• Biden’s $106 billion foreign-aid proposal includes money to speed up processing of migrants at the U.S.-Mexico border but no changes to policy to discourage asylum seekers from coming.
• For several weeks, a bipartisan group of senators has been working to strike a deal that would secure enough GOP support.
• Sen. Thom Tillis (R., N.C.), one of the lead negotiators, said talks on tightened asylum rules are making progress, but Republicans and Democrats remain farther apart on a GOP demand to rein in a separate immigration power known as humanitarian parole, which allows the president to temporarily let immigrants into the country who don’t otherwise qualify for a visa.

Fed’s Waller Says He’s More Confident Policy Is Well Positioned – Bloomberg, 11/28/2023

• Federal Reserve Governor Christopher Waller said he’s encouraged by a recent slowing of economic activity, which may indicate the central bank’s policy is tight enough to contain inflation that still remains too high.
• “I am increasingly confident that policy is currently well positioned to slow the economy and get inflation back to 2%,” Waller said Tuesday in prepared remarks for an event at the American Enterprise Institute in Washington.
• “I am encouraged by what we have learned in the past few weeks — something appears to be giving, and it’s the pace of the economy.”
• Waller also said long-term Treasury yields are still higher than they were before the middle of the year, and financial conditions overall are still tighter, despite a pullback since the Fed’s last policy meeting.
• “But the recent loosening of financial conditions is a reminder that many factors can affect these conditions and that policymakers must be careful about relying on such tightening to do our job,” he said.

Fed’s Bowman says she still expects another interest rate hike – Reuters, 11/28/2023

• The U.S. central bank will likely need to raise borrowing costs further in order to bring inflation back down to its 2% target over a reasonable period, Federal Reserve Governor Michelle Bowman said on Tuesday.
• “My baseline economic outlook continues to expect that we will need to increase the federal funds rate further to keep policy sufficiently restrictive to bring inflation down to our 2% target in a timely way,” Bowman said in prepared remarks to a banking association in Salt Lake City, Utah.
• Bowman, for her part, is less certain that will be enough, noting that inflation remains high and progress “uneven” and outlining in her remarks the “unusually high level of uncertainty” on the economic outlook.
• “In my view, given potential structural changes in the economy, such as higher demand for investment relative to saving, it is quite possible that the level of the federal funds rate consistent with low and stable inflation will be higher than before the pandemic,” Bowman said.

Powerful Koch group endorses Haley’s 2024 Republican presidential bid – Reuters, 11/28/2023

• The conservative U.S. political network led by billionaire Charles Koch on Tuesday endorsed Nikki Haley for the 2024 Republican presidential nomination, giving the former South Carolina governor a boost among party rivals struggling to make a dent against frontrunner Donald Trump.
• The influential group, which pushes for tax cuts and less government regulation, has made clear that beating former president Trump in the primaries is a top priority, as they think he would lose the November 2024 election to President Joe Biden.
• “We would support a candidate capable of turning the page on Washington’s toxic culture – and a candidate who can win. And last night, we concluded that analysis,” the Koch group, Americans for Prosperity Action, said in a statement.
• “That candidate is Nikki Haley.”
• The group said its internal polling confirms anecdotal reports from activists on the ground on what they are hearing from voters in states with early presidential nominating contests.

EUROPE & WORLD

PDD Surges 14% After Hit App Temu Wrests Shoppers From Shein – Bloomberg, 11/28/2023

• PDD Holdings surged more than 14% after reporting a stronger-than-anticipated doubling in revenue, as hit shopping app Temu ramped up discounts and marketing to grab consumers from Shein and Amazon.com.
• The Chinese-owned e-commerce platform reported a 47% surge in net income off sales of 68.8 billion yuan ($9.6 billion) in the September quarter, surpassing by about 25% the average revenue estimate.
• Its growth far outpaced Chinese rivals including Alibaba Group Holding, underscoring how it’s used promotions to woo bargain-seeking consumers at a time of economic uncertainty.

Shein files for U.S. IPO, as fast-fashion giant looks to resolve forced labor, climate concerns – CNBC, 11/28/2023

• Shein has confidentially filed to go public in the U.S. as the Chinese-founded fast-fashion juggernaut looks to expand its global reach with a long-rumored initial public offering, CNBC has learned.
• The retailer was last valued at $66 billion and could be ready to start trading on the public markets as soon as 2024, people familiar with the matter said Monday.
• It is unclear how much the company is currently worth, but its valuation has been a central point of debate among Shein and the advisors it’s working with, people familiar with the matter said.
• A confidential filing is common, as it allows companies to communicate with the U.S. Securities and Exchange Commission and make any necessary adjustments to their filings in private.
• The company has tapped Goldman Sachs, JPMorgan and Morgan Stanley to be the lead underwriters on the offering, the people said.

UK regulators say Adobe’s $20 billion Figma acquisition could harm competition – CNBC, 11/28/2023

• Britain’s top competition watchdog said Tuesday that Adobe’s proposed $20 billion acquisition of Figma could harm the U.K.’s digital design sector, findings that could mean a major setback for the merger.
• The Competition and Markets Authority said the deal could “eliminate competition,” “reduce innovation” and “remove Figma as a threat to Adobe’s flagship Photoshop and Illustrator products,” according to a release.
• The findings are provisional, but the regulator said it will investigate potential remedies, “which could include blocking the deal outright.”
• Adobe announced plans to buy Figma, which allows users to collaborate on app and website design, for $20 billion in September last year.
• In addition to regulatory probes in the U.K., the deal has been under scrutiny from the U.S. Department of Justice and the European Union.
• A representative for Figma told CNBC the company is “disappointed” by the CMA’s findings and that they “strongly disagree” with the idea that Figma competes with Adobe or will do so in the future.
• “The facts are Figma operates in a dynamic and highly-competitive market for product design and development, and Figma has not spent a single dollar or hired a single engineer to build creative tools,” the spokesperson said.
• Adobe said it is “disappointed” and disagrees with the CMA’s perspective.

Israel and Hamas Trade Blame Amid Claims of Truce Violations – Bloomberg, 11/28/2023

• Israel’s military and the Palestinian militant group Hamas accused each other of violating the deal that brought their war to a temporary pause, highlighting the fragility of the agreement.
• Israel Defense Forces said some of its soldiers were lightly wounded in three separate explosions and an ensuing shooting in the northern part of the besieged Gaza Strip.
• A Hamas official who is a spokesman for its military wing said “a field clash” took place after Israeli troops violated the terms of the cease-fire arrangement without elaborating how.
• It wasn’t immediately clear what the latest developments meant for the state of the agreement to pause fighting, which has been extended by two days beyond its original expiration on Tuesday morning.
• Hamas, which released about 50 hostages as part of the original agreement, is expected to free another 20 over the next two days, in exchange for a continuation of releases of Palestinian prisoners by Israel.

Factmonster – TODAY in HISTORY

• Portuguese explorer Ferdinand Magellan passed through the strait which bears his name to the Pacific ocean. – 1520
• American-born Lady Astor became the first woman to take a seat on the British Parliament. – 1919
• Churchill, Roosevelt, and Stalin met in Tehran for their first meeting during World War II. – 1943
• The U.S. spacecraft Mariner 4 launched—on its way to the first successful mission to Mars. – 1964
• Margaret Thatcher resigned as prime minister of Great Britain; John Major took over. – 1990

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