US FINANCIAL MARKET

Bond Rally Flounders as $16 Billion Test in Sight: Markets Wrap – Bloomberg, 11/20/2023

• The world’s biggest bond market’s surge toward its best month since March lost traction on Monday, with traders gearing up for a $16 billion sale of 20-year Treasuries.
• Wall Street continued to keep a close eye on government debt auctions, especially after the US recently offered an unusually large premium to sell 30-year securities.
• Those sales have also been exerting a growing sway over stocks, underscoring how the path of interest rates is gripping markets of late.
• Ten-year US yields rose, remaining below 4.5%.
• The S&P 500 saw a small advance after the market notched its third straight week of gains.
• The tech-heavy Nasdaq 100 headed toward its highest since January 2022.
• Microsoft climbed as the software giant hired OpenAI co-founders Sam Altman and Greg Brockman to lead its new in-house advanced artificial intelligence research team.
• The dollar was set for its lowest since August.
• The Bloomberg Dollar Spot Index fell 0.3%.
• Following softer-than-expected inflation data, the Bloomberg US Aggregate index — which tracks $25 trillion of investment-grade government and corporate debt — gained 1.4% last week and is up 0.5% for the year.
• The gauge posted a record loss of 13% in 2022 and declined 1.5% the previous year.
• As the earnings season winds down, investors will also be on the lookout for results from a handful of retailers and tech companies.
• Nvidia’s quarterly results could still exceed sky-high investor expectations thanks to strong demand for generative artificial intelligence.
• Best Buy, Nordstrom and Lowe’s are set to post slumping sales, reflecting the consumer pullback in discretionary sales.
• NRG Energy is overhauling its management after the independent power producer reached a deal with activist investor Elliott Investment Management.
• West Texas Intermediate crude rose 2.2% to $77.54 a barrel.
• Spot gold fell 0.4% to $1,971.92 an ounce.

Sam Altman to Join Microsoft Following OpenAI Ouster – Wall Street Journal, 11/20/2023

• Microsoft said it is hiring Sam Altman to helm a new advanced artificial-intelligence research team, after his bid to return to OpenAI fell apart Sunday with the board that fired him declining to agree to the proposed terms of his reinstatement.
• Microsoft Chief Executive Satya Nadella posted on X, formerly known as Twitter, late Sunday that Altman and Greg Brockman, OpenAI’s president and co-founder who resigned Friday in protest over Altman’s ouster, will lead its team alongside unspecified colleagues.
• Nadella said Microsoft was committed to its partnership with OpenAI and that it would move quickly to provide Altman and Brockman with “the resources needed for their success.”
• “The mission continues,” Altman wrote on X, reposting Nadella’s message.

OpenAI Employees Threaten to Quit Unless Board Resigns – Wall Street Journal, 11/20/2023

• More than 500 employees of OpenAI have threatened to leave the company if the current board doesn’t resign and reinstate former Chief Executive Sam Altman and former President Greg Brockman.
• Included in the list of names of signers was Ilya Sutskever, the company’s chief scientist and one of members of the four-person board that voted to oust Altman.
• Following the removal of Altman on Friday, Microsoft said late Sunday that it hired Altman and Brockman to helm a new advanced artificial-intelligence research team, after his bid to return to OpenAI fell apart, with the board that fired him declining to agree to the proposed terms of his reinstatement.
• Amid the talks to bring Altman back to the company he co-founded, OpenAI’s board found someone else to take his spot: former Twitch CEO Emmett Shear.
• The employees said they may leave the company and join Altman and Brockman at Microsoft if their demands are not met, adding that Microsoft had assured them that there would be jobs available for all of them.

Citigroup Cuts Over 300 Senior Manager Roles in Latest Restructuring – Bloomberg, 11/20/2023

• Citigroup is eliminating more than 300 senior manager roles as part of Chief Executive Officer Jane Fraser’s efforts to simplify the Wall Street giant.
• The company started announcing the cuts — which affect staffers two levels below Fraser’s executive management team — on Monday, according to a person familiar with the matter.
• They amount to roughly 10% of the workers at that level, according to the person, who asked not to be identified discussing personnel information.
• The workforce reductions, which the bank has said may continue around the globe into next year, are part of Fraser’s strategy to eliminate layers of management and get rid of co-head structures to speed up decision making across the bank.

