Morning Reads
- On Day One of Argentina Overhaul, Milei Scores Crucial Victory
- Germany, Roiled by a Court Ruling, Finally Has a Budget
- US Defense Tech Start-Ups Are Being Shut Out of Europe’s Defense Market
- Deadly New Trade in ‘Frankenstein’ Guns Enabled by a Gap in US Law
- The Sea-Monster-Sized Ship Disrupting Biden’s Wind-Energy Dreams
- Will the End of Fossil Fuels Spoil the Lucky Country’s Streak?
- Oil Demand Growth Shows Signs of Sharper Slowdown, IEA Says
- Credit Agricole to Stop Financing New Fossil Fuel Extraction Projects
- Wall Street Makes Zero Progress in Energy Finance Transition
- Is Jerome Powell’s Fed Pulling Off a Soft Landing?
- Treasuries 10-Year Yield Falls Below 4% as Fed Sees Rate Cuts
- The Markets Are Getting Ahead of the Fed
- Wall Street Traders Go All-In on Great Monetary Pivot of 2024
- Fnality Completes ‘World’s First’ Blockchain Payments at Bank of England
- UBS Intensifies Cash Clawback From Credit Suisse Defectors
- Top Business Leaders Pick the Year’s 62 Must-Reads
- American Colleges Are Losing Their Students and Money
- Holidays Well Spent
- Federal Regulators Seek to Force Starbucks to Reopen 23 Stores
- Range Rovers Become Thief-Magnets, Causing Prices to Tumble
- OPEC Leaves Global Oil-Demand Views Unchanged
- COP28 Ends With Deal on Transition Away From Fossil Fuels
- The World’s Poorest Countries Buckle Under $3.5 Trillion in Debt
- ‘There Is No Money’: Argentina Begins Economic Shock Remedy
- Xi Disappoints Investors by Skipping Signal for Big Stimulus
- E.U. Moves to Tap Frozen Russian Assets to Help Ukraine
- U.K. Sets Up New Office to Help Enforce Sanctions Against Russia
- Blistering Treasuries Rally Silences Deficit-Obsessed Vigilantes
- Inflation Holds Roughly Steady Ahead of Fed Meeting
- The Fed Isn’t Ready to Speculate on Rate Cuts — Yet
- Vanguard Is Closer Than Ever to Ending BlackRock’s ETF Reign
- UK Proposes Capping Some Visa, Mastercard Fees After Fivefold Jump Since Brexit
- Microsoft Tops the List of Best-Managed Companies of 2023
- Google’s Antitrust Loss to Epic Could Preview Its Legal Fate in 2024
- Chatbot Hype or Harm? Teens Push to Broaden A.I. Literacy
- SpaceX Value Jumps Closer to $180 Billion in Tender Offer
- Swedish Labour Union to Stop Collecting Tesla Waste in Sweden
- Tesla Recalls 2 Million Cars to Fix Autopilot Safety Flaws
- GM Moves Forward After Strike, Focusing on Cost Cuts and EVs
- Why Biden’s EV Tax Credit Could Become Hard to Claim
- Hospitals Creeping Toward Recovery Grapple With ‘Out of Control’ Costs
- There’s a Black Market on Social Media for Pricey Fertility Drugs
- Bill Ackman’s Campaign Against Harvard Followed Years of Resentment
Open Interest Changes
PREMIUM
Prepper
It finally looks like the Federal Reserve's rate-hiking cycle has come to an end, as the central bank's policymakers signaled that more rate cuts could be in store next year than they had foreseen in September. The Federal Open Market Committee maintained its key policy rate at 5.25%-5.50%, as widely expected, but it still kept the door open for additional firming. Traders cheered the Fed's revised expectations, with all three benchmark indices ending around 1.4% higher each, while yields plummeted.
Dot plot: Fed officials now expect three rate cuts next year and four more in 2025, according to the Summary of Economic Projections. While the new projection implies fewer cuts than what the markets priced in, it means that the Fed is moving closer to easing. In the September median projections, policymakers had forecast one last rate hike for 2023, followed by two cuts in 2024. Most FOMC members expect the key rate to fall within the 4.25%-5.0% range next year.
