Stocks drift up, Ocado up on Kroger retrenchment

Here’s one that you cannot trade but worth watching – shares of Moore Threads Technology jumped 400% on debut in Shanghai.

Why it matters? The US-blacklisted startup has been dubbed ‘China’s Nvidia’ and seems set to benefit from China’s drive to boost domestic manufacturing.

Fed watch: Markets now 87% priced for a rate cut next week – soft labour data is the hinge. But it’s not entirely clear cut.

Layoff announcements this year top 1.1 million, the most since 2020 when the pandemic hit, according to the Challenger jobs report, which has taken on a bit more significance lately due to the patchy official labour market data in the wake of the US government shutdown.

The firm said layoff plans hit 71,321 in November, a down from the huge (22yr high for the month) cuts announced in October…the 1.17mn total is 54% higher than the same 11-month period a year ago and job cuts in November above 70,000 have happened only twice since 2008: in 2022 and in 2008.

ADP this week reported a 32k drop in payrolls. But weekly unemployment claims dropped to a three-year low…what’s going on? Partly it’s due to the shutdown and some misaligned data. Partly it’s the rapidly changing picture of the economy and the labour market as the impact of immigration policy (removing existing and potential supply) and AI (removing demand) affects the distribution. Fewer workers + fewer jobs is not a barrier to growth in an AI-led economy. Today we see delayed PCE inflation data from September and the UoM sentiment data.

In Europe, Germany’s ruling coalition faces a key vote on a pensions bill that could topple the government. This could have implications for fiscal loosening that has underpinned a lot of the bullishness around European and particularly German equities.

Meta rallied on reports it plans deep spending cuts for its Metaverse … another year of efficiency or whatever, just not in AI I guess because, well, it can’t afford not to run that race as hard as it can. Meta executives have apparently discussed budget cuts of up to 30% on Metaverse projects next year…not chucking away cash on a wasteful project when you have a massive capex bill for data centres seems sensible. Investors are always going to approve signs of spending restraint at this stage.

Ocado shares jumped after US supermarket chain Kroger pulled the plug on a distribution centre due to open next year, but secured a larger one-off compensation payment. It’s another blow for the pick-and-fill tech company as Kroger last month said it would scrap three of eight automated warehouses using Ocado technology. But the $350mn compensation is enough to sweeten the pill for investors it seems. I’m not sure there really is anything to cheer – the model is not suited to places like the US. There’s your biggest market and it’s not working… Shares in Kroger meanwhile were lower as it narrowed its sales outlook.

Finally, Unilever’s ice cream split will happen on Saturday – The Magnum Ice Cream Company will commence trading on Monday.