DHUnplugged #682: All Aboard!

The train is leaving the station – get on or get run over.

Inflation is turning and now there is what?

Fed rally – just in time for Christmas.

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Warm Up
- AND it is LIVE - CTP Cup for 2024

- More layoffs
- End pf year - bullish sentiment and candy cane dreams
- AMAZING - NOW Deflation is starting to bubble up
- Fed-Ex Earnings...

Market Update
- Data matters - but only bull case
- Yields - next stop? What is it saying about the future economy?
- Adobe M&A stopage
- Homebuilders - hitting new highs
- Hacking - another hit
- Supply Chain Redux?

Fed Rally - Then Chill
- This is getting out of hand...
- Just days after a Federal Reserve meeting that penciled in an ample course of interest rate cuts next year, which in turn unleashed a broad rally in financial markets, one of the U.S. central bank's top policymakers pushed back on the ebullience on Friday.
- "We aren't really talking about rate cuts right now," New York Fed President John Williams said in an interview with CNBC.  (WHAT????)
- When it comes to the question of lowering rates, "I just think it's just premature to be even thinking about that" as the central bank continues to mull whether monetary policy is in the right place to help guide inflation back to its 2% target, he said.

DEFLATION concept entering the market
- Deflation is happening on the "goods" side of the U.S. economy, or the tangible objects that Americans buy, economists said.
- For one, a strong U.S. dollar makes imported goods cheaper. Some of those savings get passed on to consumers, said Mark Zandi, chief economist of Moody's Analytics.
----- A strong dollar is a likely contributor to deflation in certain categories like household furniture and appliances, Zandi said. Additionally, weaker demand may be a factor: Households that spent liberally on home goods in the early days of Covid-19 lockdowns are likely no longer doing so, he added.
--- Broadly, the pandemic snarled global supply chains, causing shortages that fueled big spikes in prices. Energy costs surged when Russia invaded Ukraine, pushing up transportation and other distribution costs.
------ Now, supply-chain disruptions are largely in the rearview mirror, economists said. The Global Supply Chain Pressure Index, for example, has fallen back to pre-pandemic levels from historic highs at the end of 2021.
- Some prices, like those for airline tickets and eggs, are also falling back to earth after hitting record-high levels. The latter, for example, soared largely due to a historically deadly bout of avian flu among egg-laying hens. Egg and airline ticket prices are down about 22% and 12% in the past year, according to CPI data.

Year Over Year November - Not Seasonally Adjusted
- Does not include rents/housing. ( A big part of the the CPI index)

Deflation - Food/Energy

Deflation - All Items (X)

Red Sea
- War is hell - now ships diverted
- Have to go around Cape Horn adding massive time for deliveries
- Will this cause any price hikes?
- Oil Prices?

FedEx Earnings
- FedEx shares tumbled 8% in after-hours trading Tuesday after the package-delivery giant lowered its revenue forecast as weaker demand hit sales.
- The company said it expects a low-single-digit decline in revenue for the fiscal year, down from a previous forecast for flat sales year-over-year - less that analysts predicted.
- It's the second consecutive quarter FedEx has lowered its sales outlook.
- Meanwhile - Apple lowered its numbers for several quarters and the stock still rallies (Buybacks)

Layoffs Auto
- General Motors plans to lay off about 1,300 workers in Michigan starting early next year due to vehicles they produce ending production, the company disclosed in state documents.
- The largest of the layoffs were expected. They include 945 workers at Orion Assembly who build Chevrolet Bolt models, which are ending production after this year.
-The final production date is scheduled for the week of Dec. 18. However, layoffs will not occur until Jan. 1.

CHINA - on different timeline?
- November since February 2022, though retail sales growth figure underwhelmed expectations pointing to a patchy recovery in the world's second-largest economy.
- China's industrial output grew 6.6% in November, outpacing expectations for 5.6% in a Reuters poll and a 4.6% rise in October.
- Retail sales climbed 10.1% in November, way below expectations of 12.5%, following a 7.6% rise in October.

