Inflation's 2024 Resurgence

Plus, Macy's rejects takeover offer.

January 22, 2024

Today is Monday, January 22, 2024.

The Early Bird Index today is 63.72.

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Inflation's 2024 Resurgence

Could inflation return in 2024? Will that hurt stocks? AJ Giannone, the chief investment officer at the investing platform Allio, explains in a new episode of the Early Bird podcast.

Expectation: Many investors believe that inflation is “done” and the U.S. Federal Reserve will cut interest rates in 2024, which would be good for stocks.

Reality: Giannone says that improved financial conditions in the last 10 months (higher consumer spending, a robust labor market, strong earnings) could cause inflation to rise again, which would delay rate cuts.

  • So? This would be bad for stocks. Really bad. Many investors already priced in rate cuts.

Background: Remember, inflation did tick up last month. It stands at 3.4%, way higher than the Fed’s stated goal of under 2%. Uh-oh.

More Details: We could see a repeat of the 2022 playbook in 2024, says Giannone, where higher interest rates resulted in value assets outperforming growth assets.

Final Thoughts: If interest rate cuts are delayed in 2024, which stocks would benefit and which stocks would suffer? Giannone explains in a new episode of the Early Bird podcast.

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Notables

Notable Earnings Today: United Airlines (Nasdaq: UAL), AGNC Investment (Nasdaq: AGNC), Agilysys (Nasdaq: AGYS), Brown & Brown (NYSE: BRO), Zions Bancorp (Nasdaq: ZION), Independent Bank Group (Nasdaq: IBTX), Bank of Hawaii (NYSE: BOH), Logitech (Nasdaq: LOGI), Great Southern Bancorp (Nasdaq: GSBC), Enterprise Financial Services (Nasdaq: EFSC), CrossFirst Bankshares (Nasdaq: CFB).

Notable IPOs Today: Aimei Health Technology Co., Ltd Ordinary Share (Nasdaq: AFJK).

Notable Equity Crowdfunding Campaigns Ending Today: Coco Pago (Wefunder), Bando Alternative Group Delivery (Mainvest), Arrive (PicMii).

Notable Economic Events Today: U.S. Leading Economic Indicators (10:00 a.m. ET).

Macy's Rejects Takeover Offer

On Sunday, Macy’s (NYSE: M) rejected a $5.8 billion offer from private equity firms to acquire the legacy retail company.

Background: In December, Arkhouse Management and Brigade Capital Management submitted a bid to acquire Macy’s for $5.8 billion, which was at $21 per share. This is worth more than what Macy’s is currently trading for, which is $17.63 per share.

Details: Macy’s said that information from the private equity firms failed to address concerns about financing. In a response on Sunday, Arkhouse said that it could increase its proposal.

Quote: “We believe Macy’s investors support a privatization given the stock’s largest single-day gain in more than two years following media reports of our interest in acquiring the Company.” - Arkhouse Management.

Stock Price: Macy’s is down 24% in the last year, including an 11% drop in the last 30 days.

Final Thoughts: Macy’s has struggled in the past few years as retail consumers have increasingly turned to e-commerce instead of traditional brick-and-mortar stores. A buyout is possible in the future, but for now, the deal is dead.

Dogecoin Falls as X Payments Comes Into Focus

There was confirmation this weekend that X (what used to be called Twitter) is rolling out a payments system called X Payments, but Elon Musk’s favorite digital coin Dogecoin was not listed as part of the system yet, which sent the price down over 4% on Sunday.

Final Thoughts: Dogecoin, down 12% in the last 30 days, is living up to its hype as a meme coin. There’s a lot of volatility with this coin.

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