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SIX things you need to know this week in <5 minutes:
Cracks in the labor market
Canada’s biggest gets bigger
Record online sales
Commodities vs. China
A welcome development
Shots fired
1. MACROCracks in the labor market
After a short Thanksgiving week, a backlog of economic data was dumped out over the last 5 days which included all-important updates on a tight labor market.
The Fed saw encouraging numbers in ADP employment change which showed hiring in November fell to the slowest pace since January 2021, with private businesses adding just 127k jobs. The market was expecting 200k.
BLS JOLTS data released shortly thereafter, on the other hand, gave the Fed little to cheer about after revealing a modest decline in job openings. Currently, at over 10.3 million, there are 1.7 jobs for every available worker.
Yesterday's data brought similarly mixed signals with fewer new claims for unemployment than expected, but a 127% MoM spike in job cuts—driven by the tech sector—led to the most monthly layoffs since January 2021 (admittedly, overall numbers here are still historically low).
GRIT'S TAKE: Cracks in the labor market are what the Fed wants to see, but losing 100k manufacturing jobs doesn't bode well for the economic outlook.
GRIT'S ACTION: Inching closer to recessionary trends.
Under the Radar
PIONEERING A BETTER WAY. For years, the most “effective” pain management medications marketed by pharmaceuticals and prescribed by doctors have been opioids. Nirvana Life Sciences is reviving theories developed in the 60s and 70s with modern technologies to pioneer better, more practical solutions for addressing addiction*.
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2. DEALSCanada’s biggest gets bigger
Royal Bank of Canada (RBC) will be padding its lead as Canada's largest bank with the acquisition of HSBC's Canadian unit.
The $10 billion cash deal will yield some 130 branches for RBC, many of which are located on the West Coast, an area in which the bank has been looking to bolster its retail presence.
RBC also gets HSBC Canada's commercial-banking franchise which expands its list of business clients and was responsible for nearly half the unit's net operating income last quarter.
The deal will need to go through the Canadian government, however, which may balk at its biggest bank getting bigger.
GRIT'S TAKE: A couple of driving factors for RBC here are Canada's pro-immigration policies (positioning itself for a frictionless transition for immigrants) and the creation of cross-selling opportunities.
GRIT'S ACTION: I recently wrote about RBC to paid subscribers here and here, and published a deep dive for all here!
3. STOCK MARKETRecord online sales
Do you think shoppers care that the personal savings rate dipped to its lowest since 2005 (2.3% of disposable income)?
Online sales data from the holidays suggest they don't.
The 5-day holiday shopping period saw $35.4 billion spent by consumers online. Those sales (a record) were driven by $9 billion and $11.3 billion in Black Friday and Cyber Monday sales, respectively (both also records).
Sales for Black Friday increased 2.3% YoY while those for Cyber Monday jumped 5.3%. These aren't adjusted for inflation, however, which means shoppers are still paying more for less.
GRIT'S TAKE: An interesting note from this - Walmart overtook Amazon as the go-to place for searching for Black Friday deals. The latter dropped all the way to fourth behind the former, Target, and Kohls.
GRIT'S ACTION: Reread Sunday’s newsletter.
4. COMMODITIES Commodities vs. China
Just as the tides were turning for China's Zero-Covid policy, a sharp spike in cases now threatens to extend the country's extreme approach.
Besides provoking widespread protests across major cities, the prospect of stricter lockdowns is posing a headwind for demand for food and energy markets.
However, some investors are betting China will be pressured into an eventual easing, unlocking a wave of demand for commodities and metals (China is the world's top-metal consuming economy).
In fact, copper rose 11% in November—snapping 7 months of consecutive losses—for its biggest monthly gain since April 2021 on optimism over renewed demand from normalization in China.
GRIT'S TAKE: Still, a combination of uncertainty over Covid policies, domestic stimulus, and tight physical supplies suggest elevated volatility for commodities.
GRIT'S ACTION: Lockdowns at this point are insanity.
5. CRYPTOA welcome development
Shortly after FTX secured its place in future Harvard Business School case studies, Binance CEO Changpeng “CZ” Zhao tweeted his intentions to bring more transparency to crypto.
Meanwhile, others (Binance included) rushed to publicly share reserve wallet addresses to prove they weren't the next domino in line. Admirable gestures in the moment, but not a source of sustainable transparency.
Last week, however, Binance released its Proof of Reserves (PoR) System which is based on a data structure known as a Merkle Tree.
In layman’s terms, this cryptographic tool enables users to verify their balances are truly backed 1:1, allowing for full liquidity transparency.
Launching with Bitcoin to start and then adding support for other tokens and networks in the coming weeks, PoR is already working to involve third-party auditors to verify results.
GRIT'S TAKE: A welcome development that should have been in place years ago.
GRIT'S ACTION: Made some moves, read about them here!
6. ENTERTAINMENTShots fired
Elon Musk woke up Monday morning and chose violence.
The Chief Twit went on a brief Twitter tirade against Apple and Tim Cook, beginning by questioning the CEO about his company's stance on free speech. Musk went on to bash its 30% "tax on everything" (read: App Store developer fee) and claimed Apple had threatened to remove the Twitter app for download.
He even put up a poll calling for the iPhone giant to "publish all censorship actions it has taken that affect its customers". The tweetstorm ended with the since-deleted meme above, suggesting a potential war between two industry titans.
By Wednesday, however, Tim Cook had apparently laid Musk's concerns to rest after an in-person conversation at Apple HQ which made it "clear that Apple never considered" removing Twitter from the App Store.
GRIT'S TAKE: Aside from the meme, the rest of the tweets remain.
GRIT'S ACTION: Something tells me this isn't the last we'll hear about Twitter and App Store fees…
*SOURCES
1. Bloomberg, CNBC, CNBC
2. Bloomberg, Chartr
3. CNBC, Washington Post, CNBC
4. Bloomberg, Bloomberg
5.Coin Telegraph, Binance
6. CNBC
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