US FINANCIAL MARKET
Wall Street Traders on Hold in Run-Up to CPI Data: Markets Wrap – Bloomberg, 1/10/2024
- Stocks, bonds, and the dollar saw small moves, with investors awaiting Thursday’s inflation data for clues on the Federal Reserve outlook.
- The S&P 500 rose 0.1%. The Nasdaq 100 rose 0.2%. The Dow Jones Industrial Average changed little.
- The yield on 10-year Treasuries declined two basis points to 3.99%.
- Bitcoin traded around $45,000 before a US Securities and Exchange Commission decision to approve exchange-traded funds holding the digital asset.
- Oil rose amid broader risks of attacks on vessels in the Red Sea.
- West Texas Intermediate crude rose 1.2% to $73.11 a barrel.
- Inflation is expected to end the year around the Fed’s 2% target, and the upcoming consumer-price index will probably give a taste of the disinflation trend.
- Ahead of that, New York Fed President John Williams is due to speak.
- When Bank of America, JPMorgan Chase, Citigroup, and Wells Fargo kicked off the industry’s fourth-quarter earnings reports Friday, their results likely showed that net interest margins felt continued pressure from higher funding costs.
- Boeing’s chief, Dave Calhoun, said the plane maker must own up to its shortcomings as it grapples with a safety incident that has renewed questions over its manufacturing quality.
- The Stoxx Europe 600 has changed a little.
Amazon Laying off Hundreds in Prime Video, Studios in Latest Cuts – Bloomberg, 1/10/2024
- Amazon.com is laying off hundreds of employees in its Prime Video and studios business.
- Mike Hopkins, who runs the streaming video and studios division, which includes the MGM unit the company acquired last year, announced the cuts in an email to employees on Wednesday.
- “Throughout the past year, we’ve looked at nearly every aspect of our business intending to improve our ability to deliver even more breakthrough movies, TV shows, and live sports in a personalized, easy-to-use entertainment experience for our global customers,” Hopkins wrote in the memo, which Bloomberg reviewed.
- “As a result, we’ve identified opportunities to reduce or discontinue investments in certain areas while increasing our investment and focus on content and product initiatives that deliver the most impact.”
- Bloomberg reported on Tuesday that Amazon’s Twitch livestreaming service was preparing to announce cuts to about 35% of its staff, or about 500 workers.
- Hopkins said the company would inform workers in the Americas who are set to be laid off Wednesday morning Seattle time and in most other regions by the end of the week.
Boeing CEO Says Company Needs to Acknowledge ‘Our Mistake’ – Wall Street Journal, 1/10/2024
- Boeing CEO David Calhoun said the company needs to acknowledge its mistake as the aircraft maker reels from a door-plug failure that has resulted in roughly 170 of its planes being grounded and spooked its customers.
- In his first remarks since the accident, Calhoun indicated a misstep by the aircraft maker played a role.
- “We are gonna approach this—No. 1—acknowledging our mistake,” Calhoun said Tuesday in an address to employees just days after the incident on an Alaska Airlines flight.
- “We’re gonna approach it with 100% and complete transparency every step of the way,” he said.
- “We are going to work with the [National Transportation Safety Board], which is investigating the accident itself, to find out what the cause is.”
Walmart Expands Drone Delivery in Dallas as It Races Amazon – Wall Street Journal, 1/10/2024
- Drones are more likely to buzz overhead this year if you live in Dallas.
- Walmart plans to offer drone delivery to most of the region this year, a significant expansion of its effort in recent years to provide the delivery option to some customers in several states.
- In Dallas, Walmart will partner with Wing, a unit of Alphabet, and Zipline, a global drone delivery company that works with healthcare providers and others.
- Walmart is currently offering drone delivery in Dallas in a limited way.
- After the expansion, drone delivery from Walmart will be available to about 75% of the Dallas-Fort Worth population, the company said.
- The drone companies handle delivery, while Walmart provides goods and access to shoppers.
SEC Blames Hack for Incorrect Post About Bitcoin ETF Approval – Wall Street Journal, 1/10/2024
- The Securities and Exchange Commission’s official X account was hacked when the agency posted late Tuesday that it had approved exchange-traded funds holding bitcoin, forcing Chair Gary Gensler and the regulator to disavow the erroneous post.
- Bitcoin briefly jumped to nearly $48,000 before Gensler said on social media that the message was “unauthorized” and that the SEC “has not approved the listing and trading of spot bitcoin exchange-traded products.”
- The agency later posted that its account was “compromised.”
- “It’s a hack,” a spokeswoman for the SEC said.
- A decision on the funds is expected on Wednesday.
