US FINANCIAL MARKET
Stocks, Bonds Get ‘Chillax’ Moment After Rally: Markets Wrap – Bloomberg, 12/4/2023
- Wall Street kicked off the week with losses, with both stocks and bonds down in a signal that traders’ aggressive pricing of Federal Reserve rate cuts may have gone too far.
- A raft of key jobs readings over the next few days will be closely watched for clues on the Fed’s next steps, with the potential to reignite volatility that has recently shown signs of anemia.
- Technically “overbought” conditions and long positioning have left markets in a more fragile state after the impressive rallies in both equities and Treasuries last month.
- The S&P 500 fell about 1%, while the Nasdaq 100 underperformed amid a selloff in megacaps — with Nvidia and Meta Platforms down about 3%.
- Two-year US yields rose nine basis points to 4.63%. The dollar gained.
- Bitcoin topped $41,000 as frenzied speculation in cryptocurrencies gathered pace.
- Whether the economy settles in for a soft landing or spirals into something worse, both scenarios suggest rate cuts are coming, possibly as soon as March.
- Current market expectations call for over 100 basis points of easing next year, a trend that would seem to clear a path for lower yields and an extended rally.
- The closely watched bull-bear spread from the American Association of Individual Investors survey recently showed the most-bullish stance for the group since July, nearing levels not seen since April 2021, when the bull market was still raging.
- Meantime, the S&P 500 posted an average daily move of 0.3% in either direction last week, its tamest swings in half a year, as the market lost some momentum toward the end of its second-best November since 1980.
- The Cboe Volatility Index, also known as the VIX, fell toward the year’s lowest levels Friday, and stocks rose after Fed Chair Jerome Powell gave his clearest signal yet that officials have finished raising interest rates.
- If history is any guide, December is unlikely to bring heavy selling.
- Since 1950, it’s the third-best month of the year for the S&P 500, averaging a 1.4% gain, data compiled by the Stock Trader’s Almanac show.
- Mark Zuckerberg is selling Meta Platforms stock for the first time in two years after the social media giant rapidly rebounded from a tumultuous 2022.
- Hawaiian Holdings agreed to be acquired by Alaska Air Group for $1.9 billion in cash and debt, in the latest attempt to consolidate the US aviation industry.
- Spotify Technology is reducing its workforce by 17% in the company’s steepest cuts yet this year, part of an aggressive effort to shrink costs and drive profitability.
- Roche Holding agreed to pay as much as $3.1 billion for Carmot Therapeutics, a developer of the new type of weight-loss treatments that’s sparked a pharma industry gold rush.
Alaska Airlines agrees to buy Hawaiian Airlines in $1.9 billion deal – CNBC, 12/4/2023
- Alaska Air Group has agreed to buy rival Hawaiian Airlines in a $1.9 billion deal, setting up another potential regulatory battle in the second proposed airline merger in less than two years.
- Alaska would pay $18 a share for Hawaiian and would take on $900 million of its debt, the companies said Sunday.
- Shares of Hawaiian Airlines closed on Friday at $4.86, giving the company a market capitalization of about $250 million.
- The airline has struggled with challenges including the Maui wildfires, increased competition from Southwest Airlines, which has ramped up service in Hawaii in recent years, and a lagging recovery of travel to and from Asia after the pandemic.
Ford’s US vehicle sales slip 0.5% in November – Reuters, 12/4/2023
- Ford Motor posted a 0.5% drop in U.S. new vehicle sales for November on Monday, as the automaker worked to restart some of its key plants following a lengthy workers’ strike that impacted vehicle production.
- Sales of Ford’s electric vehicles jumped 43.2%, to 8,958 units from a year ago, the automaker said on Monday.
- Sales of its trucks slipped 2.8%, to 78,971 units, for the same period.
- The company reported total sales of 145,559 vehicles in November, compared with 146,364 units last year.
Nvidia Insiders Unload Shares After 220% AI Rally – Bloomberg, 12/4/2023
- While corporate insiders are increasingly betting on shares of their own firms, bosses at the S&P 500’s best-performing company are cashing in.
