Morning Reads
- China Asks Some Funds to Avoid Selling Stocks as Markets Sink
- Zhongrong Trust’s Missed Payments Trigger Fears Among Chinese Investors
- China Scuttles a $5.4 Billion Microchip Deal Led by U.S. Giant Intel
- The U.S. Is Turning Away From Its Biggest Scientific Partner at a Precarious Time
- Vital Natural Gas Is Being Stashed in Caverns Beneath War-Torn Ukraine
- Race to Control Electric-Vehicle Supply Chains Leads to Africa
- A BRICS Currency Replacing the Dollar is a ‘Ridiculous’ Idea, Says the Top Economist Who Named the Group—Unless China and India Become Allies
- I.R.S. Says Cash Influx Has Made Agency Bigger and More Digital
- Coinbase Gets NFA Approval to Offer Crypto Futures
- Goldman CEO’s Most Loyal Deputy Is Tested by Mutinous Partners
- Brookfield Chases Rivals for Private Equity’s New Money-Spinner
- Billionaire Charlie Ergen Conjures M&A Magic to Save His Empire
- Dubai Leapfrogs Lisbon as Best Destination for Globetrotting Executives
- A Vietnamese Electric Carmaker is Now Worth More Than Volkswagen and Ford
- High-Potency Pot Market Worth Billions Draws Regulator Scrutiny
- Estée Lauder’s Big Bet on China Is Looking Not So Pretty
Todays Open Interest Change
PREMIUM
Prepper
Bond yields continue to rise across the board, continuing an upswing that began nearly three months ago at the beginning of the summer. In fact, the yield on the benchmark 10-year Treasury (US10Y) closed at 4.25% on Wednesday - marking the highest level since 2008 - and extended gains overnight by climbing another 4 bps to 4.29%. The upward march follows the release of the latest FOMC minutes, which stressed that additional interest rate hikes might be needed.
The minutes: "With inflation still well above the Committee's longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy... Participants generally noted a high degree of uncertainty regarding the cumulative effects on the economy of past monetary policy tightening... and emphasized the importance of communicating as clearly as possible about the Committee's data-dependent approach to policy and its firm commitment to bring inflation down to its 2% objective."
Investors are sizing up the latest developments and how rising yields compare with stock valuations. While the equity market has had a few hiccups in August, stronger-than-expected economic data continues to pour in and dip buying continues to be a strategy for those that expect the Fed to end its hiking cycle soon. Others say 10-year yields above 4% still present a good buying opportunity, in contrast to the potential rewards from pricey stocks and multiples that might not be as appealing. Check out Treasury and TIPS yields, as well as bond ETFs, on the Seeking Alpha bonds page.
Analyst commentary: "This higher-for-longer narrative is coming out of the Fed, causing nominal rates and real rates to keep moving higher," declared Lawrence Gillum, chief fixed income strategist at LPL Financial. "Whether they can continue to keep moving higher is the question. Ten-year Treasury yields have a direct impact on mortgage rates, so if they go higher, we're likely to see continued stress in housing markets. The 10-year TIPS rate tends to impact investment alternatives so that investors might choose TIPS over riskier choices."
Barbie bonanza
Barbie is now Warner Bros. Discovery's (WBD) highest-ever grossing domestic movie, topping $537M at the box office to overtake Christopher Nolan's The Dark Knight. "After a tough stretch for movie theaters during the pandemic... foot traffic for theaters and music venues rose 29.5% last month," noted Naveen Jaggi, President of Retail Advisory Services at JLL. Barbie is also showing no signs of losing steam, as it appears on track to be 2023's highest-grossing film. A major driver of its success has been Warner Bros.' advertising prowess, which SA analyst Andrew Dessy said is a "nice preview to the power of this recently combined media conglomerate." (9 comments)
Crypto derivatives
In a big regulatory win as it battles an SEC lawsuit, Coinbase (COIN) has received regulatory approval to offer eligible U.S. customers access to cryptocurrency futures. "Coinbase will now be the first crypto-native leader to directly offer traditional spot crypto trading alongside regulated and leveraged crypto futures on an integrated trading solution," the exchange said in a statement. The development is viewed as a positive for the industry, especially in light of the recent flurry of spot bitcoin (BTC-USD) ETF and ether (ETH-USD) futures ETF applications, which SA analyst VettaFi Research said proves that institutions still have significant interest in the crypto space. (2 comments)
Backing out
The biggest meat company in America, Tyson Foods (TSN), is reportedly exploring the sale of its poultry business in China. While talks are at an early stage, a number of private equity firms have shown interest. The development comes a week after Tyson announced the closure of four U.S. chicken facilities to cut costs, but many foreign companies have been divesting their assets in China due to an economic slowdown and geopolitical uncertainty. Another U.S. meat giant, Cargill, sold its poultry operations in the country earlier this year to private equity firm DCP Capital. (3 comments)
Today's Markets
In Asia, Japan -0.6%. Hong Kong flat. China +0.4%. India -0.6%.
In Europe, at midday, London -0.1%. Paris -0.1%. Frankfurt -0.1%.
Futures at 7:00, Dow +0.1%. S&P +0.1%. Nasdaq +0.1%. Crude +0.8% at $80.04. Gold flat at $1,927.80. Bitcoin -2.3% to $28,502.
Ten-year Treasury Yield +5 bps to 4.31%.
Today's Economic Calendar
8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
10:00 E-Commerce Retail Sales
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
4:30 PM Fed Balance Sheet
Companies reporting earnings today »
What else is happening...
Target (TGT) holds gains after signaling Q3 may be off to a better start.
Energy Transfer (ET) to buy Crestwood Equity (CEQP) for $7.1B in stock.
Tesla (TSLA) gets big Texas win with approval of EV charging mandate.
Paramount Global (PARA) abandons plan to sell stake in BET Media.
Cisco (CSCO) pops after posting strong results, mixed guidance.
ArcelorMittal (MT) weighs making buyout offer for U.S. Steel (X).
Visa (V) under renewed scrutiny from DOJ over token technology.
Federal appeals court rules to restrict access to abortion pill.
Tencent (OTCPK:TCEHY) profit and revenue rise, but misses estimates.
T.J. Maxx parent (TJX) up as results top estimates, FY outlook raised.
Aldi beefs up U.S. footprint with acquisitions of supermarket chains.