US FINANCIAL MARKET
Tech Weighs on Stocks as Dollar Gains Before CPI: Markets Wrap – Bloomberg, 9/11/2023
- Stocks retreated, while the dollar rebounded as investors geared up for a key inflation report that’s expected to bring more insights on the outlook for the Federal Reserve’s next steps.
- The S&P 500 fell 0.4%. The Nasdaq 100 fell 0.7%. The Dow Jones Industrial Average fell 0.2%.
- Tech led losses in the S&P 500, with Oracle sinking 12% — the most since 2020 — after a slowdown in cloud sales.
- Apple dropped before the unveiling of updated versions of its iPhone, smartwatch and AirPods.
- Energy shares joined an advance in oil, adding to concern about inflationary pressures.
- Zions Bancorp rallied after an update on its quarterly trends, while Northern Trust slumped amid a presentation at the Barclays Global Financial Services Conference.
- Treasury two-year yields, which are more sensitive to imminent Fed moves, topped 5%.
- The greenback snapped back after a brief pause in its bullish run.
- At least 11 companies are tapping the US investment-grade bond market on Tuesday as issuers press ahead to get deals done ahead of the inflation data.
- Wednesday’s consumer-price index is expected to show a pick-up in inflation pressures.
- With the economy defying pessimism and energy prices rising, economists predict the biggest monthly jump in 14 months — and the swap market is pricing in risk that it will come in even higher than expected.
- Traders expect the Fed to stay on hold at next week, and see roughly a 50% chance that the central bank delivers a hike in November.
- Traders continued watching closely the negotiations between the United Auto Workers and automakers to prevent a strike.
- General Motors, Ford Motor and Stellantis are under pressure to meet the demands of the UAW, which is seeking a new contract that replaces one expiring in just two days.
- Arm Holdings.’s initial public offering is oversubscribed and bankers plan to stop taking orders this afternoon, according to people familiar with the matter.
- Alphabet ’s Google pays more than $10 billion a year to maintain its position as the default search engine on web browsers and mobile devices, stifling competition, the US Justice Department said Tuesday at the start of a high-stakes antitrust trial in Washington.
- United Parcel Service will pay out the biggest portion of its new, five-year labor pact over the next 12 months while trying to win back customers it lost during the contentious contract talks, making for a challenging upcoming year, its CEO said.
- The Stoxx Europe 600 fell 0.2%.
- The Bloomberg Dollar Spot Index rose 0.2%.
- The yield on 10-year Treasuries was little changed at 4.29%.
- West Texas Intermediate crude rose 2.1% to $89.08 a barrel.
- Gold futures fell 0.6% to $1,934.60 an ounce.
Oracle Falls After Reporting Slower Growth in Cloud Sales – Bloomberg, 9/11/2023
- Oracle plunged by the most in more than three years after reporting a slowdown in the growth of its cloud business, raising questions about the software maker’s expansion efforts in a competitive market.
- Total sales increased 9% to $12.5 billion in the fiscal first quarter, the company said Monday in a statement.
- Analysts, on average, estimated $12.5 billion, according to data compiled by Bloomberg.
- Cloud revenue, a growth bet that is closely watched by investors, jumped 30% to $4.6 billion.
- Of that, $1.5 billion came from renting computing power and storage over the internet and $3.1 billion from applications.
- Sales of Fusion software for managing corporate finance increased 21% in the quarter, compared with 26% growth in the previous period.
- Revenue from NetSuite, enterprise planning tools aimed at small- and mid-sized companies, jumped 21%, compared with 22% in the fiscal fourth quarter.
- Oracle Chairman Larry Ellison expressed enthusiasm for the growing demand spurred by AI, saying companies in the area have “signed contracts to purchase more than $4 billion of capacity” from Oracle’s cloud service.
- Profit, excluding some items, was $1.19 a share, compared with the average estimate of $1.15.
- Total revenue in the current period ending in November will increase 5% to 7%, Catz said on the call.
- Analysts, on average, projected an 8% gain to $13.3 billion.
- Cloud sales, excluding the Cerner health unit, will jump as much as 31%, she said.
