Domino’s Pizza Group said it backed its fiscal 2023 guidance expecting accelerating growth through additional opportunities mostly in the U.K. and Ireland markets.
The pizza chain–the holder of the master franchise agreement to own, operate and franchise Domino’s stores in the U.K. and Ireland–said that it expects underlying earnings before interest, taxes, depreciation and amortization to be in the range of 132 million pounds ($165.6 million) to GBP138 million.
The company added that it still expects to open at least 60 new stores this year.
“Material progress has been made in recent years but there are a number of areas where we can significantly enhance growth,” Chief Executive Officer Andrew Rennie said.
The rally lifting U.S. stocks to fresh 2023 highs in the year’s home stretch could be at risk if the Federal Reserve on Wednesday crushes expectations for interest-rate cuts in 2024.
U.S. central bankers and investors haven’t exactly been seeing eye-to-eye about when the Fed will start easing its monetary policy, according to Melissa Brown, senior principal of applied research at Axioma.
Traders also have been flip-flopping on their forecasts for rate cuts over the past few months, based on fed-funds futures data.
Oxford Economics/Bloomberg
Given the whipsaw of recent volatility, it isn’t hard to imagine a jittery market backdrop as investors wait to hear from Fed Chairman Jerome Powell on Wednesday, even though the central bank isn’t expected to change its range for short-term interest rates. Since July, the Fed funds rate rate has been at a 22-year high in a 5.25% to 5.5% range.
U.S. stocks advanced this year after a bruising 2022, adding big gains in November, as benchmark 10-year Treasury yields BX:TMUBMUSD10Y
tumbled from a 16-year high of 5%. The Dow Jones Industrial Average DJIA
closed on Friday only 1.5% away from its record close nearly two years ago. The S&P 500 index SPX
booked its highest finish since March 2022, according to Dow Jones Market Data.
“I don’t see any report on the horizon that would really make them [the Fed] change their stance on where we are on monetary policy,” said Alex McGrath, chief investment officer at NorthEnd Private Wealth. It is mostly the expectation of Fed rate cuts next year that have supported stock and bond markets rallies recently, he said.
The Dow Jones closed 9.4% higher on the year through Friday, the S&P 500 was up 19.9% and the Nasdaq Composite advanced 37.6% for the same period, according to FactSet data.
“We have been a little skeptical of the market’s excitement over rate cuts early next year,” said Ed Clissold, chief U.S. strategist at Ned Davis Research.
It takes a gradual process for the Fed to move away from its monetary policy tightening, Clissold told MarketWatch. The Fed is likely to pivot its tone from being very hawkish to neutral, remove the tightening bias, and then talk about rate cuts, noted Clissold.
The bond market on Friday already was again flashing signs of a potential rethink by investors about the path of interest rates in 2024.
HYG,
often a canary in the coal mine for markets, hit pause on a rally that started in late October as benchmark borrowing costs fell, even though the sector has benefited from big inflows of funds in recent weeks.
Treasury yields for 10-year and 30-year BX:TMUBMUSD30Y
bonds also shot higher Friday, echoing volatility that took hold in mid-October.
Mike Sanders, head of fixed income at Madison Investments, has been similarly cautious. “I think the market is a little too aggressive in terms of thinking that cuts are going to occur in March,” Sanders said. It is more likely that the Fed will start cutting rates in the second half of next year, he said.
“I think the biggest thing is that the continued strength in the labor market continues to make the services inflation stickier,” Sanders said. “Right now we just don’t see the weakness that we need to get that down.”
Friday’s U.S. employment report adds to his concerns. About 199,000 new jobs were created in November, the government said Friday. Economists polled by the Wall Street Journal had forecast 190,000 jobs. The report also showed rising wages and a retreating unemployment rate to a four-month low of 3.7% from 3.9%.
The U.S. central bank will likely “try their best to push back on the narrative of cuts coming very soon,” Sanders said. That could be accomplished in its updated “dot plot” interest rate forecast, also due Wednesday, which will provide the Fed’s latest thinking on the likely path of monetary policy. The Fed’s update in September surprised some in the market as it bolstered the central bank’s stance of higher rates for longer.
There’s still a chance that inflation will reaccelerate, Sanders said. “The Fed is worried about the inflation side more than anything else. For them to take the foot off the brake sooner, it just doesn’t do them any good.”
Ahead of the Fed decision, an inflation update is due Tuesday in the November consumer-price index, while the producer-price index is due Wednesday.
Still, seasonality factors could aid the stock market in December. The Dow Jones Industrial Average in December rises about 70% of the time, regardless of whether it is in a bull or bear market, according to historical data.
“The overall market outlook remains constructive,” said Ned Davis’s Clissold. “A soft landing scenario could support the bull market continuing.”
Last week the Dow eked out a gain of less than 0.1%, the S&P 500 edged up 0.2% and the Nasdaq rose 0.7%. All three major indexes went up for a sixth straight week, with the Dow logging its longest weekly winning streak since February 2019, according to Dow Jones Market Data.
Media tycoon Shari Redstone is in talks to sell controlling interesting in Paramount parent National Amusements to media and entertainment company Skydance, Puck and the New York Times reported Sunday.