US Electric Vehicle Sales Growth Slowed in Latest Quarter – Bloomberg, 1/10/2024
- Electric vehicle sales in the US grew by just 1.3% in the final months of 2023, the latest sign that many American drivers remain cautious about leaping over battery-powered cars.
- A total of 317,168 EVs were sold in the fourth quarter, up from 313,086 in the prior three months, researcher Cox Automotive said in a post on its website, citing data from Kelley Blue Book.
- The growth marked a deceleration from sequential gains of about 5% in the third quarter and 15% in the April-through-June period.
- EVs made up 7.6% of the US market in 2023, up from 5.9% in 2022, Cox said.
- The average new EV sold for $50,789, about $2,000 more than the average gasoline-powered vehicle.
X Introduces Shows With Don Lemon, Tulsi Gabbard, Jim Rome Amid Video Push – Wall Street Journal, 1/10/2024
- X announced three new shows, including with former CNN host Don Lemon and former Hawaii congresswoman Tulsi Gabbard, as the social-media platform seeks to draw more eyeballs and move attention away from controversies over owner Elon Musk’s posts.
- The platform also said Tuesday that it will host a show with sports commentator Jim Rome that will stream five days a week.
Importers Face Surging Shipping Costs, Delays as Red Sea Diversions Pile Up – Wall Street Journal, 1/10/2024
- Western importers report a steep rise in ocean-shipping rates and weekslong delays as carriers divert ships from the Red Sea to avoid Houthi rebel attacks.
- Some companies shipping goods on the crucial trade lane are starting to chafe at the rising prices and extra fees that ocean carriers impose for the higher cost of routing containerships on longer voyages around the Horn of Africa following drone and missile attacks by Houthi rebels in Yemen.
- Average worldwide costs to ship 40-foot-long containers have nearly doubled since late November, according to London-based Drewry Shipping Consultants.
- The spot-market price to move containers between China and Rotterdam in the Netherlands reached $3,577 in the week ending January 4, a 115% increase from the week before.
US ECONOMY & POLITICS
US Home-Purchase Applications Increase in First Week of 2024 – Bloomberg, 1/10/2024
- Applications for home-purchase mortgages in the US increased last week by the most since June as borrowing costs hovered near a seven-month low.
- The Mortgage Bankers Association’s gauge of mortgage applications to buy a home increased 5.6% in the week ended January 5, which included the New Year’s Day holiday.
- An index of overall mortgage applications, including refinancing, climbed 9.9%, the sharpest advance in nearly a year.
- The contract rate on a 30-year fixed mortgage ticked up five basis points to 6.81%, its second straight increase.
Spending Bill Won’t Be Done in Time, Senate Republicans Warn – Wall Street Journal, 1/10/2024
- Congress may need to pass another short-term bill to avoid a partial government shutdown in less than two weeks, potentially forcing House Speaker Mike Johnson (R., La.) to break his vow to GOP colleagues swearing off such measures.
- Senate Minority Leader Mitch McConnell (R., Ky.) said the dwindling days left before the deadline meant Congress would have to take up a stopgap bill, known as a continuing resolution or CR, to keep the government open as work continues on full-year fiscal 2024 legislation.
- The current interim spending law funds some parts of the government through January 19 and the rest through February 2.
- Johnson and Senate Majority Leader Chuck Schumer (D., NY) struck a deal Sunday to set overall discretionary spending at $1.66 trillion for fiscal 2024.
- But that top-line agreement left unresolved vital details, and many conservative Republicans complained the deal didn’t include significant cuts to federal spending they had been advocating for months, raising questions about its passage into law.
Finra Calls AI ‘Emerging Risk’ in Annual Regulatory Report – Wall Street Journal, 1/10/2024
- The Financial Industry Regulatory Authority, Wall Street’s self-regulator, has classified artificial intelligence as an “emerging risk” in its annual regulatory report. It says deploying AI in the industry could affect virtually all aspects of broker-dealer operations.
- Finra said firms looking to deploy such technology should focus on the regulatory implications, particularly in anti-money laundering, public communication, and cybersecurity, among others, and in model risk management, including testing, data integrity, and governance.
- The financial industry’s use of AI, either in-house or through third parties, can provide efficiencies that help member firms better serve customers. Ornella Bergeron, a senior vice president in member supervision with Finra’s risk monitoring program, said in a podcast accompanying the report.
- The use of AI comes with concerns over accuracy, privacy, and bias, she added.
Hunter Biden Makes Surprise Appearance at House Panel Contempt Vote – Bloomberg, 1/10/2024
- Hunter Biden made an unannounced appearance at the US Capitol on Wednesday to attend a committee meeting to hold him in contempt of Congress.
