US FINANCIAL MARKET

Dow Moves Higher, Salesforce Rises; Investors Await Tesla Cybertruck News – Wall Street Journal, 11/30/2023

• Bond traders, rejoice: November was finally your month.
• The Bloomberg U.S. Aggregate bond index is up 4.8% in price this month.
• That puts the widely tracked index on course for its best month since the 1980s, according to FactSet data, after a sharp unwinding of rate-hike expectations sent investors on a bond-buying spree.
• Stocks, international currencies, and bitcoin have also rallied, with traders betting the Fed is done lifting interest rates as inflation continues to ebb.
• On Thursday, the latest personal-consumption expenditures price index—the Fed’s preferred inflation gauge—offered the latest sign that pricing pressures are softening.
• The Nasdaq Composite is up 11% in November, on track for its best month since July 2022.
• Tesla, which is poised to start delivering Cybertrucks, has added more than 20%.
• The Dow industrials climbed about 0.9%.
• The tech-heavy Nasdaq fell 0.5%, while the S&P 500 was roughly flat.
• Salesforce’s stock rose, lifting the blue-chip Dow, after the business-software company reported results last night.
• The yield on the 10-year U.S. Treasury note ticked up, rising to around 4.32%, after three days of declines.
• The OPEC cartel agreed to new oil-production cuts.
• Benchmark U.S. oil futures fell to below $77 a barrel.
• In Europe, the Stoxx Europe 600 inched higher and the euro weakened after inflation in the eurozone was lower than expected for the second straight month in November.
• Tesla will update consumers and investors on the Cybertruck.
• Dell, Marvell and Ulta Beauty are on deck to report earnings after the close.

Salesforce shares jump on better-than-expected earnings report – CNBC, 11/30/2023

• Salesforce shares rose more in extended trading on Wednesday after the cloud software vendor reported fiscal third-quarter earnings that topped analysts’ estimates.
• Revenue: $8.72 billion versus the $8.72 billion expected by LSEG.
• In its biggest unit, which provides customer support, Salesforce saw revenue jump 12% to $2.07 billion.
• Revenue in the sales software segment also rose 12% to $1.9 billion.
• Platform and other revenue, which includes Slack, increased 11% to $1.69 billion.
• Earnings: $2.11 per share, adjusted, versus the $2.06 per share expected by LSEG
• Salesforce on Wednesday raised its fiscal 2024 forecast for operating cash flow growth to 33% from 30%.
• It also said revenue for the fiscal fourth quarter will increase about 10% to between $9.18 billion and $9.23 billion.
• Analysts were expecting revenue of $9.21 billion, according to LSEG.

Snowflake earnings smash expectations as CEO cheers ‘stabilizing’ conditions – Market Watch, 11/30/2023

• Snowflake’s stock rocketed higher in Wednesday’s after-hours action as the software company delivered upbeat results and impressed with its forecast.
• Revenue rose to $734 million from $557 million, while the FactSet consensus was for $714 million.
• Product revenue was $698 million, while analysts were looking for $669 million.
• The company reported $3.7 billion in remaining performance obligations for the latest quarter, up 23% on a year-over-year basis.
• Snowflake’s net revenue retention rate was 135%, and the company had 436 customers with trailing-12-month product revenue in excess of $1 million.
• On an adjusted basis, Snowflake SNOW, 4.43% posted earnings per share of 25 cents, up from 11 cents a year before, whereas analysts tracked by FactSet were modeling 16 cents.
• For the fiscal fourth quarter, the company expects $716 million to $721 million in product revenue.
• The FactSet consensus was for $696 million in product revenue.

Kroger offers cautious guidance amid food-at-home disinflation – Market Watch, 11/30/2023

• Kroger posted better-than-expected third-quarter earnings early Thursday, but the supermarket chain offered cautious guidance for the full year, citing continued near-term economic pressures and food-at-home disinflation.
• Sales fell to $33.957 billion from $34.198 billion a year ago, while FactSet was expected $33.903 billion.
• Same-store sales excluding fuel fell 0.6% to match the FactSet consensus.
• Adjusted per-share earnings came to 95 cents, ahead of the 91-cent FactSet consensus.
• The company is seeing more high-income customers looking for value, while the more budget-conscious are under significant spending pressure, he said.
• Kroger tweaked its full-year guidance and now expects same-store sales excluding fuel to be up 0.6% to 1.0%, while FactSet expects a 1.0% rise.
• It expects adjusted EPS to range from $4.50 to $4.60, which compares with prior guidance of $4.45 to $4.60 and a FactSet consensus of $4.51.