- Nvidia executives and directors last month sold or filed paperwork showing they intend to sell roughly 370,000 shares worth about $180 million, according to data compiled by the Washington Service.
- If all of the shares were sold, it would be the biggest monthly disposal by dollar value in at least six years.
- A representative for Nvidia said the majority of the sales are based on 10b5-1 plans, in which the price, amount and dates of the sales are set in advance.
Twilio Plans to Cut Workforce by 5% – Wall Street Journal, 12/4/2023
- Twilio said Monday that it plans to shed hundreds of jobs as it seeks to streamline its operations and accelerate its path to profitable growth.
- The communications and customer data company said it plans to eliminate about 5% of its 5,900 employees, which will come at a cost of about $25 million to $35 million in various charges.
- Most of the charges, which include severance payments and employee transition expenses, are expected to be incurred in the fourth quarter of this year.
- The move is part of the company’s December Plan, which is intended to streamline its operations.
Uber to become S&P 500 constituent -S&P Indexes – Reuters, 12/4/2023
- Ride-hailing service Uber Technologies will join the S&P 500 effective at the open of trading on Dec. 18, along with S&P MidCap 400 constituents Jabil and Builders FirstSource, S&P Dow Jones Indices announced late Friday.
- The stocks will replace Sealed Air, Alaska Air Group and SolarEdge Technologies in the benchmark S&P 500, joining the S&P MidCap 400 index as of Monday.
US ECONOMY & POLITICS
White House Warns Money for Ukraine Will Run Out by Year’s End – Wall Street Journal, 12/4/2023
- The U.S. will be unable to continue providing weapons and equipment to Ukraine if Congress doesn’t approve additional funding by the end of the year, the White House said on Monday, warning of devastating consequences on the battlefield if lawmakers fail to act.
- “Cutting off the flow of U.S. weapons and equipment will kneecap Ukraine on the battlefield, not only putting at risk the gains Ukraine has made, but increasing the likelihood of Russian military victories,” Shalanda Young, the director of the White House Office of Management and Budget, wrote in a letter to House Speaker Mike Johnson (R., La.).
- The letter marks one of the White House’s most forceful pleas for congressional action to date and lays out in detail the consequences of inaction.
- “There is no magical pot of funding available to meet this moment. We are out of money—and nearly out of time,” Young wrote.
- Pentagon officials said they had issued contracts for all of the $10.5 billion in available funds for new weapons for Ukraine,and have only a little left to replenish U.S. stocks after spending $16.8 billion on missile defense systems, artillery shells, tanks and other equipment.
EUROPE & WORLD
Roche enters obesity market with Carmot takeover but drugs may not be available until 2030 – CNBC, 12/4/2023
- Swiss pharmaceuticals giant Roche is set to acquire anti obesity drug developer Carmot Therapeutics, becoming the latest company to attempt to unseat Novo Nordisk and Eli Lilly’s dominance within the global weight-loss drugs market.
- Under the deal terms, Carmot’s equity holders will receive $2.7 billion in cash on the transaction’s close and could pocket up to a further $400 million, depending on reaching certain milestones.
- The U.S. takeover target’s early-stage technology could help crack highly prized oral obesity treatments, Roche Pharmaceuticals CEO Teresa Graham said Monday, but it may be several years before the drugs are widely available.
- The deal will provide Roche access to Carmot’s current research and development portfolio, including all clinical and preclinical assets.
- California-based Carmot’s most promising drug candidate, a once-weekly injection called CT-388, belongs to a class known as dual GLP1/GIP receptor agonists — which are the same as those used by Eli Lilly’s Mounjaro, or Zepbound, and mimic a hormone typically released into the body after eating.
- After encouraging Phase 1 trial results, the drug is now due to be tested on humans in the second of three trial stages, Roche said in a statement.
Israel, Hamas Engage in Some of Fiercest Fighting of War – Wall Street Journal, 12/4/2023
- Israeli troops and Hamas fighters were engaged Monday in some of the toughest fighting of the two-month-old war, as Israel looks to decisively finish its operations in and around Gaza City and prepare to move its offensive south.