Apple Set to Unveil Latest iPhone: 5 Things to Watch – Wall Street Journal, 9/12/2023
- Apple is holding its annual hardware refresher on Tuesday at its headquarters in Cupertino, Calif.
- The event, which Apple has titled “Wonderlust,” will focus on updating some of its existing product lineup, most importantly the iPhone.
- The Apple event, beginning at 1 p.m. EDT, is also expected to launch new versions of its Apple Watch, but most of the attention will likely be going toward the iPhone.
- The presentation will be streamed on Apple’s website and on YouTube.
- There likely will be four new iPhones, two base models and two higher-priced Pro versions, analysts familiar with the company’s supply chain expect.
- The latest and most advanced features of the new iPhones—expected to be called the iPhone 15—will reside mostly with the Pro segment, as has been the case for several years now.
- Apple isn’t expected to unveil any new types of hardware categories at the event.
- USB-C: Both the Pro and base models of the iPhone 15 are expected to transition to a new connector port, moving away from its proprietary Lightning connector that has been in use since 2012 with the iPhone 5.
- The smartphone market has slowed down in recent years, and Apple has responded by trying to entice buyers to buy its more premium segment Pro iPhones.
- The iPhone 15 Pro is expected to be powered with a new custom chipset designed in-house by Apple engineers and manufactured on Taiwan Semiconductor Manufacturing’s latest 3-nanometer chip fabrication process.
- Apple will likely mix up a feature found in every iPhone since the very beginning: the mute switch.
- In place of the switch, the Pro models will likely have a simple button that can be programmed by users to perform certain actions, such as quickly opening the camera app or turning on the flashlight.
Google’s Antitrust Trial to Set ‘Future of the Internet,’ DOJ Says – Wall Street Journal, 9/12/2023
- Google and the Justice Department squared off Tuesday in the biggest antitrust trial in more than two decades, kicking off a case with major implications for the search giant and the future of antitrust law.
- “This case is about the future of the internet and whether Google will ever face meaningful competition,” said Justice Department lawyer Kenneth Dintzer during his opening statement.
- The nonjury trial, scheduled to go through mid-November, will be decided by U.S. District Judge Amit Mehta, who could order a breakup or changes to the way Google, a unit of Alphabet, promotes its search engine.
- The Justice Department has alleged Google’s agreements with companies including Apple and Samsung to make its search engine the default option on web browsers and mobile phones illegally helped maintain a monopoly in that market.
- Google has said it competes fairly for the contracts, and users can easily switch away from defaults.
Averting Auto Strike Hinges on Pay Raises to Cover Inflation – Bloomberg, 9/12/2023
- It’s been more than a decade since America’s carmakers have tied pay to inflation.
- Now workers want to change that after seeing prices surge over the past few years.
- General Motors, Ford Motor and Stellantis are under pressure to meet the demands of the United Auto Workers, who are seeking a new contract that replaces one expiring in just two days.
- Talks to avoid a strike have stalled around pay, especially a cost-of-living allowance known as COLA.
- The union won this protection 75 years ago, only to give it up in 2009 when two of Detroit’s three car companies went bankrupt during the financial crisis.
- UAW President Shawn Fain kicked off talks with demands for a 46% pay increase and made reinstating COLA a cause celebre; the union even has signs that read: “COLA and Fair Pay Now.”
- His argument is that pay for the company’s chief executive officers rose 40% during the current four-year contract as vehicle prices and profits soared.
- Meanwhile, worker raises were chewed up by inflation.
- To be clear, COLA may have gone away but union workers do get annual $1,500 checks for inflation protection.
- To make sure workers are covered, GM offered $11,000 in inflation protection over the next four years in a proposal Fain rejected.
- Ford pitched even more and was rebuffed. Stellantis offered $10,500.
WWE, UFC Combined Company Makes Market Debut, Targets Demand for Sports – Wall Street Journal, 9/12/2023
- A new publicly traded company formed by the combination of WWE and UFC is entering the ring in hopes of capitalizing on the migration of sports and live entertainment from traditional television to streaming.
- TKO will begin trading Tuesday with the aim of making more content, including UFC fights, available via streaming services in the future, said Mark Shapiro, its president and chief operating officer.
- TKO, which stands for technical knockout in boxing, is an allusion to the fighting focus of both organizations.
