Hey Snackers,
New Zealand proposed a “fart tax” that’ll charge farmers for their cows’ — um — emissions. Happy Friday.
The Dow closed up 2.8% after stocks surged yesterday, striking a surprise comeback after a bummer inflation report that could lock in a hefty November rate hike from the Fed.
Inflation’s still riding high as earnings season dawns, dashing hopes that the Fed will reverse course
Inflation doesn’t take a vacation… though investors wish they could buy it a one-way ticket to Cabo. US consumer prices in September were up a hotter-than-expected 8.2% from a year ago — a slightly slower pace than last month, but still likely far too steamy to convince the Fed to simmer down on big rate hikes. Plus, that healthy September jobs report has dashed hopes that a Powell pause (#Powse) is coming soon.
- Sad consumers: “Core inflation” (aka: excluding food and energy) was up 6.6%, the highest yearly gain for core since 1982.
- Sad economy: This week the IMF cut its global growth forecast, and Chase CEO Jamie Dimon said the US would likely enter a recession within nine months.
- Sad investors: Earnings season’s kicking off, and S&P 500 companies are expected to report their lowest annual profit growth since 2020.
Still need hot Cheetos, though… Inflation is cruising at 40-year highs, partly because Americans continue to spend through price increases. Consumer spending ticked up more than expected in August, even as high interest rates and prices weighed on demand. Delta and American reported strong sales growth despite spooky fares. Pepsi shocked investors with 9% sales growth as shoppers loaded up on Cheetos and Lay’s despite price hikes.
The Fed moves forward with an old map… It’s guiding the economy based on how things looked in the past (like: last month’s inflation), not how they might look nine months from now. If the route changes to a steep downturn, it might be too late to turn back. While the Fed is backward-looking, markets are forward-looking. That’s why this earnings season investors may be more interested in forecasts than results from last quarter.
Nuclear giant Westinghouse sells for $8B in a sign nuclear power is making a comeback
Nu(clear) kid on the block… There’s a new power player in the nuclear biz: this week renewable behemoth Brookfield Renewable Partners and uranium powerhouse Cameco agreed to buy Westinghouse Electric for $7.9B. Because Westinghouse services about half the world’s 440 nuclear reactors, the deal could revitalize the sector.
- Big turnaround: Westinghouse went bankrupt in 2017 as nuclear demand fizzled. But the company’s sale price is 70% higher than four years ago thanks to renewed demand.
Fission for compliments… Many seem to love nuclear now that Putin has destabilized global natural-gas supplies. The amount of global electricity produced by nuclear energy has fallen from 18% in the mid-’90s to 10%, because of disasters including Chernobyl. But now countries are reconsidering nuclear, which has lower emissions than fossil fuels:
- California recently voted to keep its last nuclear plant open, reversing plans to close it.
- Germany’s debating whether to keep its remaining plants open, despite plans to close them by the end of the year (even Greta Thunberg wants them to stay open).
- Japan is reopening old plants as part of a bigger nuclear reboot.
- China just approved six nuclear plants and plans to double its nuclear capacity by 2030. — which would give it more plants than the rest of the world combined.
Renewed profitability offers a path to revival… One reason nuclear plants dwindled in recent decades was they were expensive to build, and oil delivered more immediate energy profits. But Westinghouse’s sale shows nuclear’s profit potential: Brookfield Business Partners made a $4.5B profit in four years on its Westinghouse stake. Nuclear investments are expected to continue: experts say nuclear generation must double by 2050 to hit net-zero goals.
The Crypto Catch-Up…
- 🪙 Coins… BNY Mellon is getting into the crypto-custody biz. The US's oldest bank said it would hold customers' bitcoin and ether. It's not alone: Nasdaq will also offer institutional investors a custody service.
- 🤔 Sus… Crypto thieves have looted $718M this month alone, stealing $3B+ this year (approaching a record). The weak link: decentralized finance. DeFi is permissionless and ruled by smart contracts (aka: code), making it a ripe target for hackers.
- 🤖 Techy… Google signed a deal with Coinbase to facilitate cloud payments in crypto (think: cloud-storage bills paid in dogecoin). The crypto exchange will earn a % of transactions and move its own cloud biz to Google (bye, AWS).
What else we’re Snackin’
- Meatballing: Furniture icon IKEA reported record annual sales as cost-conscious shoppers snapped up $30 rugs and minimalist desks. The hybrid-work shift has meant more homes have served numerous functions.
- Adflix: Netflix says it’ll charge $7/month for its ad tier, set to launch in November to combat sagging subscribers. Viewers can expect about four to five minutes of commercials per hour.
- Krogertsons: Merger in aisle two — grocery giants Kroger and Albertsons are reportedly discussing a supermarket team-up. If it happens, it’ll combine the US’s #2 and #4 grocery sellers.
- Redbuy: Delta reported record sales last quarter, saying strong summer demand countered cost headwinds. Delta expects the vacay momentum to continue into the holiday quarter.
- Smalgreen: Walgreens’ sales dropped 5% last quarter as prescription revenue dipped and fewer people came in for Covid shots. It administered only 2.9M vaccines, vs. 13.5M a year earlier.
Friday
- Earnings expected from Citi, Wells Fargo, JPMorgan Chase, US Bank, UnitedHealth, PNC Financial, and Morgan Stanley
Authors of this Snacks own: bitcoin and ether and shares of Delta, Google, and Netflix
ID: 2476011