OPEC+ Agrees to Significant Oil-Production Cut – Wall Street Journal, 11/30/2023

• OPEC+ agreed to a significant production cut of another million barrels a day, delegates said, in a move that will likely send prices higher amid the continuing conflict in the Middle East.
• As part of the deal reached Thursday, Saudi Arabia also agreed to extend its cut of 1 million barrels a day that it announced in June.
• Taken together, the moves are expected to push prices up at a moment when geopolitical tensions are high, especially in the Middle East.
• The cuts could draw a rebuke from the U.S., which slammed the 13-strong Organization of the Petroleum Exporting Countries and its 10 Russia-led allies for agreeing to a cut of 2 million barrels a day last year.
• OPEC’s meeting, typically held in Vienna, was conducted virtually after being delayed last week due to disagreements over the cuts.
• The meeting involved heated debate over the size of the proposed cuts and how they would be distributed among members, delegates said.
• The exact details of the compromise, if any, weren’t clear.
• Despite the strains, the cartel and its allies agreed Thursday to bring in Brazil, South America’s largest oil producer, as a new member of OPEC+, the delegates said.

Ford Lost $1.7 Billion in Profits from UAW Strike – Wall Street Journal, 11/30/2023

• Ford Motor has provided a new annual earnings forecast after previously withdrawing guidance due to the United Auto Workers strike, which the auto giant said resulted in $1.7 billion in lost profits.
• The Dearborn, Mich.-based company said Thursday morning that it now expects adjusted earnings before interest and taxes of $10 billion to $10.5 billion, down from its previous guidance for $11 billion to $12 billion.
• The figure includes $1.7 billion in strike-related lost profits, $1.6 billion of which came in the fourth quarter, from interruptions in production of high-margin trucks and SUVs and lower vehicle wholesales than previously expected.
• Adjusted free cash flow is now projected to be between $5 billion and $5.5 billion, down from a prior outlook for $6.5 billion to $7 billion.
• The strike was resolved in late October with a tentative labor deal that Ford now says will cost $8.8 billion over the lifetime of the contract in gross wages, accelerated wage progression and cost of living adjustments.
• The labor agreement is expected to have a cost effect of about $900 per vehicle by 2028, Ford said.

Meta Sues FTC Over Its In-House Courts – Wall Street Journal, 11/30/2023

• Meta Platforms has challenged the constitutionality of the Federal Trade Commission’s structure, the company’s latest effort to block the regulator from imposing new restrictions on how it can monetize user data.
• Meta—which owns Facebook, Instagram, and WhatsApp—sued the FTC on Wednesday in federal court in Washington, alleging “fundamental aspects of the Commission’s structure violate the U.S. Constitution.”
• Taking issue with the FTC’s use of its in-house courts, Meta argues that in these proceedings the regulator “has a dual role as prosecutor and judge” in violation of due-process guarantees.
• Meta is seeking an injunction blocking the FTC from moving forward with new restrictions on the company, first proposed in May, that include a blanket prohibition against monetizing data of children and teens under 18.
• That provision takes aim at the company’s core business of showing ads to users based on what it learns about their interests.

Occidental Petroleum in Talks to Buy Permian Producer CrownRock – Wall Street Journal, 11/30/2023

• Occidental Petroleum is in talks to buy CrownRock, a major energy producer in the west Texas area of the Permian basin, continuing a frenzy of deal making in the oil patch.
• A deal for the closely held company, which could be valued well above $10 billion including debt, could come together soon assuming the talks don’t fall apart or another suitor doesn’t prevail, according to people familiar with the matter.
• CrownRock owns more than 80,000 net acres in the northern part of the Midland Basin in Texas, part of the Permian, the largest oil producing region in the U.S.
• It is led by Texas businessman and billionaire Timothy Dunn, and backed by the private-equity firm Lime Rock Partners.
• The company is one of the last remaining sizable private companies in the Permian, alongside Endeavor Energy Resources.
• The company produces about 150,000 barrels of oil equivalent a day, according to Fitch Ratings.

AbbVie to Buy Cancer Biotech ImmunoGen for More Than $10 Billion – Wall Street Journal, 11/30/2023

• Drug company AbbVie has agreed to buy biotech ImmunoGen for $10.1 billion in a new bet on one of the most promising novel drug technologies for attacking cancer.
• ImmunoGen develops cancer drugs called antibody-drug conjugates, or ADCs, which work like guided missiles delivering a toxic agent directly to tumors.
• The technology is among the hottest areas in the pharmaceutical industry.
• Recent advancements have spread its use to common kinds of cancer such as breast, spawning other multibillion-dollar deals.
• AbbVie on Thursday said it will pay $31.26 a share in cash for ImmunoGen, a roughly 95% premium to Wednesday’s closing price of $16.06.
• AbbVie said it expects to complete the acquisition in the middle of 2024.
• The North Chicago, Ill.-based pharmaceutical company has been on the hunt for new cancer assets to expand its portfolio beyond blood-cancer treatments Imbruvica and Venclexta.