- “We are well-positioned to capitalize on the demand for live sports and entertainment across linear and digital, and we have enough content to do both,” Shapiro said.
- The combined company has high-profile rights deals with entertainment companies including Fox, Disney and Comcast for its Peacock streaming service.
- WWE and UFC generate revenue from streaming and TV rights as well as ticket sales and merchandise tied to their popular lineups of celebrity fighters.
- Investors have cheered the advent of the combined new company in part because it can make money from traditional TV but isn’t entirely beholden to it as more consumers cut the cord in favor of streaming services.
- TKO Holdings will trade on the New York Stock Exchange.
- Entertainment company Endeavor Group Holdings owns 51% of TKO, while wrestling organization WWE owns the remaining 49%.
US ECONOMY & POLITICS
Inflation Dragged Real US Household Incomes Down 2.3% in 2022 – Bloomberg, 9/12/2023
- US inflation-adjusted household income decreased 2.3% in 2022 from a year earlier, highlighting the toll of a higher cost of living for American families.
- The median income last year was $74,580 compared with $76,330 in 2021, according to the Census Bureau’s annual report on income, poverty and health insurance coverage.
- The Tuesday data represent a concerning picture of American families’ economic health in the second year of Joe Biden’s presidency after pandemic-related turbulence in 2020 gave way to soaring inflation during the following two years.
- At the end of 2022, annual inflation stood at 6.5% after reaching a four-decade high in June that year.
- The report also showed the US poverty rate — which is calculated before taxes and excludes stimulus payments and tax credits — edged lower to 11.5% from 11.6% in the prior year.
- While the official poverty rate ticked down, a supplemental measure — which is based on post-tax income and includes government-transfer payments like stimulus checks — rose to 12.4% last year.
- The so-called Gini index — a measure of income inequality — fell to 0.488, indicating a narrowing of the gap as pay among the highest earners decreased.
- Median incomes at the 90th percentile fell to $216,000 in 2022, while incomes for those among the bottom 10th ticked up to $17,100.
McCarthy to Back Opening Biden Impeachment Probe in Escalation – Bloomberg, 9/12/2023
- Speaker Kevin McCarthy is set to endorse House Republicans’ plans to launch an impeachment inquiry into President Joe Biden, a House of Representatives official familiar with his plans said.
- This week, McCarthy will tell colleagues that such an inquiry is the next logical step in their investigation of Biden and the business dealings of his son, Hunter Biden, according to the person.
- The conservative members who want to continue investigating Biden could move to remove McCarthy as speaker if they are denied. But success is not guaranteed and moving forward will alienate more moderate members and jam up an already-clogged legislative calendar.
- McCarthy has said an impeachment inquiry gives House lawmakers stronger standing to demand bank records and other documentation from the Biden family.
- “What I see is that everyday we learn about President Biden something new,” McCarthy told reporters Monday. “The American people deserve to know.”
CDC Advisers Weigh Covid-19 Booster Guidance as Latest Variants Spread – Wall Street Journal, 9/12/2023
- Advisers to the Centers for Disease Control and Prevention are expected to endorse the latest Covid-19 boosters on Tuesday afternoon, as cases increase heading into the fall months.
- The Food and Drug Administration cleared updated boosters from Pfizer and Moderna for people six months and older on Monday.
- The 15 voting members of the CDC’s Advisory Committee on Immunization Practices are scheduled to discuss the data and decide on booster recommendations on Tuesday.
- CDC Director Dr. Mandy Cohen will make a final decision on vaccine guidance after the committee issues its recommendations.
- Covid-19 wastewater levels and hospitalizations have been rising for weeks from low levels.
- Cases of respiratory syncytial virus have ticked upward in Georgia and Florida, a usual signal of the beginning of RSV season.
- The flu is expected to join in the coming months.
- This season is the first when vaccines will be available for Covid-19, flu and RSV, and health officials are encouraging people to get the shots to help ease the anticipated tide of infections.
- Moderna has said it would set a list price for its Covid-19 booster around $130 a dose.
- Pfizer hasn’t specified a price but has said it was considering at least $110 a dose.
