Markets are mixed as investors wait for inflation data

Dow went up 92, decliners barely ahead of advancers & NAZ was off 10.  The MLP index slid back 1 to the 249s & the REIT index fell 1 to the 372s.  Junk bond funds were mixed & Treasuries had limited buying, raising yields slightly.  Oil hardly budged in the low 71s & gold dropped 17 to 1997.

AMJ (Alerian MLP Index tracking fund)

A flurry of major central banks are set to make their final rate decisions of the year in a crunch week that will test market bets for rate cuts in early 2024.  The Federal Reserve on Wed will kick off what is poised to be a pivotal week, followed by a “Super Thursday” when the ECB, Bank of England, Swiss National Bank & Norway's Norges Bank will all meet.  Policymakers at the central banks are broadly expected to hold interest rates steady, except for Norway’s central bank which warned it would likely raise the cost of borrowing in Dec.  Investors will be searching for clues in the their statements on when rate cutting could start next year as inflation continues to fall away from its highest level in decades.  “The biggest risk to ‘risk-on’ is the fact that the Fed does not do what the market is telling it that it is going to do, which is slash interest rates over the course of 2024,” David Neuhauser, chief investment officer of Livermore Partners hedge fund said.  “The market is telling you one thing, so what the market is doing essentially is calling out the Fed’s credibility … and we’ll see who’s right here.”  Market participants overwhelmingly expect the Fed to hold rates at 5.25-5.50%, although traders are pricing in a 25 basis point cut as early as Mar next year, according to the CME FedWatch Tool.  The Fed has sought to push back on market expectations for aggressive rate reductions next year, however.  Fed Chair Jerome Powell warned earlier this month that it would be “premature” to speculate when policy might ease & suggested the central bank would be “prepared to tighten policy if it becomes appropriate to do so.”

A crunch week for central banks will put rate-cut expectations to the test

An investor group has made a $5.8B offer to buy Macy's (M) in a bid to take the famed department-store chain private after stiff competition from online rivals took a big bite out of its value.  Arkhouse Management, a real-estate focused investing firm & Brigade Capital Management, a global asset manager, on Dec 1 submitted a proposal to acquire the Macy's stock they don't already own for $21 a share, people familiar with the matter said.  That represented a roughly 32% premium to where shares closed the day before.  They have risen this month & closed Fri at $17.39.  That is still a far cry from where Macy's stock traded in 2015, as high as $70 a share, before competition from nimbler digital retailers took a toll on the business & that of other erstwhile industry stalwarts.  The group already has a big position in Macy's thru Arkhouse-managed funds.  It has discussed the proposal with Macy's, whose board subsequently met to discuss the offer.  It isn't clear how the retailer views the proposal.  The investor group, which believes Macy's is undervalued in the public markets & has indicated that it would be willing to raise its offer subject to due diligence.  An investment bank has provided a letter supporting the group’s ability to raise the necessary financing to get a deal across the finish line.  Macy's operates nearly 500 department stores under its namesake banner.  It also owns Bloomingdale's, a higher-end department-store chain with more than 30 locations & a number of discount & smaller-format shops under the 2 banners.  Macy's generated about $1.2B of profit on $24.4B in revenue in the last fiscal year.  That was a slight decrease from the $1.4B of profit on $24.5B in revenue in 2021.  In 2014, it booked more than $28B in sales.  The stock jumped $3.29 to $20.69 on the offer.

Investor group launches $5.8 billion buyout bid for Macy’s

Apple (AAPL), a Dow stock, will overhaul its iPad family next year to make it less confusing for customers & to recharge slumping sales.  New versions of the iPad Pro and iPad Air are reportedly coming as soon as Mar.  AAPL didn’t release new iPads in 2023 & sales fell 3% from fiscal 2022 to fiscal 2023, after declining 8% the year before.  IPad revenue in the company's fiscal 4th qtr fell 10% year over year after AAPL warned of double-digit declines in its iPad & Mac segments.  AAPL reportedly wants to make it easier to differentiate between the iPad models & also plans big upgrades.  The plan is to make the iPad Pro the clear top-line model, with the Air as a middle tier & the 11th generation iPad at the bottom.  The upcoming changes to the iPad Pro reportedly include a better screen, the M3 chip, a new design and a new Magic Keyboard attachment that only works with iPad Pros.  The new iPad Air will have 2 screen sizes & an M2 chip.  AAPL will reportedly release an updated iPad mini & the 11th generation iPad, the latter of which will allow the company to phase out the 9th generation version that still has a home button.  The stock fell $4.04

Apple reportedly plans overhaul to iPad family that may make it less confusing

The consumer price index for Nov will be released tomorrow & the Fed's meeting concludes the next day.  As usual, the Fed can only be expected to give vague comments on the future for interest rates.  As shown in the chart below, Dow has been flattish in early Dec after a strong rise in Nov.

Dow Jones Industrials