August 23, 2023

📰 News Organizations

• S&P Joins Moody’s in Cutting US Banks Amid ‘Tough’ Climate. S&P lowered grades one notch for KeyCorp, Comerica Inc., Valley National Bancorp, UMB Financial Corp., and Associated Banc-Corp, noting the impact of higher interest rates and deposit moves across the industry.
  

• Lowe's Sticks By Full-Year Earnings Forecast Despite Weakening Sales. Lowe’s topped Wall Street’s earnings estimates but fell slightly short of expected sales as consumers’ interest in tackling springtime projects helped offset weakening home improvement demand.
  

• Dick’s Sporting Goods, Macy’s Flash Warning Signs on U.S. Consumer Spending. Both retailers traded sharply lower Tuesday after the retailers posted weaker quarterly earnings and provided lukewarm forecasts for the remainder of the year, signals that the recent strength in consumer spending has its limits.

• Global Onion Prices Set To Rise After India Slaps Export Tax. India has slapped a 40% export tax on onions on the back of higher domestic prices. India is the world’s largest exporter of onions, and contributes over 12% of global onion trade, data provided by CRISIL showed.
  

• Rice Supply Faces New Threat as India Mulls More Limits. The world’s biggest rice exporter is considering more restrictions on its shipments of the grain and an export tax as the nation grapples with rising food prices, a move that’s likely to further tighten global supply.
  

• Goldman to Join TDR’s Subway Bid to Rival Frontrunner Roark. Final bids were submitted by private equity firm Roark and the TDR-led group on Tuesday, with a decision on the winner expected as early as Wednesday. Roark seen as frontrunner after offering more than $9 billion.

🐦 Twitter

• The energy sector is outperforming S&P 500 by nearly 5% this month, the best since October. Two consecutive months of outperformance haven’t happened since last August. Source.
  

• If the Atlanta GDPNow's forecast of 5.8% annualized growth in Q3 holds, Q3 will see faster real growth than any quarter between 2009 and 2019. That’s hardly an endorsement of Treasuries as a screaming buy. Source.
  

• Mega-cap stocks have retreated the most, but even the S&P 500 equal-weighted index is seeing a meaningful correction: It’s back into the large range that has defined the price action of the past 12 months or so. Source.
  

• Promoters of a 3% inflation target are too focused on deflation risk without considering how it significantly raises the probability of undesirable inflation-related volatility. The sharp rise of stock-bond correlation shows the risks of raising the target to 3% or higher. Source.
  

• The Debt-to-GDP ratio in the US is now nearly 119%. In the year 2000, it was just 50%. We have gone from being one of the 5 lowest Debt-to-GDP countries to the top 5 highest in 23 years. Government spending is so high that $1.8 trillion in bonds are being issued over the next 6 months to cover the deficit. Source.

📓 Online Publications

• U.S. Home Sales Fall in July to a Six-Month Low. Sales of previously owned homes fell by 2.2% to an annual rate of 4.07 million in July. The median price for an existing home in July was $406,700, up 1.9% from a year ago. The total number of homes for sale in July fell by 14.6%.
  

• Rents Fall in July Due to Rising Supply of Apartments. The median asking monthly rent fell by 1% from a year ago in July to $1,759. The most affordable markets for rentals were in the Midwest, led by Oklahoma City, where renters spend around 18% of their income.
  

• Charles Schwab Is Cutting Jobs And Trim Costs.The company disclosed it would lay off an undisclosed number of employees and reevaluate its real estate footprint. The company is facing a difficult environment and is attempting to resize its operations to reflect the current climate.
  

• Inflation in Streaming Services Is Here to Stay for a While. The costs to produce content and keep bringing on new subs are getting out of control. Too much competition. This may mean consolidation is coming but that’s probably going to be difficult. So prices will keep rising.

🎧 Podcasts

• A New Geopolitical Order is Emerging. Leaders from across the developing world are gathering in Johannesburg, South Africa this week. They’ll debate whether the BRICS group of nations should expand. Brics could represent 45 percent of the global economy. Source(5:57)
  

• Has Nvidia Become a Macro Asset? Imran Lakha thinks Nvidia has evolved into sort of a macro asset embodying the AI narrative. Despite various semiconductor companies experiencing earnings disappointments due to delayed AI-driven profits, the prevailing understanding is that growth lies in this domain. Source(1:49)
  

• Commercial Real Estate Is Struggling, Except For Malls. The malls are doing great. In Q2, office vacancy rates soared to a 30-year high of 18.2%, while the vacancy rate for retail space fell to 4.8%—the lowest level since real estate firm CBRE started tracking it 18 years ago. Source(2:00)
  

• The Growth Trends For Cybersecurity As A Whole. Some of the specific growth trends that are expected to shape the cybersecurity market include the increasing number of connected devices, the growing sophistication of cyberattacks, and the increasing regulations and compliance requirements around cybersecurity. Source(14:09)
  

• Ozempic is Controlling the Economy in Denmark. Weight loss drugs like Ozempic and Wegovy are made by the company Novo Nordisk. So much money is coming from the US to Novo Nordisk that it's flooding the Danish economy with dollars causing the central bank to keep interest rates lower than the European central bank. Source(18:10)