Political Ad Spending Set to Reach Record $10.2 Billion in 2024 Campaign Cycle – Bloomberg, 9/12/2023
- There’s an emerging winner in the 2024 presidential contest: television broadcasters.
- Spending on political advertising is estimated to reach a record $10.2 billion in the 2024 cycle, according to new projections from AdImpact, which tracks and analyzes spending.
- Local television stations are projected to rake in half — $5.1 billion — of that amount, maintaining their advertising dominance in an increasingly competitive media landscape.
- Still, local broadcast station owners, including Nexstar Media Group and Hearst Television, remain the biggest beneficiaries of political group spending.
- Cable television trails broadcast with $1.9 billion of total spending, according to the AdImpact projections.
- Connected TV, which includes streaming services and devices, is likely to pull in $1.3 billion, while digital ads — namely those on Meta Platforms’s Facebook and Alphabet’s Google — could reach $1.2 billion.
- Radio accounts for $400 million, according to the estimates.
- Political ad spending in the 2024 US election cycle has already reached $652 million, 75% more than at the same point in the last presidential campaign.
- This cycle will likely surpass the all-time high of $9 billion in the 2020 cycle, according to AdImpact.
EUROPE & WORLD
OPEC Oil Data Show 3 Million-Barrel Shortfall on Saudi Supply Squeeze – Bloomberg, 9/12/2023
- Global oil markets face a supply shortfall of more than 3 million barrels a day next quarter — potentially the biggest deficit in more than a decade — as Saudi Arabia extends its production cuts.
- The latest data published by OPEC show why the kingdom’s supply squeeze, amid a period of record demand, has sent oil prices surging beyond $90 a barrel in London.
- Riyadh announced last week it will extend an extra 1 million-barrel-a-day output reduction until the end of the year, even though markets are already tightening.
- World oil inventories, having depleted sharply this quarter, are set for an even steeper drop of roughly 3.3 million barrels a day in the next three months, forecasts published in a report from the Organization of Petroleum Exporting Countries indicated on Tuesday.
- It could even become a political issue for US President Joe Biden as he prepares for next year’s reelection campaign, with national gasoline prices nearing the sensitive threshold of $4 a gallon.
- OPEC’s 13 members have pumped an average of 27.4 million barrels a day so far this quarter, or roughly 1.8 million less than it believes consumers needed, according to the report.
- OPEC and its allies are due to meet on Nov. 26 to review production policy for the year ahead.
Arm’s CEO Is Pitching a Made-For-You Chip Strategy Ahead of IPO – Bloomberg, 9/12/2023
- Arm Chief Executive Officer Rene Haas, gearing up for the biggest initial public offering of the year, is pitching investors on a pivot.
- His message to potential shareholders is that Arm is poised to become a bigger and more profitable business — not just because of the industrywide boom in cloud computing and artificial intelligence, but also due to a major change in how it operates.
- “We made a significant shift in our strategy,” Haas said in a video presentation for prospective investors seen by Bloomberg.
- For most of its history, Arm’s main focus has been designing chips for smartphones and other electronics and then selling that technology for pennies per chip to companies like Qualcomm.
- But now, Arm is doing complex design work focused on specific products, tailored for what it sees as key areas of growth.
- It’s a “purpose-built approach” addressing the urgent needs of companies making mobile devices, cloud computing, car electronics and internet-connected technology, Haas said in the presentation.
Putin Calls Trump Charges Political ‘Persecution’ – Wall Street Journal, 9/12/2023
- Russian President Vladimir Putin on Tuesday waded into the debate over the criminal charges faced by Republican election candidate Donald Trump, saying the cases against the former U.S. president amount to political “persecution” and expose U.S. weakness.
- “This shows the whole rottenness of the American political system, which cannot claim to teach others about democracy,” Putin said in an appearance at the Eastern Economic Forum in Vladivostok, an annual event aimed at showcasing the Russian government’s development plans.
- “What’s happening with Trump is a persecution of a political rival for political motives.”
- He said the provision of further Western weapons, such as F-16 jet fighters pledged by several Western countries, won’t lead to results for Kyiv’s forces.
- “It will simply extend the conflict,” he said.
- “We don’t create military alliances, and we don’t make alliances against others,” he said.