Cigna, Humana in Talks for Blockbuster Merger – Wall Street Journal, 11/30/2023

• Cigna and Humana are in talks for a combination that would create a new powerhouse in the health-insurance industry.
• The companies are discussing a stock-and-cash deal that could be finalized by the end of the year, assuming the talks don’t fall apart, according to people familiar with the matter.
• While the structure and terms under discussion couldn’t be learned, a merger of the managed-care providers would be huge, and give rise to a company worth some $140 billion given Cigna’s market value Wednesday morning of about $83 billion and Humana’s of roughly $62 billion.
• Cigna shares fell more than 8% by the close on Wednesday, while Humana lost about 5.5%, as investors digested news of the possible deal, reported earlier in the day by The Wall Street Journal.
• Cigna, which had revenue of about $181 billion last year, would be able to marry its huge pharmacy-benefit unit, which manages drug plans, and its strength in commercial insurance with Humana’s big position in the fast-growing Medicare segment, something Cigna has long sought.
• Humana could also help Cigna accelerate a strategy that is core to the managed-care business, a move toward paying doctors and hospitals in ways that aren’t tied to the volume of service provided.

Finra Fines BofA Securities $24 Million for Treasurys Spoofing – Wall Street Journal, 11/30/2023

• The Financial Industry Regulatory Authority fined BofA Securities $24 million for more than 700 instances of spoofing through two former traders.
• Spoofing is a type of fraudulent trading in which trades not intended to be executed create the appearance of market activity to induce other market participants to trade against orders that were actually executed.
• Finra, a not-for-profit organization overseen by the U.S. Securities and Exchange Commission, said a former supervisor and a former junior trader executed 717 instances of spoofing in a U.S. Treasury security to induce opposite-side executions in the same Treasury security or a correlated Treasury futures contract.
• BofA Securities consented to the entry of Finra’s findings without admitting or denying the charges in settling the matter, said Finra.

Activist investor Nelson Peltz launches Disney proxy fight, seeks multiple board seats – CNBC, 11/30/2023

• Activist investor Nelson Peltz and his firm are seeking more than two seats on Disney’s board, according to a person familiar with the matter, setting the stage for a proxy fight.
• Trian Fund Management, which Peltz co-founded, said Thursday morning that it “intends to take our case for change directly to shareholders.”
• Disney, for its part, suggested the proxy fight stemmed from a personal grudge held by one of Peltz’s allies, former Marvel boss Ike Perlmutter.
• The news came the morning after Disney added Morgan Stanley CEO James Gorman and former Sky TV boss Jeremy Darroch to its board, a move widely seen as a bid to fend off a potential challenge from Peltz. Former Illumina CEO Francis deSouza will not seek reelection on the board.
• Trian said it owns about $3 billion in Disney stock.

OpenAI’s New Board Takes Over and Says Microsoft Will Have Observer Role – Wall Street Journal, 11/30/2023

• OpenAI’s new board formally took over on Wednesday and said it would add an observer role for partner Microsoft, capping a dramatic chapter for the artificial-intelligence startup and launching a new phase of difficult decisions.
• The new board’s initial three members were decided as part of CEO Sam Altman’s return last week after the previous board abruptly fired him.
• The replacement directors’ priorities include creating an independent committee to review the events around Altman’s ouster, said Bret Taylor, the board’s chairman.
• Taylor and Altman, along with Chief Technology Officer Mira Murati, said in interviews that OpenAI’s top priority, though, is reassuring its employees, customers and investors about the company’s future.
• “My immediate priority—and the current board’s too—will be to continue to work to stabilize the company,” Altman told The Wall Street Journal.
• “Reassuring people is a process, not a moment in time.”
• The plan to include an observer for Microsoft on the board, a role that Taylor said will be nonvoting, gives some indication of how the new board will handle one of the many thorny questions it needs to address: whether OpenAI’s investors will have more input and visibility into its future governance.

