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Hey there weekday warriors,
Did retail sales data just kill any hope of a 50 basis point rate cut?
Enjoy the next 4 minutes and 27 seconds of blue-chip news and commentary.
Keep on snapping necks and cashing checks,
+ US stocks “closed nearly unchanged on Tuesday, giving up earlier gains that had vaulted the S&P 500 and Dow Industrial Average to record highs as investors braced for the first Federal Reserve rate cut in 4-1/2 years.” (Reuters)
+ The 10-year Treasury yield “ticked up after strong retail sales data on Tuesday and ahead of the Federal Reserve’s monetary policy meeting this week.” (CNBC)
+ Oil “rose by a dollar a barrel on Tuesday as supply disruptions mounted and traders bet that demand will grow if the U.S. Federal Reserve lowers borrowing costs this week, as is widely expected.” (Reuters)
+ Bitcoin “rose on Tuesday ahead of the upcoming Federal Reserve meeting where the central bank is widely expected to cut interest rates. ” (Investing)
+ The three most talked about stocks on WallStreetBets in the past 24 hours were: 1) Nvidia -1.0% 2) Intel +2.6% 3) Visa +0.3%
The market moves you need to know about…
+ Shares of Intuitive Machines spiked 55.5% after hours on news that the space exploration company had inked a $4.8B deal with NASA (perhaps you’ve heard of it?) for navigation and communication services in the “near space region.”
+ Lenovo’s decision to tap SentinelOne’s AI security tech for all of its computers had analysts fully bricked up. Shares of SentinelOne jumped 7.4% after Wells Fargo gave the deal its stamp of approval. Side note: how the f*ck did SentinelOne land the ‘S’ ticker symbol?
Size doesn’t matter
Source: Giphy
Pain.
On the eve of what could be a rate cut that is of the ‘it’s so f*cking big’ variety, retail sales data came in hot, potentially playing spoiler.
Economists had been expecting retail sales to drop 0.2%. Instead, they actually rose 0.1%. Because, football and consumerism, that’s what America does.
That’s good news if you’re hoping for a “soft landing” (or you’re a credit card company). But bad news if you were hoping for a jumbo rate cut today…
What to expect…
The Fed will wrap up its two-day meeting this afternoon, which means we get a rate decision at 2 PM EST and a Jerome Powell presser around 2:30. For the first time in a long time, the Central Bank’s statement is actually more important than what J-Poww has to say in his post-game speech.
As recently as Monday, markets were increasingly betting on a 50 basis point rate cut…
But better-than-expected retail sales figures that hint at economic resilience could be the nail in the coffin for that big, thick, veiny rate cut we were all wet dreaming about.
In case you were wondering, the smartest guys in the room (read: TWC readers) believe the Fed will slash interest rates by just 0.25% (77.0% of respondents to yesterday’s poll answered ‘25 basis points’).
Of course, as soon as our economic overlords decide our fate via a rate decision, all eyes will turn to what’s next. The dot plot as well as Jerome’s press conference will be more closely watched than a Nvidia earnings call at a bar FiDi for clues about what to expect.
+ “Stop trying to make AR happen.” - Regina George
Despite literally no one asking for it, and the Street really wishing they’d focus on their core business, Snap (-2.2%) has rolled out a new pair of Spectacles. For those of you keeping score at home, that’s the fifth generation of AR/VR glasses Snap has released.
But it didn’t just use company resources to build new hardware, it also launched a brand new operating system to power the glasses. You can get your own pair for just $99 per month via Snap’s Developer Program. Currently, the eyewear is geared towards developers building apps on the platform.
And this, ladies and gentlemen, is why shares of Snap are down 41% this year…
Not to be outdone, Meta and EssilorLuxottica (the maker of Ray-Ban) said they were extending their smartglasses partnership.
Make. It. Stop.