- The Israeli military has essentially cornered Hamas fighters in two of their last strongholds in the northern Gaza Strip—the Shajaiya neighborhood of Gaza City and the city of Jabalia, immediately to the north.
- Israel has conducted heavy airstrikes in those areas since the fighting resumed over the weekend, including one strike that Israeli officials said killed Hamas’s battalion commander in Shajaiya, and which Palestinian officials said caused hundreds of civilian casualties.
- At the same time, Israel is turning its attention to the southern city of Khan Younis, the home of Hamas leader Yahya Sinwar.
- Israel also believes Khan Younis is probably where hostages are being held.
- Israel on Monday warned some residents in the south to evacuate ahead of military action that analysts said could be the decisive battle of the war.
Meta Faces Lawsuit From Spanish Media Over Advertising Practices – Wall Street Journal, 12/4/2023
- A group representing more than 80 media outlets in Spain filed a lawsuit against Meta Platforms, saying the Facebook and Instagram owner hadn’t complied with European data-protection laws that require users’ consent before their data are used for advertising profiling.
- The Asociacion de Medios de Informacion said Monday that it was seeking more than 550 million euros, equivalent to $598.6 million, from Meta, citing the “massive” and “systematic” use of personal data by the group’s platforms without users’ consent that handed Meta an “unfair” advantage in the advertising market.
- AMI represents some of Spain’s largest media publications, including El Mundo, El Pais, El Economista and Cinco Dias.
- The group said Meta’s practices were damaging to the country’s media landscape, putting its sustainability at risk.
- AMI alleged Meta hadn’t complied with European data-protection regulations from May 25, 2018, until earlier this year.
- Meta couldn’t comment as it hasn’t yet received any legal claims or documents from AMI.
Spotify to Lay Off 17% of Staff, Its Third Round of Job Cuts This Year – Wall Street Journal, 12/4/2023
- Spotify is preparing to lay off 17% of its workforce or about 1,500 employees, as the company accelerates its profitability push.
- Chief Executive Daniel Ek announced the job cuts—the Stockholm-based company’s third round of layoffs this year—to staff Monday.
- The company expects to take €130 million to €145 million in charges—equivalent to up to about $157 million—during the final quarter of the year as a result of the layoffs.
- It expects to report a €93 million to €108 million operating loss during the fourth quarter, revising down its prior forecast of a €37 million operating profit.
Panama Canal Jam Sends Ships Sailing Continents Out of the Way – Bloomberg, 12/4/2023
- The Panama Canal, the century-old engineering marvel that revolutionized global trade, is being squeezed shut by drought and forcing shippers worldwide to face a painful choice.
- They can wait in line for days or weeks, as low water levels limit the number of ships passing through the 50-mile waterway, carrying cars, consumer goods, fruit and fuel.
- They can pay millions of dollars to jump ahead in the queue, if a ship with a booked reservation drops out.
- Or they can sail an entire continent out of the way, sending their ships around the southern tips of Africa and South America, or through the busy Suez Canal.
- Each choice adds cost, at a time when governments around the world are struggling to tame inflation.
- And the bottleneck will only worsen in the coming months as Panama enters its annual dry season, which typically begins in December and lasts until April or May.
- Each choice adds cost, at a time when governments around the world are struggling to tame inflation.
- Money for an auctioned slot comes on top of the canal’s usual transit fee, which depending on the vessel’s size can be close to $1 million. Companies spent $230 million on auctions this year through Nov. 20.
Factmonster – TODAY in HISTORY
- George Washington delivered his farewell address to his officers at Fraunces Tavern in New York City. – 1783
- James Monroe of Virginia was elected (by electors) the fifth president of the United States. – 1816
- The Senate approved U.S. participation in the United Nations. – 1945
- Dianne Feinstein became San Francisco’s first female mayor. – 1978
- Associated Press correspondent Terry Anderson is released after seven years as a hostage in Lebanon. – 1991
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