US FINANCIAL MARKET

Wall Street Holds Back on Big Bets Before CPI Test: Markets Wrap – Bloomberg, 12/11/2023

• Stocks kicked off the week on a cautious note, with traders refraining from big bets ahead of key economic data and meetings from major central banks that will test the market’s optimism on rate cuts in 2024.
• In less than 24 hours, Wall Street will get a sense on whether the disinflation trend is continuing, with the consumer price index for November.
• The report will be released a day before the last scheduled Federal Reserve decision of 2023, with officials widely expected to hold rates and announce their Summary of Economic Projections.
• The question is whether the Fed will try to temper policy easing expectations after investors aggressive dovish repricing.
• The S&P 500 fluctuated around 4,600 after notching its sixth straight week of gains — the longest winning run since November 2019. The Nasdaq 100 rose 0.4%.
• US 10-year yields climbed four basis points to 4.26%.
• The dollar rose.
• The S&P 500 will hit a record high in 2024 as the US avoids sinking into a recession, although a weaker consumer will mean the index gains less than this year’s 20% surge, according to Bloomberg’s latest Markets Live Pulse survey.
• A median of 518 respondents expect the S&P 500 to climb to 4,808 points next year — topping its previous closing peak of 4,797 hit in January 2022 — and the 10-year Treasury yield to drop to 3.8% from this year’s high of 5%.
• More than two thirds of respondents indicated they don’t see a hard economic landing as the top risk to markets and majority expects Federal Reserve interest rate cuts to begin before July.
• Macy’s received a $5.8 billion buyout offer from Arkhouse Management and Brigade Capital Management, a wager that the venerable retailer can execute its turnaround better as a private firm.
• Cigna Group walking away from talks with Humana put an early end to what would have been one of the biggest deals of the decade.
• Occidental Petroleum agreed to acquire Texas shale driller CrownRock in a cash-and-stock deal valued at about $10.8 billion as consolidation heats up in North America’s most-prolific oil basin.
• DoorDash and MongoDB are set to be added to the Nasdaq 100, among other names. The changes will take effect prior to market open on Dec. 18.
• The Stoxx Europe 600 rose 0.3%.
• West Texas Intermediate crude was little changed.
• Spot gold fell 0.9% to $1,986.85 an ounce.

Apple Offers Reward for Musicians to Use High-End Audio Format – Bloomberg, 12/11/2023

• Apple is offering incentives to artists and record labels to produce music using a spatial-audio technology that surrounds listeners in sound.
• Starting next year, the company plans to give added weighting to streams of songs that are mixed in Dolby Atmos technology, according to people with knowledge of matter.
• That could mean higher royalty payments for artists who are first to embrace the technology made by Dolby Laboratories, said the people, who asked not to be identified because the change hasn’t been announced.
• Listeners wouldn’t necessarily have to play the Atmos version of a song for artists to benefit.
• It only matters that the song is offered in that format.
• The new policy will encourage artists and labels to record and mix music with Atmos — including older tracks.
• Mixing music in Atmos is broadly affordable, according to the people, making it worthwhile for established artists and labels to participate in the hope of seeing a boost in royalties.

New York Joins IBM, Micron in $10 Billion Chip Research Complex – Wall Street Journal, 12/11/2023

• New York state is joining chip companies to invest $10 billion in a semiconductor research facility at the University at Albany that is set to include some of the most advanced chip-making equipment in the world.
• NY Creates, a nonprofit that oversees the Albany NanoTech Complex where the facility is to be built, will coordinate its construction.
• It will also use state funds to acquire chip-making equipment from ASML Holding, a Dutch company whose machines can cost hundreds of millions of dollars and are key to making the most advanced chips possible.
• Once the machinery is installed, the project and its partners will begin work on next-generation chip manufacturing there, according to New York Gov. Kathy Hochul’s office.
• The partners include tech giant IBM, memory manufacturer Micron Technology, as well as chip-manufacturing equipment makers Applied Materials and Tokyo Electron.

Boeing Picks a Frontrunner to Be Its Next CEO – Wall Street Journal, 12/11/2023

• Boeing is elevating Stephanie Pope to become its No. 2 executive, setting her up as the heir apparent to Chief Executive David Calhoun as the plane maker prepares for its next leadership transition.
• Pope, who heads Boeing’s services arm, was promoted to chief operating officer and will start in the newly created role on Jan. 1, the company said Monday.
• The Wall Street Journal reported Sunday that the three-decade Boeing veteran beat out other top executives for the role.
• Calhoun expects to remain in the top job at least one more year, some of the people said.
• Pope, 51 years old, has worked in various parts of the company, including stints as the finance chief of both the commercial airline business and services unit, which she helped form.
• The services unit, which she took over in 2022, generates about a quarter of the company’s revenue and is the only unit making a profit.