According to the Times, Redstone — the daughter of late Paramount CEO Sumner Redstone — has held talks with Skydance in recent weeks, though the Times said it was unclear if a deal would be reached.
Skydance, which is led by David Ellison, son of Oracle founder Larry Ellison, is one of Hollywood’s top independent studios, and has produced Paramount blockbusters such as “Mission: Impossible — Dead Reckoning” and “Top Gun: Maverick.” RedBird is a financial backer of Skydance.
A sale would be a major reversal for Redstone, who waged a bitter battle for control of the company in 2016, and who later led the effort to merge CBS Corp. and Viacom, which led to the creation of the current Paramount Global.
Deadline had reported that Skydance would be more interested in Paramount’s IP and movie studio, and could look to sell its TV assets, including CBS.
A deal could signal the start of a major shakeup across the media industry, as traditional TV companies are struggling to make money in the streaming age. Comcast Corp. CMCSA, -0.17%,
which owns NBCUniversal, could be looking to expand, while Warner Bros. Discovery WBD, +6.01%
could be a potential seller. Disney DIS, +0.84%
CEO Bob Iger recently floated the idea of selling ABC, but quickly walked that back.
Paramount Global shares PARA, +12.11%
have surged nearly 40% in the past month, but are still about flat year to date.
SmileDirectClub Inc. said late Friday it was winding down operations, effective immediately, seeming to cast its millions of customers adrift — except when it comes to their bills.
SmileDirectClub SDCCQ, -45.32%
said in a statement that its aligner treatment is not available to new customers. For existing customers, the company said, “we apologize for the inconvenience, but customer care support is no longer available” through its telehealth program, including periodic check-ins.
The company did not immediately return a request for comment.
People on the company’s SmilePay plan will need to make all payments until paid in full, the company said. SmileDirect also ended its lifetime guarantee.
For those seeking refunds, the company said that “there will be more information to come once the bankruptcy process determines next steps and additional measures customers can take.”
The company has long attracted criticism for its teledentistry model, which it has said aims to disrupt the orthodontics industry. There were allegations a few years ago that it had harmed customers by breaking teeth and causing nerve damage, which the company denied.
Setbacks also include a scathing report from a short seller; regulatory action in California, Alabama and Georgia; and opposition to the company’s business practices from medical organizations including the American Dental Association and the American Association of Orthodontists.
U.S. stocks closed higher on Friday, shaking off earlier weakness after a strong monthly jobs report, to clinch a sixth straight week in a row of gains. The Dow Jones Industrial Average DJIA, +0.36%
advanced about 130 points, or 0.4%, to end near 36,247, according to preliminary FactSet data. The S&P 500 index gained 0.4% Friday and the Nasdaq Composite finished 0.5% higher. A string of weekly gains propelled the S&P 500 index SPX, +0.41%
to a fresh 2023 closing high and left the Dow about 1.4% away from its record close set nearly two years ago, according to Dow Jones Market Data. Equities have benefitted from a risk-on tone going into year end, which has been driven by falling 10-year Treasury yields TMUBMUSD10Y, 4.230%
and optimism around the Federal Reserve potentially cutting interest rates in the year ahead. That hinges on if inflation continues to ease. November’s robust jobs report served as a reminder Friday of the tough path of the “last mile” in getting inflation down to the Fed’s 2% annual target. As part of this, the 10-year Treasury yield jumped about 11.5 basis points Friday to 4.244%, but still was about 74 basis points lower than its October high. For the week, the Dow was only fractionally higher, the S&P 500 gained 0.2% and the Nasdaq climbed 0.7%.
Tang Tan, the Apple Inc. executive who headed product design for the iPhone and Apple Watch, is leaving amid a shake-up of the division responsible for the company’s most critical product lines, according to a Bloomberg report.
Tan reports to John Ternus, senior vice president of hardware engineering, and the division is reshuffling duties to handle the transition.
Earlier this week, Bloomberg reported that Steve Hotelling, who worked on key technologies like the iPhone’s multitouch screen, Touch ID, and Face ID, is retiring from Apple.
Shares of Apple AAPL, +0.74%
are up 0.7% in trading Friday. Apple had no comment on the departures.
After the U.S. unemployment rate climbed to 3.9% in October, stoking fears that the labor market might finally be starting to crack under the weight of the Federal Reserve’s interest-rate hikes, economic data released Friday showed that unemployment retreated to 3.7% in November.
That means the Sahm rule, an indicator devised to sniff out a recession long before one is officially declared, is now even further from triggering, after nearly brushing up against the threshold last month.
And according to the rule’s creator, former Federal Reserve economist Claudia Sahm, perhaps it won’t trigger, at least not during this cycle.
“I am more optimistic today that it doesn’t trigger,” Sahm told MarketWatch during a phone interview Friday.
What’s the Sahm rule, and why should we care about it?
Wall Street and social media were abuzz with talk of the Sahm rule last month as the rising unemployment rate sparked a debate about whether a recession had begun.