US ECONOMY & POLITICS

Fed’s favorite gauge shows inflation rose 0.2% in October and 3.5% from a year ago, as expected – CNBC, 11/30/2023

• Inflation as measured by personal spending increased in line with expectations in October, possibly giving the Federal Reserve more incentive to hold rates steady and perhaps start cutting in 2024, according to a data release Thursday.
• The personal consumption expenditures price index, excluding food and energy prices, rose 0.2% for the month and 3.5% on a year-over-year basis, the Commerce Department reported.
• Both numbers aligned with the Dow Jones consensus and were down from respective readings of 0.3% and 3.7% in September.
• Headline inflation was flat on the month and at a 3% rate for the 12-month period, the release also showed.
• Energy prices fell 2.6% on the month, helping keep overall inflation in check, even as food prices increased 0.2%.
• Goods prices saw a 0.3% decrease while services rose 0.2%.
• On the services side, the biggest gainers were international travel, health care and food services and accommodations. In goods, gasoline led the gainers.
• Personal income and spending both rose 0.2% on the month, also meeting estimates and indicating that consumers are keeping pace with inflation.

Jobless claims tick higher in latest week, reaching highest level in 2 years – Market Watch, 11/30/2023

• Initial jobless claims rose 7,000 to 218,000, in the week ending Nov. 25, the Labor Department said Thursday.
• Economists polled by The Wall Street Journal had estimated new claims would rise 11,000 to 220,000.
• Last week, claims rose a revised 22,000 to 211,000.
• That compared with the initial estimate of a drop of 24,000 to 209,000.
• The number of people already collecting jobless benefits in the week ending Nov. 18 rose by 86,000 to 1.927 million.

Pending home sales drop to a record low, even worse than during the financial crisis – CNBC, 11/30/2023

• Pending home sales, a measure of signed contracts on existing homes, dropped 1.5% in October from September.
• They hit the lowest level since the National Association of Realtors began tracking this metric in 2001, meaning it’s even worse than readings during the financial crisis over a decade ago.
• Sales were down 8.5% from October of last year.
• Rates have since pulled back to around 7.3%, according to Mortgage News Daily.
• Pending sales fell in all regions month-to-month except in the Northeast.
• They fell most steeply in the West, which is where homes are most expensive.
• Sales were down everywhere compared with a year ago.
• Tight supply and still-strong demand have kept pressure on home prices, which not only continue to hit new highs but appear to be accelerating in their gains.
• The Realtors noted that sales of homes priced above $750,000 have been increasing simply because there is more supply on the high end of the market.

Anthony Fauci to Testify in House on Covid-19 Pandemic’s Origins, U.S. Response – Wall Street Journal, 11/30/2023

• After months of negotiations, former chief White House medical adviser Anthony Fauci has agreed to testify in Congress on the U.S. response to the Covid-19 pandemic and the virus’s origins in China.
• The testimony by Fauci, who led the National Institute of Allergy and Infectious Diseases from 1984 until last year, will be his first before the Republican-controlled House.
• The U.S. intelligence community remains divided over whether the virus leaked from a laboratory or arose naturally, leaving lawmakers still searching for answers on how the pandemic began and the effectiveness of the U.S. response.
• The arrangements for Fauci’s testimony are extensive.
• They will begin with two days of transcribed interviews behind closed doors in January.
• A public hearing, which is expected to be contentious, will be held at a later date.

EUROPE & WORLD

Israel Considers How to Remove Threat of Hamas Fighters in Gaza – Wall Street Journal, 11/30/2023

• As Israeli forces prepare for a renewed offensive targeting Hamas’s top leaders in the Gaza Strip, Israeli military and political leaders are confronting the challenge of what to do about the thousands of fighters that represent the group’s power base.
• To address that challenge, some Israeli and U.S. officials are discussing the idea of expelling thousands of lower-level militants from the Palestinian enclave as a way to shorten the war.
• The idea is reminiscent of the U.S.-brokered deal that allowed Palestinian leader Yasser Arafat and thousands of fighters to flee Beirut during Israel’s 1982 siege of the Lebanese capital.
• The prospect of expelling Hamas fighters is part of evolving Israeli and American talks about who will run Gaza when the war ends and what can be done to ensure that the territory can never be used to stage another attack on Israel like the one on Oct. 7, the worst in the nation’s history.
• One proposal for how to govern a post-Hamas Gaza, developed by the Israeli military’s think tank and viewed by The Wall Street Journal, would start with the creation of what it calls “Hamas-free safe zones” that would be ruled by a new Gaza authority backed by Saudi Arabia and the United Arab Emirates.

Factmonster – TODAY in HISTORY

• Supreme Court Justice Samuel Chase was tried for political bias. – 1804
• Irish author Oscar Wilde died in Paris at age 46. – 1900
• Barbados became independent of Great Britain. – 1966
• The Brady Bill, requiring a five-day waiting period for handgun purchases, is signed. – 1993
• President Bill Clinton became the first U.S. president to visit Northern Ireland. – 1995

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