+ “You’ll get nothing and like it.” - Jamie Dimon to DJ D-Sol
Thoughts and prayers to the Goldman (+0.04%) team negotiating the bank’s exit from consumer finance. GS has long since given up on servicing peasants, but it’s still sitting on a credit card program it launched with Apple. A credit card program with 12M users and $17B in outstanding loan balances…
According to reports, JPMorgan has stepped up and offered to take the credit card biz off of Goldman’s hands. Unsurprisingly, JPM doesn’t want to pay full price… presumably because it knows it has David Solomon and Goldman bent over a barrel.
To complicate matters, JPM is also negotiating with Apple, which controls things like rewards and billing cycles.
+ *Asks ChatGPT to translate ‘A degenerate gambler places a seven-leg parlay on the SNAI app’ to Italian'*
For the record, it’s “Un giocatore d'azzardo degenerato piazza una scommessa multipla con sette eventi sull'app SNAI.”
Flutter, which you probably know as the company behind the FanDuel sports gambling app, just made its second major acquisition in as many weeks.
Yesterday, it announced it’s buying Italy's Snaitech for $2.6B. That sounds like a bargain when you consider Italy is the biggest regulated gambling market in Europe… but just 21% of bets are currently placed online in the country.
And last week, Flutter bought a 56% stake in NSX Group for $350M. NSX owns Brazil’s largest gaming company. Did I mention that sports gambling goes live nationwide in Brazil on January 1st?
What else?
+ Microsoft, BlackRock form group to raise $100 billion to invest in AI data centers and power. What could possibly go wrong for humanity?
+ Steve Cohen stops trading for hedge fund Point72. More like Stevie Back Office.
+ Transportation Department Blesses Alaska Air-Hawaiian Merger, With Strings. JetBlue punching air right now…
+ U.S. decision on Nippon’s bid for U.S. Steel pushed back until after election. So you’re telling me there’s a chance?
+ A Non-Ivy Tops Businessweek’s B-School Ranking for Sixth Straight Year. University of Phoenix for the win.
+ OpenAI CEO Sam Altman shares his No. 1 strategy for living without regrets: You should ‘put a huge premium’ on it. I also live with no ragrets.
🔥 66-year-old billionaire says there’s 1 trait it takes to succeed: ‘It doesn’t matter how much experience they have’. “Use ChatGPT or offshoring services to complete your job, while you do something you love.”
FYI, TWC might be compensated if you click on the links above. So, what are you waiting for? Start clicking.
⏪ Yesterday, we got August retail sales data. Plus, the two-day FOMC meeting got underway.
⏩ Today we’re keeping an eye on…
+ The Fed hands down its much-anticipated rate announcement (spoiler: either a 25 or 50 basis point cut). Plus, we’ll hear from J-Poww after the Central Bank meeting wraps up.
+ General Mills reports before the open
Yesterday, I asked, “Are we getting a 50 or 25 basis point cut this week?”
77.0% of you think we’re getting 25 basis points.
Here’s what some of you guys had to say (and my thoughts in italics)…
50: "a girl can dream, can't she?"
50: "because Tyler said so...” I always knew I liked you.
25: "Historically it's always 25 bps. Outside of the GFC in 2008"
25: "I know WE'RE cool, but my lawyer would feel some type of way if I didn't include the caveat that this is not financial advice." I have notified Gary Gensler about everyone else...
25: "Zero chance it's 50bps (Put me in the email after they announce 50)." You're getting doxxed if it's 50.
Here’s today’s question…
You get $50M, but you can only use ONE bathroom for the rest of your life. Do you take the money?The bathroom is in one spot and cannot move. That means no RVs, boats, planes, etc. You only get to choose its location once. |
Oh, and one more thing…
What did you think about today's newsletter? |
Does this look like the face of a guy you should take financial advice from?
No, it’s the face of an individual who is financially irresponsible/dumb enough to be talked into spending money on a family photo shoot that he could have just done with his iPhone. So, act accordingly...
This is not financial advice. Nothing in this newsletter is an investment recommendation. All content is created for entertainment, educational, or informational purposes only. Do your own research, or do yourself a favor and hire a professional.