The increase brought the Sahm rule indicator to 0.30, according to data available on a Federal Reserve branch website, bringing it closer to triggering than at any time during the past two years. It also sparked a brisk conversation among professional economists and amateur market watchers about what the Sahm rule is, how it works and why investors should care about it.
After Sahm declared that the rule hadn’t triggered, some on social media accused her of misrepresenting her own rule, said the economist, who now runs her own consulting business.
She was surprised by this, she told MarketWatch, since she thought the rule’s simplicity was one of its most important features.
It was initially devised with lawmakers in mind, intended to become an automatic mechanism to send out stimulus checks more quickly as a recession begins, thus helping to shield workers from some of the worst financial consequences.
But the debate has helped her realize that perhaps the rule’s dynamics aren’t clearly understood by all.
To try to remedy this, she published a step-by-step guide explaining how the Sahm rule is calculated, or at least how Sahm and the Fed calculate it. Economists are free to devise their own variations on the rule. Here are some key points:
The Sahm rule uses the three-month average of the monthly unemployment rate, instead of taking the latest rate in isolation.
The current average is then compared with the lowest three-month average from the past year. Right now, that stands at around 3.5, Sahm said.
The 12-month low is subtracted from the current three-month average, and if the difference is 0.5 percentage point or greater, it means the rule has triggered. The rule is based on history and it has a strong precedent, meaning that almost every time unemployment has risen past this threshold, a recession has ensued.
The snowball effect
The logic undergirding the rule is pretty straightforward, Sahm said: The rule is grounded in the notion, supported by historical data, that once employment starts to rise, it often snowballs.
Typically it increases by anywhere between 4 and 6 percentage points during a recession, Sahm said.
But just because the rule has held in the past doesn’t mean it always will. Sahm has previously said that she wouldn’t be surprised if the rule were to break because of pandemic-related distortions in the global economy.
She affirmed on Friday that she still believes this to be the case, although she doubts the rule will trigger this cycle.
That is largely because, as Sahm sees it, the rise in the unemployment rate has been driven not only by slowing job creation, but by workers returning to the workforce, a sign that supply-and-demand dynamics in the U.S. labor market are coming back into balance, and that maybe employers won’t need to be as precious about hiring in the future.
“If [the rebalancing] happens fast enough, then we won’t trigger. But if it slows down, then maybe we’ll trigger, but we’ll likely see unemployment move sideways before coming back down,” Sahm said.
Labor Department data showed the U.S. economy added 199,000 jobs in November, surpassing economists’ expectations for 190,000 new jobs. The number was also higher than the 150,000 created during the previous month.
November’s sharp pullback in 30-year fixed mortgage rates may not last if the labor market remains strong, said Mark Palim, deputy chief economist at Fannie Mae.
Palim was speaking to the robust jobs report released on Friday, showing the U.S. added 199,000 jobs in November and that wages rose, albeit with the figures somewhat inflated by the return of striking workers from the auto industry and from Hollywood.
Homebuyers can benefit from a robust labor market and the near 80 basis point decline in mortgage rates since the end of October, Palim said. But if the “labor markets remain this strong, we believe the pace of mortgage rate declines will likely not continue in the near term or may partially reverse,” he said in a statement.
The benchmark 30-year fixed mortgage rate was edging down to 7.05% on Friday, after surging to nearly 8% in October, according to Mortgage Daily News.
Optimism around the potential for falling mortgage costs to thaw home sales helped lift shares of Toll Brothers Inc., TOL, +1.86%
and a slew of other homebuilders tracked by the SPDR S&P Homebuilders ETF, XH,
to record highs earlier this week, even while investors in some homebuilder bonds have been sellers in recent weeks.
Yields on 10-year BX:TMUBMUSD10Y
and 30-year Treasury notes BX:TMUBMUSD30Y
were up sharply Friday, to about 4.23% and 4.32%, respectively, but still below the highs of about 5% in October. The surge in long-term borrowing costs was stoked by tough talk by Federal Reserve officials about the need to keep rates higher for longer to bring inflation down to a 2% annual target.
U.S. stocks were up Friday afternoon, shaking off earlier weakness following the jobs report. The Dow Jones Industrial Average DJIA
was 0.2% higher, further narrowing the gap between its last record close set two years ago, the S&P 500 index SPX
and the Nasdaq Composite Index COMP
also were up 0.2%, according to FactSet data.
The Walton family’s five-year rule as the world’s richest dynasty has come to an end.
The House of Nahyan, rulers of oil-rich Abu Dhabi in the United Arab Emirates, comes in at No. 1 on Bloomberg’s world’s richest families list for 2023, bumping the third-generation Walmart WMT, -1.05%
heirs that have long topped the rankings
The report released this week said that petroleum fortunes are “reshaping global business as never before,” and noted that the three Gulf families who made Bloomberg’s latest list of family fortunes are probably even wealthier than these “conservative estimates.”
The Al Nahyans of Abu Dhabi rule the list with $305 billion to their name, according to the report, which notes that the United Arab Emirates capital is home to most of the country’s oil reserves.
The Al Nahyan family holds $45 billion more than the Walton family, which owns 46% of Walmart — the world’s largest retailer by revenue. The Waltons have ruled the rankings for the past several years, but are now No. 2, worth $259.7 billion in the most recent fiscal year.