Occidental to Buy CrownRock for $12 Billion as Oil Patch Consolidates – Wall Street Journal, 12/11/2023

• Occidental Petroleum announced a $12 billion agreement Monday to buy West Texas producer CrownRock as the independent oil company seeks to keep pace with rapid consolidation in the industry.
• As part of the cash and stock deal, Occidental said it would incur $9.1 billion of new debt, issue about $1.7 billion of common equity and take on CrownRock’s $1.2 billion existing debt.
• The Wall Street Journal reported last month that Occidental and CrownRock were in talks for a tie-up.
• CrownRock 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.
• With CrownRock, Occidental accesses more than 94,000 net acres in the Western portion of the oil-rich Permian Basin, the company said. Occidental said the purchase would add some 170,000 barrels of oil equivalent a day to its production in 2024, along with about 1,700 undeveloped locations.

Tucker Carlson Is Launching His Own Streaming Service – Wall Street Journal, 12/11/2023

• Tucker Carlson is launching his own subscription streaming service, the former Fox News host’s official foray into paid content after months of posting videos on X.
• The service, Tucker Carlson Network, is expected to go live on Monday, people familiar with the matter said.
• It will be home to at least five different shows by midweek, they said, including interviews, short-form videos and monologues.
• Tucker Carlson Network, whose logo resembles a red pill, will cost $9 a month—or $72 a year—and will initially be solely available through Carlson’s website.
• Some of the content will be accessible without a subscription and will be ad-supported, while some interviews and monologues will be available exclusively to subscribers, who will have access to that content without ads.

Netflix to Serve Up Live Tennis, Featuring Nadal and Alcaraz – Wall Street Journal, 12/11/2023

• Netflix will stream a one-night tennis exhibition match featuring Rafael Nadal and Carlos Alcaraz in the streaming company’s latest foray into live sports.
• Nadal, winner of 22 Grand Slam men’s singles titles, and Alcaraz, the current No. 2 ranked men’s player, will face off in a match next year, the company said Monday.
• The event, called “The Netflix Slam,” will take place in Las Vegas on March 3 and stream live.
• Other tennis players and matchups will be announced later, Netflix said.
• Last month, Netflix streamed its first live sporting event, “The Netflix Cup,” a golf tournament with athletes from “Drive to Survive,” its Formula One documentary, and “Full Swing,” its show about professional golfers.

Investor Group Launches $5.8 Billion Buyout Bid for Macy’s – Wall Street Journal, 12/11/2023

• An investor group has made a $5.8 billion offer to buy Macy’s, in a bid to take the famed department-store chain private after stiff competition from online rivals took a big bite out of its value.
• Arkhouse Management, a real-estate focused investing firm, and Brigade Capital Management, a global asset manager, on Dec. 1 submitted a proposal to acquire the Macy’s stock they don’t already own for $21 a share, people familiar with the matter said.
• That represented a roughly 32% premium to where shares closed the day before.
• The group already has a big position in Macy’s through Arkhouse-managed funds.
• It has discussed the proposal with Macy’s, whose board subsequently met to discuss the offer.
• The investor group, which believes Macy’s is undervalued in the public markets, has indicated that it would be willing to raise its offer subject to due diligence.
• An investment bank has provided a letter supporting the group’s ability to raise the necessary financing to get a deal across the finish line.

Cigna Drops Humana Pursuit and Plans Stock Buybacks Instead – Bloomberg, 12/11/2023

• Cigna Group walked away from talks with Humana, putting an early end to what would have been one of the biggest deals of the decade.
• Cigna ended the discussions after failing to agree with Humana on price, a task made more difficult as Cigna’s shares declined, according to people with knowledge of the matter.
• That obstacle proved to be too high, even though the two sides believed a merger made strategic sense and thought it could clear regulatory hurdles, said the people, who asked not to be identified because the information was private.
• A combination would have created a health insurance behemoth with a market value of about $135 billion, even after share price declines for both companies in the past month.
• Cigna shares rose as much as 16% at the US market open Monday, the biggest intraday gain since 2015.
• Humana shares slipped 3% before paring losses.

US ECONOMY & POLITICS

Trump Holds 32-Point Lead Over DeSantis in Closely Watched Iowa Poll – Wall Street Journal, 12/11/2023

• Former President Donald Trump holds a 32-percentage-point lead over his nearest rival, Florida Gov. Ron DeSantis, in the state that will hold the first Republican presidential nominating contest in just more than a month, according to an Iowa poll released Monday.
• The survey shows 51% of likely GOP caucus-goers say Trump is their first choice out of seven candidates tested, while 19% pick DeSantis and 16% select former South Carolina Gov. Nikki Haley.
• They are followed by entrepreneur Vivek Ramaswamy at 5% and former New Jersey Gov. Chris Christie at 4%, while all others received 1% or less.
• The numbers show Trump building a lead ahead of the Jan. 15 Iowa caucuses, while his challengers are barely moving or stalled.
• He gained 8 percentage points since the last Iowa poll in late October, while DeSantis added three points and Haley was unchanged.
• Haley has drawn the most attention lately, including from rivals in last week’s debate.

