☀️☕️ Opening, not opening. Covid-19 cases surge in China

23 November 2022

Happy Wednesday!

📊 IN THE MARKETS

• Cleveland Fed, Best Buy, Musk, Genesis

📝 FOCUS

• Opening, not opening. Covid-19 cases surge in China

• Who ya gonna call? Trustbusters! Penguin's $2.2B Simon & Schuster deal is blocked

📊 IN THE MARKETS

Cleveland Fed President Loretta Mester, a voting member this year of the FOMC (the Federal Open Markets Committee, which sets US interest rates) said recent inflation data was promising (we knew that) and that she’d support reduced interest rate hikes going forward (bang in-line with expectations after the last FOMC meeting, which we will see the minutes for later today).

Nothing new, but good enough for US markets to end the day strong, along with some better-than-expected results from electronics retailer Best Buy and clothing companies American Eagle and Abercrombie & Fitch, which were up 13%, 18% and 21%. 

Best Buy results were actually pretty bad compared to a year ago, with profits per share for the October quarter down nearly 40%, but it was still much better than expectations from Wall Street’s highly-paid analysts and, to be fair, its own earlier guidance. So the company raised full-year guidance and up up up the stock went. (One concerning observation about consumers was that savings are being drawn down and credit usage is going up.)

Meanwhile, in the People's Republic of Elon, more Twitter staff got sacked (from sales), $7.99 a month Twitter Blue's November 29th relaunch got pushed back again, Musk crudely taunted Trump to come home from his sad Truth Social presence, the unabashedly anti-semitic Kanye West was allowed back on and paperwork was filed for Twitter to process payments (what begins with "s" and ends with "uper-app"?) It must all be an ingenious ploy by Musk to outrage the world back onto Twitter... and so far, it seems to be working. On Friday, Musk tweeted

And Digital-asset brokerage Genesis, which halted withdrawals last week and is still looking for US$1 billion in capital to cover a US$1 billion shortfall from the fall of disgraced crypto exchange FTX has helpfully denied any ‘imminent’ plans to file for bankruptcy. (They did try Binance, before you ask, and the answer was no.) Genesis is the sister company of Grayscale, which runs the largest bitcoin fund, the closed-ended Grayscale Bitcoin Trust (GBTC.)

📝 FOCUS

Opening, not opening. Covid-19 cases surge in China

China on Monday hit 28,000 daily Covid-19 cases, close to record levels for the year. Market "experts" who only last week were trumpeting the inevitability of a bull market on the imminent reopening of the economy were bashed again. On Tuesday, Beijing shut down public spaces like museums, shopping centres and parks, and its Communist party secretary reaffirmed the zero-Covid policy. Over 40 Chinese cities (responsible for a fifth of Chinese GDP) are currently under restrictions.

The FT quoted one Wuhan doctor as saying ​​the "medical system will probably be paralysed when faced with mass cases.” Another said the “medical system is not ready for a large-scale reopening,” which is why we may see yet stricter lockdowns with continuing and maybe worse global supply chain disruption ahead until effective mass vaccinations can be done. 

Oh well. So now that's five down days in a row for HK in its longest losing run in a month, though over that month, the benchmark Hang Seng Index is still up a pretty awesome 11.8% vs the S&P500 up (a still very good) 5.1%. Not to pick on crypto, but to pick on crypto a little, Bitcoin's down 18% over the last (FTX-ing) month.

Who ya gonna call? Trustbusters! Penguin's $2.2B Simon & Schuster deal is blocked

Ruling on an antitrust 🎓 lawsuit filed by the US Justice Department, a federal court has blocked the sale of publisher Simon & Schuster by its parent Paramount (until recently ViacomCBS) to Penguin Random House, a subsidiary of German media giant Bertelsmann. Now Penguin has to fork over a US$200 million termination fee to Paramount for the deal originally worth US$2.17 billion. Video and streaming-focused Paramount is still looking for buyers.

Because both Penguin and Simon & Schuster are among the “Big Five" US book publishers, the Department of Justice Antitrust Division said the deal would have given the combined company too much control over how much authors are paid. Looks like a case for The Trustbusters!

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