Rounding out the top three is the Hermès family, whose fortune can be traced to the French luxury house. The founding family is worth $150.9 billion, as they still own a two-thirds majority in the company.
As far as other Americans on the list, the Mars family’s confectionary collection of chocolate brands such as M&Ms, Milky Way and Snickers bars — not to mention pet products — land them in fourth place with $141.9 billion. And the Koch family, behind Koch Industries, is in sixth place with $127.3 billion.
The report added that the richest families have certainly gotten richer this year, with the world’s ultra-rich clans collectively adding $1.5 trillion — yes, trillion — to their wealth in the past year, a 43% increase over their already considerable fortunes in 2022.
So here are the world’s 10 richest families of 2023, as reported by Bloomberg.
Al Nahyan, ruling family of the United Arab Emirates, $305 billion
Walton, owners of Walmart in the U.S., $259.7 billion
Hermès, owners of Hermès in France, $150.9 billion
Mars, owners of Mars, Inc. in the U.S., $141.9 billion
Al Thani, ruling family of Qatar, $133 billion
Koch, owners of Koch Industries in the U.S., $127.3 billion
Al Saud, ruling family of Saudi Arabia, $112 billion
Ambani, owner of Reliance Industries in India, $89.9 billion
Wertheimer, owner of Chanel in France, $89.6 billion
Thomson, owner of Thomson Reuters in Canada, $71.1. million
Krispy Kreme has already run into trouble with the deputy mayor of Paris after opening its first store in the French capital this week.
The opening saw hundreds of Parisians flock to Krispy Kreme’s DNUT, +0.31%
new shop, which occupies a site that previously housed a restaurant run by Michelin-starred chef Alain Ducasse.
The North Carolina doughnut purveyor’s arrival in Paris, however, also attracted the ire of Deputy Mayor Emmanuel Grégoire, after the business put up a series of posters on the streets of Paris.
The Socialist Party politician slammed Krispy Kreme’s poster campaign for “littering the streets,” which he described as “illegal, polluting and costly for the community.” The so-called guerrilla marketing tactic of flyposting is illegal under French law.
“Prepare to get a big fine!” Grégoire said in response to a tweet celebrating the campaign that read: “Prepare to change your diet with @KrispyKremeFrr.”
The poster campaign was developed by advertising agency Buzzman Time, which has previously designed marketing campaigns for Burger King and Uber Eats.
The opening of Krispy Kreme’s Paris store marks the company’s first foray into France, which is now the second-biggest fast-food market in the world.
The New York–listed company, which was founded in 1937, plans to build 500 doughnut stalls across France over the next five years. Krispy Kreme doughnuts are currently available in 38 countries, including Cambodia, Myanmar and Kazakhstan. Its 379 locations in the U.S. are in 41 states and the District of Columbia.
According to its most recent financial results, Krispy Kreme generated $407 million in revenue in the third quarter of 2023, a 7.9% increase over the previous year.
Krispy Kreme and Buzzman Time have not responded to a request by MarketWatch for comment.
U.S. stocks closed higher Friday, with the Dow Jones Industrial Average scoring its longest weekly winning streak since February 2019, as investors digested the latest job report.
How stock indexes traded
The Dow Jones Industrial Average DJIA
rose 130.49 points, or 0.4%, to close at 36,247.87, its highest closing value since Jan. 12, 2022.
The S&P 500 SPX
gained 18.78 points, or 0.4%, to finish at 4,604.37, marking its highest close since March 29, 2022.
The Nasdaq Composite COMP
climbed 63.98 points, or 0.4%, to end at 14,403. 97, scoring its highest closing value since April 4, 2022.
For the week, the Dow eked out a gain of less than 0.1%, the S&P 500 edged up 0.2% and the Nasdaq advanced 0.7%. All three major indexes rose for a sixth straight week, according to Dow Jones Market Data.
What drove markets
U.S. stocks ended higher Friday as investors parsed a stronger-than-expected job report.
The U.S. Bureau of Labor Statistics said Friday that the economy added 199,000 jobs in November, while the unemployment rate fell to 3.7% from 3.9%. Economists polled by the Wall Street Journal had forecast that 190,000 jobs would be added in the month.
“It’s nice to see that a soft landing still can take place,” Yung-Yu Ma, chief investment officer at BMO Wealth Management, said by phone Friday. But the market had been getting “too optimistic” about potential interest-rate cuts by the Federal Reserve in the early part of next year, he added.
The job report is “perhaps a wash” for markets as “average hourly earnings growth came in a little on the high side,” Ma said. That could contribute to inflationary pressures and push a Fed pivot on rate cuts further out in 2024 than markets were expecting.
“The Fed can probably be patient for a while,” he said. Fed Chair Jerome Powell may “strike a bit more of a hawkish tone” after the central bank’s monetary-policy meeting next week, potentially pushing back against some of the enthusiasm for earlier rate cuts, Ma said.
Average hourly earnings rose 0.4% in November, up 4% year over year, the job report shows.
