The U.S. consumer is holding up the economy

U.S. retail sales increased, Fed officials are mixed on future rate hikes, Buffett buys homebuilders, Burry buys puts on the markets, oil prices rise

Author

Carbon Finance
August 20, 2023

Happy Sunday! Hope you all had a wonderful week. There were a lot of key developments this week in the world of finance. We’ve revamped our newsletter to make it more concise and easier to read so that you can focus on the most important news and data. As always if you enjoyed the newsletter or would like to provide feedback, use the poll at the end to let us know how we did!

Let’s dive right in!

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Data as of 8/20/23 2:00 PM EST

🛍️ Retail Surge. US retail sales increased by 0.7% in July, surpassing expectations, indicating a robust consumer bolstered by a strong labor market and wage growth. [BB]

🤔 Fed Debate. Fed officials in July expressed concerns about ongoing high inflation, but saw signs of potential easing, leading to mixed views on future interest rate hikes. [FTNE]

👴🏻 Buffett’s Trades. Berkshire Hathaway acquired new positions in US homebuilders D.R. Horton, Lennar, and NVR, while reducing stakes in Activision Blizzard and General Motors. [YF]

⚠️ Fitch’s Warning. Fitch Ratings may downgrade U.S. banks, including JPMorgan Chase, following concerns about the industry's operating environment and rising interest rates, with over 70 banks potentially affected. [E]

🛢️ Oil Prices Rise. Rising global demand and production cuts have driven oil prices to ~$90 a barrel, with record crude demand pushing up premiums for spot cargoes, especially in Asia and the Middle East. [BB]

🐻 The Big Short Pt. 2. Michael Burry held bearish options against the S&P 500 and Nasdaq-100, securing put options with a notional value of $1.625B. [R]

💰 401(k) Millionaire Boom. The number of 401(k) millionaires increased by 26% in Q2, with younger generations showing a significant rise in retirement investments. [WP]

🏠 Mortgage Mountain. Mortgage rates have surged to a 20-year high of 7.09%, slowing the housing market and causing concern for both potential buyers and sellers. [WSJ]

📉 Dwindling Dollars. Americans may deplete their pandemic savings by the end of Q3, posing likely challenges to the US economy as consumer spending is important for growth. [BI]

🇨🇳 China Slashes Rates. Amid slowing economic indicators, China's central bank cut key interest rates to bolster the economy's recovery, with experts suggesting more support is essential to prevent a recession. [R]

Major Earnings Recap Week of August 14th:

  • Home Depot ($HD) reported a 2% year-over-year sales decline, despite surpassing earnings expectations, attributing the drop to consumers' hesitancy towards major purchases and the normalization of DIY project demand post-pandemic. [CNBC]

    • 🟢 EPS $4.65 Beats $4.45 Estimate

    • 🟢 Sales $42.92B Beats $42.23B Estimate

  • Cisco ($CSCO) reported a 16% year-over-year revenue increase, surpassing expectations, buoyed by the company's optimistic remarks about a 30% sequential surge in product orders and indications of robust demand across all customer markets. [B]

    • 🟢 EPS $1.14 Beats $1.06 Estimate

    • 🟢 Sales $15.2B Beats $15.05B Estimate

  • Target ($TGT) experienced its first quarterly sales decline in six years due to concerns over inflation and backlash to its Pride merchandise, prompting the company to reduce its annual profit forecast. [AP]

    • 🟢 EPS $1.80 Beats $1.39 Estimate

    • 🔴 Sales $24.77B Misses $25.16B Estimate

  • Walmart ($WMT) exceeded Q2 earnings expectations and raised its annual profit forecast, crediting its success to consumers seeking budget-friendly options amid economic challenges. [F]

    • 🟢 EPS $1.84 Beats $1.71 Estimate

    • 🟢 Sales $161.63B Beats $160.27B Estimate

Notable Companies Reporting Earnings This Week:

  • Monday:

    • Zoom ($ZM), Nordson ($NDSN)

  • Tuesday:

    • Lowe’s ($LOW), Medtronic ($MDT), Dick’s ($DKS)

  • Wednesday:

    • Nvidia ($NVDA), Analog Devices ($ADI), Snowflake ($SNOW), Autodesk ($ADSK), Peloton ($PTON)

  • Thursday:

    • Intuit ($INTU), Workday ($WDAY), Dollar Tree ($DLTR), Ulta Beauty ($ULTA)

  • Friday:

    • Akebia ($AKBA)

All of the companies that are reporting earnings this week can be viewed here.