Amazon Launches Free AI Classes in Bid to Win Talent Arms Race – Wall Street Journal, 11/20/2023

• Amazon.com is launching a program to train millions of workers in artificial-intelligence skills as the tech giant seeks to gain an edge in a pitched battle for talent with Microsoft, Google and other companies.
• Named “AI Ready,” Amazon’s new program plans to train at least two million people by 2025 on basic to advanced AI skills, including how to make use of the generative AI technology that has powered language-based models such as ChatGPT.
• Amazon aims to fill a gap in AI talent as it has sought to generate interest in its generative AI efforts after falling behind rivals.
• In launching its program, Amazon is adding to a broader effort by the corporate world to get workers in various fields trained in AI.
• The training is centered on eight online courses that focus on generative AI and target people with both tech and tech-adjacent roles.
• The classes are catered to both beginners and those with more experience, and the company said it can form the foundation for professionals to prepare for the jobs and skills now needed in the industry.

Kyle Vogt Resigns as CEO of GM’s Driverless-Car Unit Cruise – Wall Street Journal, 11/20/2023

• Kyle Vogt has resigned as chief executive of Cruise, the self-driving car unit of General Motors, following a turbulent month in which the company lost some of its permits in California and paused operations.
• Vogt co-founded Cruise a decade ago and was named CEO in February 2022.
• Since then, Cruise expanded its driverless robotaxi fleet in San Francisco and started launching operations in cities across the country.
• Last month, after an incident in which a Cruise self-driving car allegedly dragged a woman 20 feet, California regulators pulled the company’s permits that allow it to operate in the state—its main market.
• Craig Glidden, a Cruise board member and executive vice president at General Motors, was recently installed as chief administrative officer and named a president.

Nvidia Partners With Alphabet Spinoff on Drug Discovery Tech – Bloomberg, 11/20/2023

• Nvidia and SandboxAQ, a startup spun off from Alphabet, are working together to help companies simulate large volumes of chemical reactions to develop new materials for medicine and batteries.
• The Palo Alto, California-based startup will help expand the capabilities of CUDA, Nvidia’s software platform for developing artificial intelligence applications, to better simulate the quantum mechanics behind chemical, biological and material science.
• “SandboxAQ’s AI simulation capabilities, augmented with Nvidia accelerated computing and quantum platforms, will help enable the creation of new materials and chemical compounds that will transform industries and address some of the world’s biggest challenges,” said Eric Schmidt, chairman and a key investor of SandboxAQ, in a statement.
• The startup is currently valued at $4 billion, according to data firm Pitchbook.
• SandboxAQ’s simulation tech relies on quantum algorithms, which have been around for decades, but have been too big and complex to run on computers.
• But the arrival of powerful graphics processors like Nvidia’s A100 and H200 means they can now be used for real-world medical treatments and other products, Jack Hidary, SandboxAQ’s chief executive officer, said in an interview.

NRG Energy CEO Exits Amid Board Shakeup – Wall Street Journal, 11/20/2023

• NRG Energy is replacing its chief executive and adding new members to the board, after a push for new leadership by activist investor Elliott Investment Management.
• The power company said Monday that Mauricio Gutierrez has stepped down as CEO and resigned from the board.
• Chairman Lawrence Coben will take over as interim president and chief executive while the board searches for a permanent successor.
• The shakeup comes months after Elliott disclosed a 13% stake in the company and said it intended to shake up NRG’s board and cut costs.
• Elliott later said that Gutierrez had lost the confidence of investors and called on the company to launch a search for a new CEO.
• The company said Monday that pursuant to a cooperation agreement with Elliott, NRG’s board is getting four new independent members.
• NRG is also reviewing its operations and cost structure to identify ways to become more efficient.