EUROPE & WORLD

Global Trade to Drop 5% This Year Amid Geopolitical Headwinds – Bloomberg, 12/11/2023

• Global trade will decline in 2023 by about 5% from last year’s record as high borrowing costs weigh on economies, US-China tensions redirect supply chains and more policies restricting cross-border commerce emerge, a UN agency said.
• The value of goods and services trade will reach $30.7 trillion compared with $32.2 trillion in 2022, according to the Geneva-based United Nations Conference on Trade and Development.
• A $2 trillion, or 8%, slump in merchandise trade is the main reason.
• Services trade this year will increase by $500 billion, or about 7%, from a year ago, UNCTAD said in a report Monday.
• Lower costs for goods affected by high inflation a year ago is also a reason for the decline.

Dubai Sets Up New Fund to Hold Assets Worth Billions of Dollars – Bloomberg, 12/11/2023

• Dubai has set up a new fund to drive investments in strategically important projects and said the entity will house government-owned assets valued at billions of dollars.
• The Dubai Investment Fund will be tasked with investing government funds, surpluses and the general reserve locally and internationally, state-run news agency WAM said on Monday.
• It will be able to establish companies and investment funds independently or with third parties, as well as acquiring or merging firms, projects and funds, and holding stakes in them.
• “The fund will focus on investments in stocks, bonds, and securities to achieve sustainable returns and can explore prospects in local or international financial markets,” WAM said.
• It also “seeks to bolster the financial stability” of the Dubai government by financing its deficit and “establishing strong financial reserves.”
• The entity will include stakes in the city’s main utility, DEWA, toll operator Salik, as well as the government-owned taxi firm, all of which have been privatized over the past year under plans to list.

Gazans say hunger is causing social breakdown, fuelling fears of exodus into Egypt – Reuters, 12/11/2023

• Hamas said it was striking back against Israeli forces across Gaza on Monday and Palestinians and international relief agencies said public order was disintegrating as hunger spread, fuelling fears of a mass exodus to Egypt.
• The narrow coastal strip has been under a full Israeli blockade since the start of the conflict more than two months ago and the border with Egypt is the only other way out.
• Most of Gaza’s 2.3 million people have been driven from their homes and residents say it is impossible to find refuge, or increasingly food, in the densely populated enclave, with around 18,000 people already killed and conflict intensifying.
• Gazans said people forced to flee repeatedly were dying of hunger and cold as well as bombardment, describing desperate attacks on aid trucks and sky high prices.
• “Had any of us expected that our people may die of hunger, had it crossed anyone’s mind before?” said Rola Ghanim, among many expressing bewilderment on social media.
• Aid trucks risked being stopped by desperate residents if they even slowed down at an intersection, Carl Skau, said deputy executive director of the U.N. World Food Programme.

Ukraine’s Zelensky Is Facing a Turning Point as He Heads to Washington – Wall Street Journal, 12/11/2023

• Ukrainian President Volodymyr Zelensky will hold high-level meetings in Washington on Tuesday as he faces his toughest test since Russian tanks bore down on Kyiv in late February 2022.
• Zelensky will meet with President Biden and Congressional leaders from both parties seeking to help push through an aid package for Ukraine, which has been held up by fighting over funding for security at the U.S.’s southern border.
• Zelensky’s visit to Washington, his third since the war began, reflects the existential urgency for Ukraine of maintaining the flow of weapons from the U.S., which has been the country’s primary arms supplier.
• If Congress shuts off the tap, Ukrainian troops would soon find themselves severely outgunned.
• Congress’s battle over funding for Ukraine is the most critical in a string of challenges facing Zelensky.

Factmonster – TODAY in HISTORY

• Indiana became the 19th state. – 1816
• Nitrous oxide was used for the first time in dentistry. – 1844
• King Edward VIII abdicated the throne of Britain for the woman he loved, Mrs. Wallis Simpson. – 1936
• Germany and Italy declared war on the United States. – 1941
• The United Nations International Children’s Emergency Fund (UNICEF) was established. – 1946
• Russian troops invaded Chechnya in an unsuccessful attempt to restore Moscow’s power in the region. – 1994
• Bernard Madoff, an investment manager, was charged with defrauding clients of as much as $50 billion in what might be the largest swindle in Wall Street history. – 2008

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