Major Trades Published 8/14 - 8/18. Trades may include family members. [Source: 2iQ]

Buys:

  • Michael McCaul (R)

    • Company: Alphabet ($GOOGL)

      • Amount Purchased: $230K-$500K

    • Company: Charles Schwab ($SCHW)

      • Amount Purchased: $150K-$350K

    • Company: Chipotle ($CMG)

      • Amount Purchased: $150K-$350K

    • Company: AT&T ($T)

      • Amount Purchased: $115K-$300K

  • Tommy Tuberville (R)

    • Company: Humacyte ($HUMA)

      • Amount Purchased: $3K-$45K

Sells:

  • Daniel Goldman (D)

    • Company: Novo Nordisk ($NVO)

      • Amount Sold: $350K-$750K

    • Company: Louis Vuitton ($LVMH)

      • Amount Sold: $150K-$350K

    • Company: Verizon ($VZ)

      • Amount Sold: $100K-$250K

    • Company: UBS ($UBS)

      • Amount Sold: $100K-$250K

    • Company: HSBC ($HSBC)

      • Amount Sold: $100K-$250K

  • Michael McCaul (R)

    • Company: Netflix ($NFLX)

      • Amount Sold: $150K-$350K

Major Trades Published 8/10 - 8/18

Buys

  • Fox ($FOX/$FOXA)

    • Insider: Lachlan Murdoch (CEO)

      • # of Shares Purchased: 282,744 Shares

      • $ Amount: $9,567,718

      • SEC Forms: [1], [2]

  • Sarepta Therapeutics ($SRPT)

    • Insider: Michael Chambers (Director)

      • # of Shares Purchased: 23,686 Shares

      • $ Amount: $2,559,272

      • SEC Forms: [1]

  • Option Care Health ($OPCH)

    • Insider: Harry Kraemer (Director)

      • # of Shares Purchased: 55,000 Shares

      • $ Amount: $1,904,518

      • SEC Forms: [1]

  • Lyft ($LYFT)

    • Insider: John David Risher (CEO)

      • # of Shares Purchased: 100,000 Shares

      • $ Amount: $1,092,429

      • SEC Forms: [1]

  • Howard Hughes Corp ($HHC)

    • Insider: Pershing Square Capital (Director)

      • # of Shares Purchased: 14,264

      • $ Amount: $1,066,805

      • SEC Forms: [1]

Sells

  • Datadog ($DDOG)

    • Insider: Amit Agarwal (President)

      • # of Shares Sold: 248,000 Shares

      • $ Amount: $22,203,830

      • SEC Forms: [1], [2]

  • Ares ($ARES)

    • Insider: Bennett Rosenthal (Co-Founder)

      • # of Shares Sold: 202,489 Shares

      • $ Amount: $19,939,642

      • SEC Forms: [1]

    • Insider: David Kaplan (Co-Founder)

      • # of Shares Sold: 190,054 Shares

      • $ Amount: $18,699,715

      • SEC Forms: [1]

  • Roblox ($RBLX)

    • Insider: David Baszucki (CEO)

      • # of Shares Sold: 375,000 Shares

      • $ Amount: $11,260,800

      • SEC Forms: [1]

  • DoorDash ($DASH)

    • Insider: Tony Xu (CEO)

      • # of Shares Sold: 132,300 Shares

      • $ Amount: $10,442,112

      • SEC Forms: [1]

  • Amazon ($AMZN)

    • Insider: Adam Selipsky (AWS CEO)

      • # of Shares Sold: 70,056 Shares

      • $ Amount: $9,798,298

      • SEC Forms: [1]

  • AMD ($AMD)

    • Insider: Lisa Su (CEO)

      • # of Shares Sold: 75,000 Shares

      • $ Amount: $8,369,403

      • SEC Forms: [1]

All times in ET

  • MONDAY, AUG.21

    • None scheduled

  • TUESDAY, AUG.22

    • 10:00 am Existing Home Sales - July

  • WEDNESDAY, AUG.23

    • 9:45 am S&P Flash U.S. Services PMI - August

    • 9:45 am S&P Flash U.S. Manufacturing PMI - August

    • 10:00 am New Home Sales - July

  • THURSDAY, AUG.24

    • 8:30 am Initial Jobless Claims - August

    • 8:30 am Durable-goods Orders - July

    • 8:30 am Durable-goods Minus Transportation - July

    • 10:00 am Fed Officials Interviews From Jackson Hole Summit

  • FRIDAY, AUG.25

    • 10:00 am U Mich Consumer Sentiment, Final - August

    • 10:05 am Powell Gives Opening Speech At Jackson Hole Summit

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