Powell's speech: Fed Chair Jerome Powell remained cautious in the post-decision press conference, saying the Fed is "just at the beginning" of discussing policy easing. He noted that inflation is still elevated, although it has eased from its highs without a spike in unemployment. Powell reiterated that incoming data will determine the Fed's decision on how long it keeps rates restrictive. "He acknowledges that it is premature to declare victory, but this FOMC meeting gives off a strong sense of achievement," said Yimin Xu on behalf of Investing Group Leader Cestrian Capital Research.
SA commentary: "Despite the message of caution from the press conference, the Fed has clearly taken a dovish tone here," said SA analyst Jeremy LaKosh, adding that the economy needs to achieve significant disinflationary milestones over the next 12 months. Wolf Richter noted that the FOMC's statement toned down the chance of additional rate hikes, but left the door cracked open, "just in case." Meanwhile, ING Economic and Financial Analysis thinks the Fed will end up being more aggressive on rate cuts than both they and the market are currently expecting. (119 comments)
Autopilot recall
Tesla (TSLA) is recalling more than 2M vehicles after the National Highway Traffic Safety Administration determined that its Autopilot driver-assistance system does not go far enough to keep drivers engaged. The recall follows an NHTSA investigation into a series of crashes involving Autopilot. The agency will keep the investigation open while it monitors the efficiency of Tesla's over-the-air software fixes. Wedbush believes Tesla's decision to make the requested software update could clear a path for broader acceptance. However, Investing Group Leader Jonathan Weber warned that the indirect costs of the recall, such as brand damage, could be significant. (155 comments)
FTC probe
Adobe (ADBE) shares fell around 7% in extended-hours trading on Wednesday after the Photoshop maker issued weaker-than-expected outlook for the coming year, despite its Q4 results topping estimates on account of strong performance in its Digital Media segment, particularly Creative Cloud. Adobe also disclosed that it was being probed by the Federal Trade Commission over its subscription practices. The company said its practices comply with the law and it is working with the government agency about a possible settlement or resolution on the matter. This could "involve significant monetary costs and could have a material impact on financial results," Adobe warned. (35 comments)
Dim outlook
Pfizer (PFE) shares reached a new 52-week low on Wednesday after the COVID-19 vaccine maker set its 2024 outlook below expectations, dragging its peers including Moderna (MRNA) and Novavax (NVAX), as well as its partner BioNTech (BNTX). Pfizer expects its revenue to reach $58.5B-$61.5B in 2024, which includes about $8B from its COVID treatments and a $3.1B contribution from newly-acquired Seagen (SGEN). While J.P. Morgan said the COVID sales forecast likely represents "a floor for 2024 sales," Investing Group Leader Stone Fox Capital said Pfizer "will no longer have a strong COVID profit machine to help repay debt from the Seagen deal." (184 comments)
Today's Markets
In Asia, Japan -0.7%. Hong Kong +1.1%. China -0.3%. India +1.3%.
In Europe, at midday, London +2.2%. Paris +1.3%. Frankfurt +0.7%.
Futures at 6:30, Dow +0.3%. S&P +0.3%. Nasdaq +0.4%. Crude +1.9% to $70.78. Gold +2.6% at $2,049.30. Bitcoin +4.6% to $43,001.
Ten-year Treasury Yield -9 bps to 3.95%.
Today's Economic Calendar
8:30 Initial Jobless Claims
8:30 Retail Sales
8:30 Import/Export Prices
10:00 Business Inventories
10:30 EIA Natural Gas Inventory
4:30 PM Fed Balance Sheet
Companies reporting earnings today »
What else is happening...
Apple (AAPL) notches new record closing high amid market rally.
Berkshire boosts Occidental (OXY) stake again after CrownRock deal.
Bitcoin erases week's losses as FASB rules may beef up adoption.
U.S. Steel (X) gains after getting multiple bids above $40 a share.
GM's (GM) Cruise shakes up management in effort to rebuild trust.
SEC now requires more Treasury trades to be centrally cleared.
Farfetch (FTCH) in talks with Apollo (APO) for emergency funding.
Can Alibaba (BABA) regain its crown as China's e-commerce king?
Etsy (ETSY) falls after announcing restructuring moves, job cuts.
Mattel's (MAT) American Girl is heading to the big screen.