September 29, 2023

US Consumer Spending Posts Slowest Growth in a Year

📰 News Organizations

  • US Consumer Spending Rose at Weakest Pace in a Year Last Quarter. Second-quarter outlays grew just 0.8%, revised from 1.7% pace, largely due to weaker spending on services, according to government figures published Thursday.

  • Jobless Claims Stay Extremely Low at 204,000. Claims show a very low number of job losses, indicating the economy is still on firm ground. Unemployment claims typically rise when the economy weakens and a recession approaches.

  • Oil Nears 100 USD. Surging global demand coupled with output cuts by Saudi Arabia and Russia have sent crude prices to levels not seen since last August. Though some analysts say oil prices could soon hit $100 a barrel, U.S. shale companies aren’t rushing to drill more.

  • UAW Threatens More Strikes as GM, Stellantis Try to Keep Repair Parts Flowing. The United Auto Workers union pledged to widen its strike on Friday barring significant progress in talks with Detroit carmakers, as the companies take steps to keep critical parts flowing.

  • SpaceX Wins First Pentagon Contract for Starshield. The Pentagon has awarded Elon Musk’s SpaceX its first confirmed contract for the Starshield network it’s developing, a military-specific version of the company’s Starlink satellite internet system.

  • Micron Forecasts Worse-Than-Expected Loss. The company projected a fiscal first-quarter loss of as much as $1.14 a share, excluding some items. Analysts had estimated a 96-cent loss. On the bright side, revenue is expected to start recovering in the period.

  • Accenture Growth Outlook Disappoints. Accenture expects revenue growth of 2–5% in the fiscal ending August 2024, as against an estimated 4.6% or $67.15 billion, signaling that high inflation and interest rates would choke enterprise spending through next year.

🐦 Twitter

  • Most of the easy money is gone in the bond market at this point. The asset that is now clearly overvalued is stocks. 50%+ outperformance of stocks vs. long bonds in the last 3 years is not sustainable. Closing that gap will be extremely painful to most investors. Source.

  • The SEC wants to accelerate the launch of Ether futures ETFs (because they want it off their plate before shutdown) so they've asked the filers to update their docs by Friday pm (no small task to jam into 48hrs, esp for indie issuers), so they can go off Monday and trade Tuesday. Source.

  • Banks are in far worse financial shape now on their residential mortgage books than they were in 2008. Back then banks only lost money on borrowers who defaulted on their mortgages. Now banks are losing money on every borrower who pays their mortgage on time. Source.

  • 10-year Treasury yields have surpassed another milestone, surging above 4.6% for 1st time since October 2007, up 50 basis points MTD; on track for largest monthly move in past 12m, and on track to rise for 5th straight month(streak not seen since April 2022). Source.

  • Citi analysts: "House prices are rising too rapidly to be consistent with two percent inflation. A 0.87%MoM SA increase in Case-Shiller house prices in July is the fifth consecutive month of increase and prices are now up year-on-year." Source.

  • Driving a developing crisis is Russia and Saudis' cuts in oil output. WTI is soaring, and the US strategic reserve is now empty. Meanwhile, investors think the inflation outlook is benign. Source.

1 in 4 young homeowners received help from family or friends to secure a down payment for their current home. 2nd only to personal savings as a source of down payment. Generational wealth transfer in action.

Alex Thomas

📓 Online Publications

  • Google Pushes Deeper into Blockchain. Google's cloud-computing division is increasingly involved in blockchain, with plans to add 11 networks including Polygon, Optimism, and Polkadot to its 'BigQuery' program for public datasets.

  • SEC Pushes Deadlines for ARK 21Shares, VanEck Spot Ether ETF Applications. The commission said it had received no public comments on either proposal and would push the deadlines for another delay or decision to Dec. 25 and Dec. 26, respectively.

  • Coinbase Rolling Out Perpetual Futures Trading For Retail Users Outside US. Coinbase has gained approval to offer non-U.S. retail users perpetual futures trading from the Bermuda Monetary Authority. About 75% of global crypto trading volume comes from derivatives market activity.

  • Binance Halts EUR Trading for Paysafe Users. Binance advised Paysafe users to convert their EUR balances into USDT by Oct. 31, ending buying, selling and trading support for the currency after the banking partner pulled its services from the crypto exchange.

  • Arbitrum Users Can Now Trade Bitcoin Mining Power With Each Other. Bitcoin miners have the ability to easily buy and sell hashing power to interested purchasers. The trades will be routed through smart contracts and will specify hashrate amount, duration and price.

🎧 Podcasts

  • Dealmaking Has Gone Comatose Lately. Mergers and acquisitions are having their worst third quarter in over a decade. That’s thanks in large part to higher interest rates. They’re driving up the cost of borrowing. A tougher regulatory market isn’t helping things. Source(0:42)

  • Chinese Battery Groups Invest In Morocco To Serve Western Markets. China wants to invest in places besides the US and Europe. Take the Chinese company CNGR. It supplies materials for batteries. It once invested in the US or Europe, but Morocco has become an attractive alternative. Source(5:39)

  • Meta Introduces AI to Apps. Meta is introducing AI chatbots into apps, including a ChatGPT-style assistant, and partnering with Microsoft's Bing for real-time internet results. They've also launched chatbots inspired by real-life figures like Kendall Jenner and Mr. Beast. Source(6:36)

  • Alibaba to IPO Logistics Unit Cainiao. Alibaba plans to list its logistics unit Cainiao on the Hong Kong Stock Exchange. Upon completion of the spinoff, Alibaba will continue to hold more than 50% of the shares of Cainiao. Source(10:16)

  • New Economic Prosperity as AI Creates Complexity. While AI may disrupt job markets, it also holds the promise of unprecedented prosperity and transformative advancements across various fields, from healthcare to climate change mitigation and chip design. Source(8:32)