US ECONOMY & POLITICS

Black Friday, Cyber Monday Spending Projected to Hit New High – Bloomberg, 11/20/2023

• Consumers plan to spend an average of $567 during Black Friday and Cyber Monday shopping events, up 13% from last year, as they seek out the best deals while facing economic pressures such as higher prices and soaring interest rates.
• The result is a new record for Deloitte’s annual Black Friday-Cyber Monday survey.
• About 84% of shoppers feel confident enough to stick with the budgets they set in September.
• In order to stay within their spending limits, many consumers plan to do much of their shopping during Black Friday and Cyber Monday.
• Four in 10 expect to finish their shopping during the period.
• Many early birds have already gotten discounts, with about 41% of respondents saying they shopped for holiday gifts during October promotional events.
• Those who shopped in October are likely to spend 25% less than others during Black Friday and Cyber Monday.
• Deloitte polled 1,200 consumers between Oct. 19 and Oct. 25.

Yellen Says US Making ‘Considerable Progress’ Reducing Inflation – Bloomberg, 11/20/2023

• The US is making “considerable progress” in bringing down inflation, which is especially notable given the labor market remains strong, Treasury Secretary Janet Yellen said Monday.
• The annual inflation rate, as measured by the government’s consumer price index, has dropped to 3.2% in October from its 2022 peak of more than 9% after the Federal Reserve embarked on an aggressive campaign of interest-rate increases to cool price pressures.
• While prices aren’t rising as fast as they were last year, they are still increasing and many essential items remain much more costly than they were before the pandemic.
• “We’re making considerable progress in bringing inflation down, but Americans do notice higher prices from what they used to be accustomed to,” Yellen said in an interview on CNBC.
• “And importantly, we’re making this inflation progress while maintaining a strong economy and a strong labor market. So that’s good news for Americans.”

EUROPE & WORLD

Israel Shifts to Tougher Phase of Its Gaza War – Wall Street Journal, 11/20/2023

• Israel is shifting the focus of its military campaign to southern Gaza, where it will likely face the hardest stage of the six-week-old war as it seeks to crush Hamas and recover hostages amid a deepening humanitarian crisis.
• Israeli forces have largely succeeded in taking control of northern Gaza. But they have only partially destroyed Hamas’s military capabilities and haven’t captured or killed many of its top leaders, senior Israeli officers and analysts say.
• Israeli commanders have signaled the shift to the south in recent days, suggesting that many Hamas fighters have escaped there as Israeli troops moved in and that some leaders are ensconced in densely populated towns, or in underground tunnels, that have seen fewer airstrikes and less fighting than Gaza City in the north.
• Hamas will almost certainly prove to be a more determined adversary in the south, where the militants will have few remaining options other than to fight.
• The hostages are the best leverage Hamas leaders have for surviving the Israeli shift to the south, as the militants seek a halt to the fighting, at least temporarily, former Israeli officers say.
• Israel’s plan for attacking Hamas in the south is likely to resemble its advance in the north, but it will be complicated by the large number of civilians now packed into the area, Israeli officials and commanders say.

Argentina’s New President Wants to Adopt the U.S. Dollar as the National Currency – Wall Street Journal, 11/20/2023

• The self-styled anarcho-capitalist who won Argentina’s presidency on Sunday plans to ditch his nation’s peso and adopt the U.S. dollar as the national currency.
• President-elect Javier Milei’s top campaign proposal was aimed at eradicating rampant inflation that has for decades ravaged South America’s second-biggest economy by removing the battered national currency from circulation and stripping the central bank of its power to print money.
• Uncontrolled money-printing to cover public expenditures, economists say, has fueled 143% inflation, one of the world’s highest.
• “Closing the central bank is a moral obligation,” Milei said late Sunday.
• But getting support from Argentina’s congress and implementing his so-called dollarization plan could be rife with challenges.
• Other countries that have dollarized are far smaller, like El Salvador.
• After his victory Sunday, Milei vowed to overhaul Argentina’s bloated government, cut down on spending, open the country’s economy to global markets and sell state-run companies such as oil firm YPF.

Factmonster – TODAY in HISTORY

• New Jersey became the first state to ratify the Bill of Rights. – 1789
• Francisco Madero began an armed revolt against the president of Mexico, Porfirio Diaz. – 1910
• The war crimes trials of 24 German World War II leaders began in Nuremberg, Germany. – 1945
• The future Queen Elizabeth II married Philip Mountbatten, Duke of Edinburgh. – 1947
• President John F. Kennedy agreed to lift the American blockade of Cuba, ending the Cuban missile crisis. – 1962
• Peru’s president Alberto Fujimori resigned. – 2000

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