Hurricane carnage to cost insurers
Back-to-back hurricanes Helene and Milton are expected to cost insurers up to $55 billion, according to Moody’s RMS risk-modelling unit.
Warning signs for luxury sector
According to a Bloomberg report, organic revenue at LVMH Moët Hennessy Louis Vuitton SE (MCP-TRQX) declined 5% in the third quarter, with analysts expecting a small gain. Organic sales in the region that includes China fell 16% in the quarter at LVMH, which owns brands like Louis Vuitton and Christian Dior. However, the company is cautiously optimistic about trends in the U.S.
Trend alert: Conferencing & hospitality
Conferences and other group business travel are usually the last lodging sectors to recover from a downturn as they are an easy corporate cost-cutting area due to large upfront costs. However, the Wall Street Journal recently reported that the rise of remote working is prompting many US companies to reprioritise group travel and industry conferences as a more efficient way to promote team cohesion or meeting with partners and clients. “Group and convention hotels are having a moment right now,” said C. Patrick Scholes, a lodging and leisure analyst for Truist Securities. “That is the greatest strength this year and likely next year in terms of revenue growth for the domestic hotel industry.”
US Goldilocks economic situation
JPMorgan Chase & Co. (JPM-NASQ) CFO Jeremy Barnum said in a Wall Street Journal article that earnings are consistent with a “soft landing” or “no landing”. What the bank is seeing from consumers is in the “realm of what is normal” instead of indicating consumer stress; to him, it suggests a “stable, normal, modest growth environment.” And the larger corporate segment is “increasingly, seemingly, optimistic,” he adds. He calls it a “Goldilocks economic situation.”
West-on-west trade war loading
The European Union (EU)has prepared a list of American goods it could target with tariffs if former President Donald Trump wins the US election and follows through on his threat to hit the bloc with punitive trade measures.
Sarb sees cautious optimism on SA prices, growth
The South African Reserve Bank (SARB) sounded moderately confident on the outlook for inflation and economic growth amid expectations for another quarter-point interest rate cut this year. “Policy is still moderately restrictive,” the central bank said in its semi-annual Monetary Policy Review. “While disinflation is on track, uncertainty remains.” Keeping with the tone of the report titled “The Clearing Storm”, the review noted market pricing implied another quarter-point rate cut this year and it did not push back on this assessment. “This is a noticeable shift in expectations since the previous MPR, but not out of line with changes in South Africa’s macroeconomic outlook,” it said.
Trading Update: 18 October 2024
Despite some negative data, optimism is the dominant theme in global and local markets. Globally, a Goldilocks economy in the US and stimulus in China suggest sustained growth ahead while cautious optimism pervades the local market, with strengthening tailwinds for various sectors and the economy.
Optimism keeps pushing US markets on
US stocks strengthened as earnings season got underway, with optimism that corporate results would offer further vindication of soft-landing bets. The S&P 500 climbed toward a fresh record – its 46th this year – with Nvidia Corp. (NVDA-NASQ) leading gains in chipmakers and Apple (AAPL-NASQ) climbing on a bullish analyst call.
OPEC cuts global oil demand forecasts again
The Organization of Petroleum Exporting Countries (OPEC) trimmed its forecasts for oil demand growth this year and next for a third consecutive month as the group belatedly recognises a slowdown in global fuel use. Global oil consumption will increase by 1.9 million barrels a day — roughly 2% — in 2024, or 106,000 barrels a day less than previously forecast, according to an OPEC monthly report. The revision was “largely due to actual data received combined with slightly lower expectations” for some regions, it said.
AI chip war
The Biden administration has discussed capping AI chip sales from Nvidia Corp. (NVDA-NASQ) and Advanced Micro Devices (AMD-NASQ), according to a Bloomberg report quoting people familiar with the matter. The measures would set a ceiling on export licenses for some countries in the name of national security. In unrelated chipmaker news, ASML Holding NV’s shares plunged the most in 26 years after it booked only about half the orders analysts expected, a startling slowdown for one of the bellwethers of the semiconductor industry. The Dutch company, which makes the world’s most advanced chipmaking machines, lowered its guidance for 2025 and reported bookings of €2.6 billion ($2.8 billion) in the third quarter, missing an average estimate of €5.39 billion by analysts surveyed by Bloomberg.
Hurricane carnage to cost insurers
Back-to-back hurricanes Helene and Milton are expected to cost insurers up to $55 billion, according to Moody’s RMS risk-modelling unit.
Warning signs for luxury sector
According to a Bloomberg report, organic revenue at LVMH Moët Hennessy Louis Vuitton SE (MCP-TRQX) declined 5% in the third quarter, with analysts expecting a small gain. Organic sales in the region that includes China fell 16% in the quarter at LVMH, which owns brands like Louis Vuitton and Christian Dior. However, the company is cautiously optimistic about trends in the U.S.
Trend alert: Conferencing & hospitality
Conferences and other group business travel are usually the last lodging sectors to recover from a downturn as they are an easy corporate cost-cutting area due to large upfront costs. However, the Wall Street Journal recently reported that the rise of remote working is prompting many US companies to reprioritise group travel and industry conferences as a more efficient way to promote team cohesion or meeting with partners and clients. “Group and convention hotels are having a moment right now,” said C. Patrick Scholes, a lodging and leisure analyst for Truist Securities. “That is the greatest strength this year and likely next year in terms of revenue growth for the domestic hotel industry.”
US Goldilocks economic situation
JPMorgan Chase & Co. (JPM-NASQ) CFO Jeremy Barnum said in a Wall Street Journal article that earnings are consistent with a “soft landing” or “no landing”. What the bank is seeing from consumers is in the “realm of what is normal” instead of indicating consumer stress; to him, it suggests a “stable, normal, modest growth environment.” And the larger corporate segment is “increasingly, seemingly, optimistic,” he adds. He calls it a “Goldilocks economic situation.”
West-on-west trade war loading
The European Union (EU)has prepared a list of American goods it could target with tariffs if former President Donald Trump wins the US election and follows through on his threat to hit the bloc with punitive trade measures.
Sarb sees cautious optimism on SA prices, growth
The South African Reserve Bank (SARB) sounded moderately confident on the outlook for inflation and economic growth amid expectations for another quarter-point interest rate cut this year. “Policy is still moderately restrictive,” the central bank said in its semi-annual Monetary Policy Review. “While disinflation is on track, uncertainty remains.” Keeping with the tone of the report titled “The Clearing Storm”, the review noted market pricing implied another quarter-point rate cut this year and it did not push back on this assessment. “This is a noticeable shift in expectations since the previous MPR, but not out of line with changes in South Africa’s macroeconomic outlook,” it said.
Petro Wells
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