- “We make alliances in the interests of our nations. And that’s how we’ll continue.”
More Than 5,000 Feared Dead After Storm Batters Libya – Wall Street Journal, 9/12/2023
- Libyan authorities struggled to reach survivors and provide food, water and shelter to tens of thousands of people after a lethal storm that officials say likely killed thousands in the country’s worst natural disaster in decades.
- Libyan officials and the head of the country’s delegation for the International Federation of Red Cross and Red Crescent Societies said Tuesday that as many as 10,000 people were missing as a result of the storm.
- More than 5,000 people are feared dead, according to a high-ranking official in the government in eastern Libya, one of two rival administrations running the country.
- The Mediterranean cyclone Daniel made landfall earlier this week, overwhelming two nearby dams and unleashing floodwaters that washed entire buildings out to sea in the city of Derna.
- Thousands of people fled the rising waters, with some taking shelter in schools around the city of Benghazi, the largest city in the region, and others crying for help from the roofs of their homes in Derna, more than 100 miles east.
Chinese Warships Gather in Sign of Major Naval Exercises – Wall Street Journal, 9/12/2023
- A Chinese aircraft carrier and around two dozen other Chinese warships were gathering in the western Pacific, according to authorities in Taiwan and Japan, an unusually large group suggesting Beijing may be planning major naval exercises.
- The movement follows a flurry of U.S. military activity in the region, and comes as efforts by Washington and Beijing to improve relations appear to have lost momentum.
- China has made no announcement about coming naval drills, but it has condemned a transit of the Taiwan Strait by a U.S. destroyer and Canadian frigate on Saturday.
- The U.S. held other naval exercises near China involving allies such as Japan and the Philippines in recent weeks.
- The Chinese aircraft carrier Shandong sailed toward the western Pacific Ocean to the southeast of Taiwan on Monday for training, Taiwan’s military said.
- It also said it identified 20 Chinese warships around Taiwan, without giving further details.
- Japan’s military said six Chinese destroyers and two Chinese frigates were spotted on Monday morning close to Japan and monitored as they sailed southeast between the Japanese islands of Okinawa and Miyako into the Pacific Ocean.
- “The Shandong undoubtedly poses a new threat” to Taiwan, Gen. Huang Wen-chi, the assistant deputy chief of general staff for intelligence for Taiwan’s military, said at a Tuesday news conference in Taipei, noting that the aircraft carrier has been paired with new large destroyers.
TikTok launches online shopping in the US – Reuters, 9/12/2023
- TikTok has officially rolled out its e-commerce business in the United States after months of testing, according to a blog post on Tuesday, as its Chinese-owner ByteDance looks to capitalize on the popularity of the social media app.
- TikTok is bringing online shopping through a series of features on its main app and is hoping to replicate the success of Asian platforms Shein and PDD Holdings’ Temu.
- TikTok’s more than 150 million users in the U.S. will now be able to see videos and live streams with links to purchase items on their feed, as it offers tools to content creators, brands, and merchants to create shoppable content.
- New features include a shop tab, where businesses can display their products with logistics and payments solutions powered by TikTok.
- The social media firm said it also integrated its shopping service with various third-party platforms like Shopify, Salesforce, and Zendesk, among others.
Factmonster – TODAY in HISTORY
- Henry Hudson began his exploration of the Hudson River. – 1609
- Future President John F. Kennedy married Jacqueline Bouvier. – 1953
- South African black civil rights leader Steven Biko died while in police custody. – 1977
- Mae Carol Jemison became the first black woman in space aboard the Space Shuttle Endeavour. – 1992
- Indonesia announced it would allow an international peacekeeping force to restore order to East Timor. – 1999
- Israeli Prime Minister Ehud Olmert, who was under investigation for corruption, resigned as prime minister. – 2008
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. Historical performance is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
All investing involves risk including loss of principal. No strategy assures success or protects against loss. Any economic forecasts set forth may not develop as predicted.
All company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.
Material presented is excerpts derived from third party content and you may need a subscription to access the full the content. The views and opinions expressed are those of the authors and do not necessarily reflect the views of Pence Financial Group or LPL Financial.
Prior to making any investment decision please consult your financial advisor regarding your specific situation.