“Even though the headline 199,000 new jobs created is just slightly above consensus estimates for 190,000 new positions, the lower unemployment rate of 3.7%, coupled with higher-than-expected average hourly earnings, caused a jump higher in Treasury yields,” Quincy Krosby, chief global strategist at LPL Financial, said in emailed comments.
The yield on the 10-year Treasury note BX:TMUBMUSD10Y
climbed 11.5 basis points Friday to 4.244%, according to Dow Jones Market Data. That’s below its high this year of about 5% in October.
Meanwhile, the stock market’s so-called fear gauge remained low, with the CBOE Volatility Index VIX
declining to 12.35 on Friday, FactSet data show.
In other economic data released Friday, the University of Michigan’s gauge of consumer sentiment rose to a preliminary reading of 69.4 in December, its first increase in five months. Inflation expectations also moderated, the university’s survey of consumer sentiment showed.
Such a big swing for a single reading of the survey is unusual, said Claudia Sahm, a former Federal Reserve economist who now runs a consulting business. “These data usually don’t move like that,” she said during a phone interview with MarketWatch.
Next week’s economic calendar will include a reading on U. S. inflation from the consumer-price index as well as the outcome of the Fed’s two-day policy meeting, scheduled to conclude Dec. 13.
Meanwhile, the S&P 500 notched a sixth straight week of gains, its longest such winning streak since the stretch ending Nov. 15, 2019, according to Dow Jones Market Data. The Dow Jones Industrial Average logged its longest stretch of weekly gains since February 2019.
Companies in focus
Lululemon Athletica Inc. shares LULU, +5.37%
jumped 5.4% after the company late Thursday called for lower-than-expected holiday-quarter figures, saying that is navigating an “uncertain” economy.
Mullen Automotive Inc. shares MULN, -5.13%
dropped 5.1% after the electric-vehicle maker filed a lawsuit against a group of investors for allegedly using “spoofing” to manipulate its share price.
This is a developing story. Stay tuned for updates here.
The numbers: The University of Michigan’s gauge of consumer sentiment rose to a preliminary December reading of 69.4 from a six-month low of 61.3 in the prior month. This is the highest level since August.
Economists polled by the Wall Street Journal had expected a December reading of 62.4.
Expectations of inflation cooled in early December, according to the report.
Americans think inflation will average a 3.1% rate over the next year, down from 4.5% in the prior month. That’s the lowest level since March 2021.
Expectations for inflation over the next five years fell to 2.8% from 3.2% in November, which was the highest reading in over a decade.
Key details: According to the report, a gauge of consumers’ views on current conditions jumped to 74 in December from 68.3 in the prior month, while a barometer of their expectations of the future rose to 66.4 from 56.8.
Big picture: A lot of factors were behind the increase in confidence, with the solid job market and declining gasoline prices mentioned most often by economists. Stock prices have also been strong. Despite the gains, sentiment is still well below prepandemic levels.
SPX
were higher in early trading on Friday, while the 10-year Treasury yield BX:TMUBMUSD10Y
rose to 4.21% after the solid job report was released earlier in the morning.
Airbus and Hong Kong’s Cathay Pacific Airways have signed a purchase agreement for six A350F freighter aircraft with a basic price of $2.71 billion before price concessions, the companies said Friday.
Cathay said Airbus granted it significant price concessions which might be used toward the payment of the aircraft. The basic price comprises prices for airframe, optional features and engine, Cathay said.
The aircraft, expected to be delivered by the end of 2029, will expand Cathay’s cargo fleet capacity and will mainly serve long-haul destinations in North America, South America and Europe, it said.
Airbus said the A350F can carry a payload of up to 111 metric tons and can fly up to 4,700 nautical miles, or 8,700 kilometers.
Write to Adria Calatayud at adria.calatayud@dowjones.com
WASHINGTON — Hunter Biden was indicted on nine tax charges in California on Thursday as a special counsel investigation into the business dealings of President Joe Biden’s son intensifies against the backdrop of the looming 2024 election.
The new charges — three felonies and six misdemeanors — are in addition to federal firearms charges in Delaware alleging Hunter Biden broke laws against drug users having guns in 2018. They come after the implosion of a plea deal over the summer that would have spared him jail time.
Hunter Biden “spent millions of dollars on an extravagant lifestyle rather than paying his tax bills,” special counsel David Weiss said in a statement. The charges are centered on at least $1.4 million in taxes Hunter Biden owed during between 2016 and 2019, a period where he has acknowledged struggling with addiction. The back taxes have since been paid.
If convicted, Hunter Biden could face up to 17 years in prison. The special counsel probe remains open, Weiss said.
In a fiery response, defense attorney Abbe Lowell accused Weiss of “bowing to Republican pressure” in the case.
“Based on the facts and the law, if Hunter’s last name was anything other than Biden, the charges in Delaware, and now California, would not have been brought,” Lowell said in a statement.
The White House declined to comment on Thursday’s indictment, referring questions to the Justice Department or Hunter Biden’s personal representatives.
The charging documents filed in California, where he lives, details spending on everything from drugs and girlfriends to luxury hotels and exotic cars, “in short, everything but his taxes,” prosecutor Leo Wise wrote.