Nothing Matters - EOY Buying Continues
-- A federal court jury has decided that Google's Android app store has been protected by anticompetitive barriers that have damaged smartphone consumers and software developers, dealing a blow to a major pillar of a technology empire.
-The unanimous verdict reached Monday came after just three hours of deliberation following a four-week trial revolving around a lucrative payment system within Google's Play store.
-- Stock continues to move higher

- Apple will pause U.S. sales of two of the latest versions of its Apple Watches due to an intellectual property dispute over their Blood Oxygen feature, the company said.
- The decision stems from two orders issued by the U.S. International Trade Commission on Oct. 26, which would restrict Apple's ability to sell products that use the Blood Oxygen feature after an intellectual property disagreement between Apple and Masimo, a medical technology company.
- Online sales of the the Apple Watch Series 9 and Apple Watch Ultra 2 will pause at 3 p.m. Thursday and in stores after Sunday.
- If the decision stands, one of the ITC's orders will bar Apple and its affiliates from importing watches that use the Blood Oxygen feature, as well as materials used to make that feature
--- The other is Cease and desist
----- Will obviously come down to a payment / royalty.
- Stock was down 1% on the news

- Intel unveiled new computer chips on Thursday, including Gaudi3, an artificial intelligence chip for generative AI software. Gaudi3 will launch next year and will compete with rival chips from NVIDIA and AMD that power big and power-hungry AI models.
- While the company was light on details, Gaudi3 will compete with Nvidia's H100, the main choice among companies that build huge farms of the chips to power AI applications, and AMD's forthcoming MI300X, when it starts shipping to customers in 2024.
- - INTC moved up slightly - AMD and NVDA continue higher

- Israel's stocks are right back where they were before war began

One for the consumer
- The Federal Communications Commission on Wednesday voted to pass a measure banning cable and satellite companies from charging early termination fees.
- The rule will also require service providers to issue a prorated credit or rebate to customers for days remaining in the billing cycle after cancellation.
--- Why wasn't this standard practice?

Balmer - Getting Paid!- 6th wealthiest in the world
- Microsoft is on track to pay former CEO Steve Ballmer about $1 billion in annual dividend payments.
- Today, his stake is worth $128 billion, according to Bloomberg's Billionaire Index, after gaining $42 billion in wealth this year thanks to a 55% rally in Microsoft's stock price.
- Microsoft paid $2.79 in dividends per share in 2023, which equates to an annual dividend payment of about $930 million to Ballmer based on his stake in the company.

- 10 Yr treasury sub 4%
- Yield curve looking a little better since Powell DOVE Christmas Message
- Even though several speakers out end of last week to try to throw some cold water on markets
- DoubleLine Capital CEO Jeffrey Gundlach said last week the 10-year Treasury yield will continue to fall to the 3% range next year, following the Federal Reserve's new forecast for rate cuts.
- "There's something about if you break below four on the 10-year that I think it almost sounds like a fire alarm going off relative to the economy," Gundlach said.

- BlackRock, State Street subpoenaed by U.S. House in ESG probe
- The U.S. House of Representatives Judiciary Committee said it had subpoenaed BlackRock and State Street for documents and communications related to its probe into whether environmental, social and governance (ESG) efforts violate antitrust laws.
- The committee wrote to BlackRock and State Street on July 6, requesting documents. But response from both the companies on the request has been inadequate, the committee said in a statement.

Blackstone - Holiday ERA Tour Video?
- Comments on ?
- AH sent to P/E peeps - CRINGWORTHY  was their comment

Adobe - Nope
- Adobe and Figma, the cloud-based design tool, will terminate their planned $20 billion merger in light of regulatory hurdles, the companies said Monday.
- In a statement, the two companies said "there is no clear path to receive necessary regulatory approvals from the European Commission and the UK Competition and Markets Authority."
- Last week - just like 3 days before this announcement, Adobe said all was on track

Hack (Clorox like?)
- Shares of The North Face and Vans owner VF Corp tumbled Monday after the company reported that a hack had affected its ability to fulfill some orders ahead of the holidays.
- The company said hackers encrypted “some” systems and made off with personal data.
- Those are some hallmarks of ransomware, where attackers try to extort companies in exchange for hefty payment. VF Corp. declined to comment on whether the incident was a ransomware attack.
- The stock closed down more than 7% Monday.

Follow Up - Rolling Down the Hill
- Trevor Milton, the founder of electric truckmaker Nikola, has been sentenced Monday to four years in prison after a jury last year found him guilty of misleading investors about his company’s technology, according to reports.
- 4 years in prison for fraud
--- Martha Stewart of our time.... Plenty of other peeps what should be in orange suits (SPAC Pied Pipers)

End of an Era and Saga
- Nippon Steel with be buying US Steel in all cash deal
- Seems not a lot of issue with anti-trust on this deal
- The deal price of $55 per share represents a whopping 142% premium to Aug. 11, the last trading day before Cleveland-Cliffs unveiled a $35-per-share, cash-and-stock bid for U.S. Steel.

Announcing the Entries for the 2023 - DHUnplugged CTP Cup
- Matheau Phillips (2022 Winner)
- Anson Brady
- Taylor Rivera (2)
- Jeff Salcedo
- Jen Devall
- Mike Kazmierczak

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