- The president’s son, accompanied by his attorney, Abbe Lowell, did not respond to questions as he entered the hearing room.
- Republicans conducting the hearing appeared caught off guard by Hunter Biden’s presence.
- Representative Nancy Mace of South Carolina, during the meeting, said, “Who bribed Hunter Biden to be here today?”. At the same time, Representative Marjorie Taylor Greene of Georgia asked about the rules regarding a surprise guest.
- The House Judiciary and Oversight committees are expected to recommend that the president’s son be held in criminal contempt of Congress for refusing to comply with a subpoena in the ongoing impeachment inquiry into his father, President Joe Biden.
EUROPE & WORLD
TSMC posts flat fourth-quarter revenue but beats expectations – CNBC, 1/10/2024
- Taiwan chipmaker TSMC reported an essentially flat fourth-quarter revenue on Wednesday, which still beat both the company’s and the market’s expectations.
- Revenue in the final three months of last year came in at T$625.5 billion ($20.10 billion), according to Reuters calculations, compared with $19.93 billion in the year-ago period.
- That beat Taiwan Semiconductor Manufacturing’s, or TSMC’s, previous prediction for fourth-quarter revenue being between $18.8-19.6 billion, and beat an LSEG SmartEstimate of T$617.1 billion drawn from 21 analysts.
- For December alone, TSMC reported that revenue fell 8.4% year-on-year to T$176.3 billion, down 14.4% compared with the previous month.
US, U.K. Warships Shoot Down Houthi Barrage in Red Sea – Wall Street Journal, 1/10/2024
- US and British warships shot down one the largest barrages of missiles and drones fired by Yemen’s Houthi rebels into the crucial Red Sea shipping lane. At the same time, U.S. Secretary of State Antony Blinken continued his efforts to prevent the conflict in Gaza from escalating into a broader regional war.
- The overnight Houthi attack came a week after the US and an international coalition warned that continued attacks by the Iran-backed rebels would come at a cost.
- The US military has prepared options to strike the group.
- The barrage, including 18 drones, two cruise missiles, and one ballistic missile, caused no damage or injuries, said US Central Command.
China’s Messaging to the US: Don’t Rock the Boat – Wall Street Journal, 1/10/2024
- A new buzzword is emerging in Beijing’s messaging to Washington: the “San Francisco vision”—a veiled warning to the US not to rock the boat after a reset in ties at a November summit in California between President Biden and Chinese leader Xi Jinping.
- Diplomatic outreach has gone into high gear recently, including a New York appearance Tuesday by an English-speaking senior envoy of the Chinese Communist Party.
- The push comes ahead of Saturday’s election in Taiwan that will usher in a new president for the first time in eight years and amid a raft of other geopolitical hot-button issues where the nations don’t see eye-to-eye.
- Last year, the catchphrase was “return to Bali,” the place of another Biden-Xi summit, in similar rhetoric aimed at pressuring the Biden administration not to squander hard-to-come-by goodwill between the two nations.
- How interested Beijing remains in sustaining communication channels with the US may become more apparent in its responses to the Taiwan election results.
Gaza Hostage Talks Inch Closer to a Restart as Blinken Meets With Israeli Leaders – Wall Street Journal, 1/10/2024
- An Israeli delegation arrived in Cairo to revive hostage talks, Egyptian officials said, as Secretary of State Antony Blinken held meetings in Israel aimed at preventing the war in Gaza from escalating into a regional conflict.
- The delegation from Israel met Egyptian mediators in the Egyptian capital on Tuesday, weeks after hostage negotiations came to a standstill.
- The renewed talks are aimed at freeing hostages still held in Gaza in exchange for a prolonged cease-fire, the officials said.
- Hezbollah said on Tuesday that it hit Israel’s northern command base and lost three more fighters in Israeli airstrikes.
- Israeli military spokesperson Rear Adm. Daniel Hagari said that the Israeli strikes had killed the Hezbollah fighter who had led the attack on the northern command base.
- It was the second Israeli military base to be targeted by Hezbollah in a few days after a barrage caused damage to an Israeli air force base on Saturday.
- The first underground passenger railway, the Metropolitan, opened in London. – 1863
- The League of Nations came into existence. – 1920
- The first General Assembly of the United Nations met in London. – 1946
- The first African American senator elected by popular vote, Edward Brooke of Massachusetts, took his seat. – 1967
- The US and the Vatican reestablished diplomatic relations after a 117-year break. – 1984
- North Korea announced that it was withdrawing from the Nuclear Non-Proliferation Treaty. – 2003