2023-11-22 11:55:00 ET
Summary
- Oil prices fall as OPEC delays meeting to discuss production cuts.
- Oct. durable goods orders down 5.4%; Initial jobless claims fell much more than expected to 209K.
- Hedge funds are holding most of their long portfolios in their top 10 stock positions - Goldman Sachs.
Listen below or on the go on Apple Podcasts and Spotify
OPEC+ meeting is delayed with Saudi Arabia said to be unhappy. (0:15) Rise in consumer inflation expectations raises eyebrows. (1:29) Apple's Tim Cook says there is a detailed s uccession plan. (3:53)
This is an abridged transcript of the podcast.
Our top story so far
Oil prices are tumbling as OPEC+ delays an expected meeting .
Oil officials were slated to meet this weekend, but the meeting will now start on November 30, OPEC said on its website.
Saudi Arabia, which cut output by an additional 1 million barrels a day starting in July, was said to be dissatisfied that other members of OPEC weren't scaling back production, according to Bloomberg. Sources told Reuters that African nations disagreed with OPEC’s production assessment.
WTI crude ( CL1:COM ) is down about 4% to below $75 per barrel, while Brent ( CO1:COM ) is also down 4%, moving below $80.
Energy analyst John Kemp says Saudi Arabia “may have to threaten a resumption of volume warfare to get other members of OPEC+ to share in extended or additional production cuts.”
Elsewhere in today’s trading
Stocks are volatile, which is typical for low-volume pre-holiday trading.
The major averages were higher out of the gate but soon reversed course after some hawkish inflation numbers.
The major averages are up about +0.3%, while the 10-year Treasury yield ( US10Y ) is back above 4.4%.
The University of Michigan released its final measure of consumer sentiment. Normally, these revisions have little impact on the market, but the spike in consumer inflation expectations in the preliminary numbers made this report more noteworthy.
Fed Chairman Jay Powell has said before that he watches these figures, and many traders were looking for downward revisions in the final figures. But instead, 1-year inflation expectations were revised up to 4.5% from 4.4%, and 5- to 10-year expectation stayed at a 12-year high of 3.2%.
Craig Shapiro, macro advisor at LaDuc Trading, says: “Inflation expectations are not well anchored, regardless what the Fed tells you. With labor data better this morning, market's confidence in imminent rate cut cycle is misplaced.”
But the Michigan figures come with a caveat: a sharp political split in responses. Republicans are much more likely to say inflation is heading higher than Democrats, who see it more in check.
Before the bell, a dovish drop in durable goods was balanced with a hawkish tumble in jobless claims.
Durable goods orders for October sank 5.4% , much more than the 3.2% drop forecast. Core orders, ex. transportation, were flat, with economists looking for a 0.1% rise. Initial jobless claims fell much more than anticipated, to 209,000.
Pantheon Macro’s Kieran Clancy says the “upshot from the durable goods report is that real business equipment investment is on course for another decline in the fourth quarter, after declining at a 3.8% annualized rate in Q3.”
Among active stocks
Deere ( DE ) is under pressure after the maker of agricultural machinery said it expects profit to decline next year . The company forecasts that sales in its small agriculture and turf segments will fall 10% to 15% in fiscal 2024. It also estimated sales declines of 15% to 20% in its production and precision agriculture segments and a roughly 10% drop in construction and forestry.
J.P. Morgan upgraded Clorox ( CLX ) to Neutral from Underweight as it sees improvement in tracked channel demand and expects margins and EPS to beat expectations. Analyst Andrea Teixeira said the company's fiscal Q1 results were much better than anticipated, given higher shipments and better cost absorption.
Guess? ( GES ) is sinking as it missed on the top and bottom lines and lowered its 2024 guidance . Adjusted diluted EPS is now projected at $2.67 to $2.74. The consensus was $2.96.
In other news of note
Apple ( AAPL ) CEO Tim Cook revealed in a podcast that the company has "very detailed" succession plans when the time comes to replace him. But he also said he has no intention of going anywhere just yet.
“I would say that my job is to prepare several people for the ability to succeed, and I really want the person to come from within Apple. So that's my role: there's several for the board to pick from," Cook said.
And in the Wall Street Research Corner
Hedge funds are holding most of their long portfolios in their top 10 stock positions , according to data from Goldman Sachs.
In its “Hedge Fund VIPs” report, Goldman said that the average hedge fund is concentrating most of its investments on a certain number of U.S. equities today, more than any time in the past 22 years.
The data comes from 735 hedge funds with about $1.6 trillion in long equity positions and $797 billion in short positions.
The average fund holds 70% of its long portfolios in their top 10 positions, making them more crowded than ever. The most popular crowded stocks remain megacap techs, such as Meta Platforms (META), Microsoft (MSFT), Amazon (AMZN), and the rest of the Magnificent Seven. Those seven account for 14% of the average hedge fund long portfolio.
For further details see:
Wall Street Lunch: Oil Tumbles On OPEC Meeting Delay