The indictment comes as congressional Republicans pursue an impeachment inquiry into President Biden, claiming he was engaged in an influence-peddling scheme with his son. The House is expected to vote next week on formally authorizing the inquiry.
No evidence has emerged so far to prove that Joe Biden, in his current or previous office, abused his role or accepted bribes, though questions have arisen about the ethics surrounding the Biden family’s international business.
The criminal investigation led by Weiss has been open since 2018, and was expected to wind down with the plea deal that Hunter Biden had planned to strike with prosecutors over the summer. He would have pleaded guilty to two misdemeanor tax evasion charges and would have entered a separate agreement on the gun charge, getting two years of probation rather than jail time.
It was pilloried as a “sweetheart deal” by Republicans, including former President Donald Trump, who is facing criminal charges in multiple cases.
The agreement also contained immunity provisions, and defense attorneys have argued that they remain in force since that part of the agreement was signed by a prosecutor before the deal was scrapped.
Prosecutors disagree, pointing out the documents weren’t signed by a judge and are invalid.
After the deal fell apart, prosecutors filed three federal gun charges alleging that Hunter Biden had lied about his drug use to buy a gun that he kept for 11 days in 2018. Federal law bans gun possession by “habitual drug users,” though the measure is seldom seen as a stand-alone charge and has been called into question by a federal appeals court.
The defense is planning to push next week for dismissal of the “unprecedented and unconstitutional” gun charges, Lowell said.
Hunter Biden’s longstanding struggle with substance abuse had worsened during that period after the death of his brother Beau Biden in 2015, prosecutors wrote in a draft plea agreement filed in court in Delaware.
He still made “substantial income” in 2017 and 2018, including $2.6 million in business and consulting fees from a company he formed with the CEOs of a Chinese business conglomerate and the Ukrainian energy company Burisma, but did not pay his taxes on a total of about $4 million in personal income during that period, prosecutors said in the scuttled Delaware plea agreement.
He did eventually file his taxes in 2020 and the back taxes were paid by a “third party” the following year, prosecutors said.
Broadcom Inc. topped profit expectations for its latest quarter, but shares of the chip company were falling in Thursday’s aftermarket action.
The company recorded fiscal fourth-quarter net income of $3.5 billion, or $8.25 a share, whereas it posted net income of $3.3 billion, or $7.83 a share, in the year-earlier period.
On an adjusted basis, Broadcom AVGO, +2.06%
earned $11.06 a share, up from $10.45 a share a year before, while analysts tracked by FactSet were modeling $10.96 a share.
Revenue increased to $9.30 billion from $8.93 billion, while the FactSet consensus was for $9.28 billion. Broadcom generated $7.33 billion in revenue from semiconductor solutions, up 3%, along with $1.97 billion in revenue from infrastructure solutions, up 7%.
Results were “driven by investments in accelerators and network connectivity for AI by hyperscalers,” Chief Executive Hock Tan said in a release.
Broadcom’s stock was off about 2% in Thursday’s extended session.
For the new fiscal year, Broadcom anticipates $50 billion in revenue, when including contributions from the recently closed acquisition of VMware that may not be fully reflected in consensus estimates. The company also expects adjusted earnings before interest, taxes, depreciation and amortization to be about 60% of projected revenue; it was 65% of revenue in the most recent fiscal year.
The company expects its semiconductor segment to sustain a mid- to high-single-digit revenue growth rate in fiscal 2024.
Financial conditions are now looser than in September, says economist
Financial conditions in the U.S. are looser than in September, says economist.
Getty Images
The feel-good tone gripping markets in the home stretch of 2023 may not be what the Federal Reserve had penciled in for the holidays.
The stock market in December, once again, has been knocking on the door of record levels, driven by optimism about easing inflation and potential Fed rate cuts next year.
But while the prospect of double-digit equity gains this year would be a reprieve for investors after a brutal 2022, the latest rally also points to looser financial conditions.
Ultimately, the risk of looser financial conditions is that they could backfire, particularly if they rub against the Fed’s own goal of keeping credit restrictive until inflation has been decisively tamed.
Specifically, the November rally for the S&P 500 index SPX
can be traced to the 10-year Treasury yield BX:TMUBMUSD10Y
dropping to 4.1% on Thursday from a 16-year peak of 5% in October.
Falling 10-year Treasury yields from a 5% peak in October coincides with a sharp rally in the S&P 500 at the tail end of 2023.
Oxford Economics
The Fed only exerts direct control over short-term rates, but 10-year and 30-year Treasury yields BX:TMUBMUSD30Y
are important because they are a peg for pricing auto loans, corporate debt and mortgages.
That makes long-term rates matter a lot to investors in stocks, bonds and other assets, since higher rates can lead to rising defaults, but also can crimp corporate earnings, growth and the U.S. economy.
Michael Pearce, lead U.S. economist at Oxford Economics, thinks the November rally may put Fed officials in a difficult spot ahead of next week’s Dec. 12 to 13 Federal Open Market Committee meeting — the eighth and final policy gathering of 2023.
“The decline in yields and surge in equity prices more than fully unwinds the tightening in conditions seen since the September FOMC meeting,” Pearce said in a Thursday client note.
