DHUnplugged #723: Race To The End

DHUnplugged Podcast

Bulls remain in charge

Data not important – down the road all will be fine

Seasonality – Race to the End

CPI and PPI – conflicting

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This week on TDI Podcast - Patrick O'Hare from Briefing.com

Warm-Up
- Bulls remain in charge
- Data not important - down the road all will be fine
- Seasonality - Race to the End
- Check the Podcast Cover Design - trying to do all from AI generation through end of year.
- Musk pulls a fast one

Markets
- CPI and PPI - conflicting
- Bank earnings - so far so good
- Fed allowing people to look past negatives - rather to opportunities ahead
- US Chips and Exports - roughed up market

Economics This Week
- Import and Export Prices
- Retail Sales
- Philly Fed
- Industrial Production
- Housing Starts
- Building Permits

Of Interest:
NY Fed says median inflation expectations remained unchanged at 3.0% at the one-year horizon, increased to 2.7% from 2.5% at the three-year horizon, and increased to 2.9% from 2.8% at the five-year horizon.
- So inflation is a bit more sticky than

Recession - No Says Goldman
- Goldman lowers recession odds to just 15%

Seasonality - The Race until the end
- Sell Rosh Hashana and Buy Yom Kippur - so far so good - working just as planned. Almost...
- End of year from here favors the bulls
- Could have a few complications with the election right in between but electoral promises will be helpful for markets

Markets Worried?
- Biden administration officials have discussed capping sales of advanced AI chips from Nvidia Corp. and other American companies on a country-specific basis
- NVDA, INTC, AMD in the crosshairs for Middle East
- Officials are focused on Persian Gulf countries that have a growing appetite for AI data centers and the deep pockets to fund them
- The new approach would set a ceiling on export licenses for certain countries in the interest of national security
- ASML earnings miss (Stock dropped 16%) is a drag on chip/semiconductor sector

Fed Powers
- Former President Trump on Bloomberg interview says Fed Chair Jerome Powell dropped rates too much in 2020; says a president should be able to give his or her opinion to Fed on interest rates, but he or she shouldn't be allowed to order it

ELON - Pulling a fast one
- Tesla had its Optimus robots controlled by remote at CyberCab event, according to Bloomberg
- Also, reports that driver-less cars controlled by remote drivers in India (or somewhere)
- Isn't that fraud?

Example of promises hitting the wires
- Former President Trump will propose today making all interest on car loans fully tax deductible, according to Reuters
- Former President Trump will also propose a 15% corporate tax rate only for companies that produce products in America
- Former President Trump will also propose banning all Chinese autonomous vehicles from traveling on US roads (Special gift for Elon)

Consumer Confidence
- Last Friday - confidence showed people less confident
- Inflation expectations lower, but dropped 2 points from last month

JPM Earnings
- JPMorgan Chase & Co. reported a surprise gain in net interest income for the third quarter and raised its forecast for the key revenue source, even amid expectations that US interest rates will continue to fall.
- Revenue from the bank’s Wall Street operations also defied analysts’ estimates, with investment-banking fees surging 31%, topping estimates for a 16% gain. Equity traders notched a 27% revenue increase.
- Official: JPMorgan Chase reported strong third-quarter earnings, with earnings per share (EPS) of $4.50, beating estimates. The bank’s performance was driven by robust trading and investment banking revenues. This reflects a slight drop compared to the same quarter last year, when earnings were $4.33 per share. However, JPMorgan's revenues increased from the previous year's figure of $39.8 billion

Other Banks:
- Wells Fargo also reported better-than-expected earnings, with a notable increase in net interest income. The bank reported earnings of $1.28 per share on revenue of $20.37 billion, showing a 2% decline in revenue compared to last year. Net income dropped 11% year-over-year to $5.1 billion?
- BlackRock and Bank of New York Mellon are among other financial heavyweights that released their results today and did well.

Eli Lilly
- GLP1 weight loss meds come off the short supply list by the company
- FDA takes off too - which means compounding will not be available for this drug (Zepbound - Tirzepatide )
- Compounding companies sue the FDA
- Less than a week later, the FDA is reconsidering allowing compounding companies to continue production
- WAIT - Doesn't Lilly have a patent until 2036?

Tesla Robo-Taxi Day - Follow Up
- DUD - promises and nothing except a car growth no steering wheel or driver's cockpit (as we predicted)
- Stock down 8% the next day as analysts seem to be getting bored with the story.

Boeing Follow Up
- Now the company - (employees still on strike) - laying off 10% of their employees - 17,000
- If cut to junk status, Boeing Co. will be the biggest US corporate borrower to ever be stripped of its investment-grade ratings and join junk bond indexes, flooding the high-yield market with a record volume of new debt to absorb.
- S&P Global Ratings said it’s considering downgrading the planemaker to junk as strikes at its manufacturing sites persist, hurting production.

Social Security Recipients
- The Social Security Administration has announced a 2.5% the cost-of-living adjustment for 2025.
- TIPs, SS payments

CPI and PPI
- The September Consumer Price Index increased 0.2% month-over-month (Briefing.com consensus 0.1%), leaving it up 2.4% year-over-year versus 2.5% in August.
- The core Consumer Price Index, which excludes food and energy, increased 0.3% month-over-month (Briefing.com consensus 0.2%), leaving it up 3.3% year-over-year versus 3.2% in August.

CPI YoY

China
- China’s exports and imports both missed expectations in September, raising concerns about one of the few bright spots in the world’s second largest economy.
- Customs data out Monday showed exports rose by 2.4% in September from a year ago in U.S. dollar terms, while imports added 0.3%.
- Analysts had expected faster growth. China’s exports were forecast to have risen by 6% year-on-year in September in U.S. dollar terms, with imports anticipated to have posted a 0.9% year-on-year climb last month, according to Reuters polls.

Nuclear
- "NEW CLEAR ENERGY"
- Alphabet will support construction of 7 smaller US nuclear power reactors to help power artificial intelligence, according to WSJ
- “We believe that nuclear energy has a critical role to play in supporting our clean growth and helping to deliver on the progress of AI,” Michael Terrell, senior director for energy and climate at Google, said on a call with reporters. “The grid needs these kinds of clean, reliable sources of energy that can support the build out of these technologies. … We feel like nuclear can play an important role in helping to meet our demand, and helping meet our demand cleanly, in a way that’s more around the clock.”
- potential related stocks: VST, NLR, CCJ, SMR

Interesting
- Warren Buffett’s Berkshire Hathaway continued to increase its stake in SiriusXM now owning 32% of the New York-based satellite radio company.
- The Omaha, Nebraska-based conglomerate purchased roughly 3.6 million shares for about $87 million in separate transactions Wednesday through Friday, according to a filing with the Securities and Exchange Commission late Friday.

Kroger Again
- Announcing additional 25,000 hires for end of year holiday expectations
- Kroger Owns:
---Supermarkets – Kroger, Ralphs, Dillons, Smith’s, King Soopers, Fry’s, QFC, City Market, Owen’s, Jay C, Pay Less, Baker’s, Gerbes, Harris Teeter, Pick ‘n Save, Metro Market, Mariano’s
- Multi-department stores – Fred Meyer
--- Dillons Marketplace, Fry’s Marketplace, King Soopers Marketplace, Kroger Marketplace, Smith’s Marketplace
-- - Price-impact warehouse stores – Food 4 Less, Foods Co

Bankruptcy and Closings
- Wholesale hardware supplier True Value has filed for Chapter 11 bankruptcy and is planning to sell by the end of the year to rival Do It Best.
- Nearly 450 7-Eleven stores across North America are closing for underperforming, according to the company.

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