August 31, 2023

📰 News Organizations

• U.S. Job Growth Slowed Sharply To 177,000 In August. It's down from a revised 371,000 in the prior month, according to ADP on Wednesday. The slowdown in job growth was driven by leisure and hospitality. Job creation in hotels and restaurants fell to 30,000 in August.
  

• UBS Shares Jump to 2008 Highs After Profit Beat. UBS said the result primarily reflected $28.93 billion in negative goodwill on the Credit Suisse acquisition. UBS also announced thousands of layoffs as it plans to fully absorb Credit Suisse’s Swiss bank.

• Microsoft Fends Off EU Antitrust Probe With Teams Deal. Microsoft Corp. tried to ward off further European Union antitrust scrutiny of its Teams video-conferencing app by offering to unbundle Teams from Microsoft 365 and Office 365 across Europe, starting October 1st.
  

• Salesforce Projects Revenue Topping Estimates, Easing Fears. The company delivered growth in all five of its product categories, with quarterly revenue gains of 11%.CEO Marc Benioff sees growth ahead through AI and raised its fiscal-year sales, profit, and margin outlook.

• Shares of HP Fall 8% Following Revenue Miss. HP reported $13.2 billion in revenue, down from the $13.37 billion expected by analysts, according to Refinitiv. Analysts think PC revenues will likely improve going forward but the company’s printing business may be more of a sticking point.

• LEGO Sales Increase While Other Toy Makers Struggle. Lego has built on pandemic-era growth, boosted by a slate of products that cater to kids and adults alike. Meanwhile, Mattel, Hasbro, Funko, and Jakks Pacific have all reported sales declines so far this year.

• Visa, Mastercard Prepare to Raise Credit-Card Fees. The fee increases are scheduled to start in October and April. The changes could result in merchants paying an additional $502 million annually in fees. The fees will help cover costs related to fraud prevention and innovation.

🐦 Twitter

• U.S. home prices have experienced a V-Shaped recovery. We're just -0.02% below the all-time high set in June 2022. Peak to trough, U.S. home prices experienced a 3% decline with seasonal adjustment and a 5% decline without seasonal adjustment. Source.
  

• Florida housing is starting to sink: Tampa home prices were up 20.5% YoY last October; it just flipped negative, and Miami will follow soon. The west coast remains deep underwater but stabilizing. Source.
  

• Home price growth is reaccelerating. The 3-month annualized % change in the S&P CoreLogic CS National Home Price Index climbed to +8.9% in June, which is among the stronger readings relative to history. Source
  

• Mastercard is back at an all-time high, up 622% over the last decade vs. a 230% gain for the S&P 500. Their Q2 earnings report noted "resilient consumer spending, particularly in travel and experiences." Revenues/Net Income hit new highs in Q2, up 14%/25% over the prior year. Source.
  

• Hedge fund exposure to mega-cap technology stocks just crossed 30% for the first time in history. There has never been more hedge fund exposure to large technology stocks. Institutional money really believes that AI is the next big thing. Source.
  

• Hedge Funds continue to short treasuries at historic levels and have increased their short position on 10-year note futures to more than 6 million contracts, the largest since at least 2016. Source.

📓 Online Publications

• US Second-Quarter Growth Rate Cut to 2.1% on Business Spending. The government’s main measure of US economic activity in the second quarter was revised lower, as more moderate business investment than initially reported outweighed stronger consumer spending.

• US Pending Home Sales Unexpectedly Rise for a Second Month. The NAR index of contract signings increased 0.9% in July, the highest in three months, the group reported Wednesday. The pending sales in the West region rose, helped by a drop in prices.
  

• Pharmacy Chains Are Moving Into Full-Service Healthcare. Walgreens, Walmart, and CVS are now offering testing and treatment options for people with viral respiratory illnesses in the hopes of grabbing a bigger slice of the trillions of dollars the US annually spends on healthcare.
  

• Inflation Adjusted House Prices 3.9% Below Peak. The seasonally adjusted National Index, was reported as being 65% above the bubble peak in 2006. However, in real terms, the National index is about 9% above the bubble peak. The composite 20, in real terms, is 1% below the bubble peak.
  

• US Home Prices Near 2022 High As Prices Rise For Fifth-Straight Month. US home prices rose to within 0.02% of an all-time high tallied in June 2022 as cities nationwide posted a fifth month of increases, according to data released by CoreLogic and the FHFA.

🎧 Podcasts

• The EU Imported Record Volumes Of Liquefied Natural Gas From Russia. The European Union is on track to import a record amount of liquefied natural gas from Russia this year. That’s according to data by Global Witness. The jump in imports has come as the EU has struggled to move away from Russian piped gas. Source(0:50)

• Goldman Sachs Bought UK And US Companies Using Chinese State Funds. China has been investing in a series of UK and US companies through a Goldman Sachs private equity fund. It’s a big issue because the West has been cracking down on Chinese investment. Source(5:12)
  

• Job Market Slowdown Fuels Bets Fed Will Hold Fire On Rates This Year. All of this points to a cooling labor market, and that’s making analysts think the Federal Reserve is even more likely to stop raising interest rates for the rest of the year. Markets liked all this. Source(8:30)
  

• Biden Takes on Big Pharma to Lower Drug Prices. The Biden administration unveiled a list of 10 prescription drugs subject to negotiations with Medicare. The new drug prices won’t take effect until 2026, but we might see this argued before the Supreme Court before then. Source(2:25)
  

• Commodity Supercycle Breakout Unlikely. Deflationary pressures on China's exports are visible, and the Chinese government seems focused on aiding its domestic economy rather than the global scale, unlike the 2015–2016 recession, limiting hopes for a commodity market upswing due to ongoing Chinese developments. Source(9:35)