The Fed next week isn’t expected to raise rates, but instead opt to keep its benchmark rate steady at a 22-year high in a 5.25% to 5.5% range, which was set in July. The hope is that higher rates will keep bringing inflation down to the central bank’s 2% annual target.
Ahead of the Fed’s July meeting, stocks were extending a spring rally into summer, largely driven by shares of six meg-cap technology companies and AI optimism.
Rates in September were kept unchanged, but central bankers also drove home a “higher for longer” message at that meeting, by penciling in only two rate cuts in 2024, instead of four earlier. That spooked markets and triggered a string of monthly losses in stocks.
Pearce said he expects the Fed next week to “push back against the idea that rate cuts could come onto the agenda anytime soon,” but also to “err on the side of leaving rates high for too long.”
That might mean the first rate cut comes in September, he said, later than market odds of a 52.8% chance of the first cut in March, as reflected by Thursday by the CME FedWatch Tool.
Stocks were higher Thursday, poised to snap a three-session drop. A day earlier, the S&P 500 closed 5.2% off its record high set nearly two years ago, the Dow Jones Industrial Average DJIA
was 2% away from its record close and the Nasdaq Composite Index COMP
was almost 12% below its November 2021 record, according to Dow Jones Market Data.
While Advanced Micro Devices Inc. shares didn’t enjoy a Wednesday bump during the company’s artificial-intelligence event, they were rallying sharply Thursday as analysts reflected on the chip maker’s presentation.
Chief Executive Lisa Su and her team “put together one of the most impressive new product event/launches by our reckoning in the last decade, perhaps ever,” Rosenblatt Securities analyst Hans Mosesmann wrote in a note to clients.
The launch of AMD’s AMD, +7.09%
MI300X AI/graphics-processing-unit accelerator “was not just a speeds and feeds geek fest (it was that for sure, with AMD claiming superiority in AI inferencing), but an industry movement coalescing around the concept of ‘open’ sourced technologies are preferred (demanded really), to address the insanely fast/accelerating life-changing thing that AI has become,” Mosesmann continued.
He was also impressed by the company’s talk of its software platform ROCm, which he thinks is catching up to Nvidia Corp.’s NVDA, +1.54%
CUDA.
“Of course, Nvidia is not going away, and we are quite sure will remain the dominant AI player for years to come but AMD we feel made the case yesterday that they will be an important AI innovator on a secular basis,” Mosesmann noted, as he kept his outperform rating and $200 target price on the stock.
AMD shares were up 6% in Thursday morning trading.
Baird’s Tristan Gerra was also impressed.
“Rapidly unfolding hyperscaler engagements, highly competitive AI architecture specs, along with accelerated new product roadmap, bode well for share gains and continued acceleration in AI-related revenue for AMD beyond 2024, while faster-than-expected rate of adoption so far could potentially drive upside in the AI revenue outlook for 2024, in our view,” he wrote.
Gerra also sees the potential for “high-volume deployments,” thanks to the “significant software milestones” AMD is showing. He rates the stock at outperform with a $125 target price.
TD Cowen’s Matthew Ramsay said that AMD’s event reinforced his belief that the company “is well positioned to meaningfully participate” in the large total addressable market for AI accelerators.
The company called out Microsoft Corp. MSFT, -0.01%,
Meta Platforms Inc. META, +2.41%
and Oracle Corp. ORCL, -0.08%
as customers, announcements that were “strong” but not “surprising,” in Ramsay’s view.
“We remain encouraged that AMD is making an impressive case (and is getting customer support) to provide adaptive computing solutions for both training and inference in increasingly large [generative-AI] infrastructure builds,” he wrote. “We believe this signifies a strong AI strategy of delivering a broad portfolio of [central processing unit], GPU, and [field-programmable gate array] assets, with open software that enables easily deployed AI workloads while leveraging the company’s existing partnerships to accelerate its AI ramps at-scale.”
Ramsay has an outperform rating and $130 target price on AMD shares.
Dollar General Corp.’s stock DG, +0.40%
rose 1.9% early Thursday, after the discount retailer beat third-quarter earnings estimates and backed its guidance, even as its CEO said it was not happy with its performance. The company posted net income of $276.2 million, or $1.26 a share, for the third quarter, down from $526.2 million, or $2.33 a share, in the year-earlier period. Sales rose 2.4% to $9.694 billion from $9.465 billion a year ago. The FactSet consensus was for EPS of $1.20 and sales of $9.644 billion. Same-store sales fell 1.3%, while FactSet was expecting a 2.1% decline. “While we are not satisfied with our financial results for the third quarter, including a significant headwind from inventory shrink, we are pleased with the momentum in some of the underlying sales trends, including positive customer traffic, as well as market share gains in both dollars and units,” CEO Todd Vasos said in a statement. Vasos returned to the role of CEO in October, after serving in the position from June 2015 to November 2022. Vasos said the company has completed a review of all aspects of the business and identified key areas for improvement both in the near and longer term. For fiscal 2024, it is planning about 2,385 real estate projects, including 800 new stores, 1,500 remodels, and 85 relocations. “This is a modest slow down compared to the number of projects in recent years, which we believe is prudent in this environment,” he said. Dollar General backed its full-year guidance, for a sales increase of 1.5% to 2.5%, and for EPS of $7.10 to $7.60. The company expects same-store sales to be down 1% to flat. The stock is down 45.6% in the year to date, while the S&P 500 SPX, -0.39%
has gained 19%.
“‘ ‘You want to know what has contributed to inflation in this country? Yes, it’s more government spending. Yes, it’s the fact that we’re printing too much money. Absolutely. But it is also the increase in prices that were driven by Donald Trump’s tariffs.’”
— Former N.J. Gov. Chris Christie
That was former New Jersey Gov. Chris Christie swinging hard against GOP frontrunner Donald Trump during Wednesday’s Republican debate at the University of Alabama.
Florida Gov. Ron DeSantis, former South Carolina Gov. Nikki Haley and tech entrepreneur Vivek Ramaswamy joined Christie onstage in the fourth Republican presidential primary debate, which aired on NewsNation and the CW.
While discussing foreign policy and inflation, Christie placed much of the blame for higher prices at the former president’s feet, while also blasting his trade relations with China.
“The proof that he wasn’t good on trade with China is that all he did was imposed tariffs, which raise the prices for every American,” Christie said.
“You can’t say he was good on trade, because he didn’t trade. He didn’t change one Chinese policy in the process. He failed on it.”
That wasn’t the only swing that Christie took at Trump. The moderators opened Wednesday night’s debate by pressing the candidates on whether they are really electable, when most polls show the majority of Republican voters supporting Trump. And Christie responded by warning that Trump is “unfit” to serve as the commander-in-chief for a second term — even comparing him to “Harry Potter” villain Voldemort, who was a facist, evil wizard.
“We’ve had these three [candidates on stage] acting as if the race is between the four of us. The fifth guy [Trump] doesn’t have the guts to show up and stand here,” Christie said. “And yet, I’ve got these three guys who want to seemingly compete with Voldemort — he-who-should-not-be-named. They don’t want to talk about it.”
Christie also blamed Trump’s high poll numbers on many of his Republican rivals, whom he accused of condoning Trump’s more controversial actions and comments, including those that have landed him in legal trouble.
“‘You want to know why those [Trump] poll numbers are where they are? Because folks like these three guys on the stage make it seem like his conduct is acceptable.’”
— Former N.J. Gov. Chris Christie
“This is an angry, bitter man who wants to be back as president because he wants to exact retribution to anyone who disagreed with him, anyone who has tried to hold him to accountable for his own conduct,” Christie said, noting that the other colleagues on stage had raised their hands during the first GOP debate in August to show they would still support Trump, even if he was convicted of federal crimes.
“You want to know why those poll numbers are where they are? Because folks like these three guys on the stage make it seem like his conduct is acceptable,” Christie said. “Let me make it clear. His conduct is unacceptable. He’s unfit.”
He continued: “My three colleagues are afraid to offend. If you’re afraid to offend Donald Trump, then what are you gonna do when you sit across from President Xi, you sit across from the Ayatollah, you sit across from President Putin?”
Republican presidential hopeful Nikki Haley pushed back when pressed at Wednesday’s primary debate on whether she’s too tight with billionaires and corporate interests, saying those supporters won’t affect her stances on key issues.
“When it comes to these corporate people that want to suddenly support us, we’ll take it, but I don’t ask them what their policies are. They ask me what my policies are, and I tell them,” said Haley, a former ambassador to the U.N. and former South Carolina governor.
“Sometimes they agree with me, sometimes they don’t,” she added. “Some don’t like how tough I am on China. Some don’t like the fact that I’ve signed pro-life bills. Some don’t like the fact that I may oppose corporate bailouts.”
“Nikki, you were bankrupt when you left the U.N.,” the entrepreneur said. “Now you’re a multimillionaire. That math does not add up. It adds up to the fact that you are corrupt.”
Florida Gov. Ron DeSantis criticized her as well, saying: “These Wall Street liberal donors, they make money in China. They are not going to let her be tough on China, and she will cave to the donors.”
Presidential hopeful Vivek Ramaswamy holds up a sign that accuses rival Nikki Haley of being corrupt as he speaks during the fourth Republican presidential primary debate at the University of Alabama in Tuscaloosa.
AFP via Getty Images
Haley, meanwhile, said she wasn’t bankrupt after her stint as ambassador, but rather she and her husband had been in public service. She also spoke highly of Boeing, but noted she left the airplane maker’s board because she didn’t support its efforts to get a bailout during the COVID-19 pandemic.
“In terms of these donors that are supporting me, they’re just jealous,” Haley added, referring to DeSantis and Ramaswamy. “They wish that they were supporting them.”
The comments came Wednesday night at the 2024 Republican presidential primary’s fourth debate, held at the University of Alabama. Besides DeSantis, Haley and Ramaswamy, former New Jersey Gov. Chris Christie also took part in the clash.
The primary’s frontrunner, former President Donald Trump, skipped the debate, just as he steered clear of the previous three.
