USA OUTLOOK OCTOBER 16 TO 20, 2023

USA OUTLOOK WEEKLY NEWSLETTER October 16 to 20

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October 16, 2023

October 17, 2023

United Airlines says pricier fuel, war in Middle East will weigh on profits United Airlines said more expensive jet fuel and a halt to the carrier’s Tel Aviv flights during the Israel-Hamas war will eat into its profits in the last three months of the year. For the current quarter, the Chicago-based carrier estimated adjusted earnings of between $1.50 and $1.80 a share, below analysts’ forecasts of $2.06.

Photo: Reuters

Rite Aid files for bankruptcy amid high debt, opioid lawsuits Debt-laden U.S. drugstore chain Rite Aid (RAD.N) filed for bankruptcy protection on Sunday and said it would close underperforming stores, sell its pharmacy benefit company Elixir, and resolve lawsuits over its sale of addictive opioid medications.

Rite Aid, one of the largest U.S. pharmacy retailers, stumbled under its high debt, revenue declines, increased competition, and opioid litigation, according to its court filings. The U.S. government has accused Rite Aid of ignoring "red flags" while filling illegal opioids prescriptions, and the company faces 1,600 other opioid lawsuits from state and local governments, hospitals, and individuals.

United would then earn between $9.55 and $9.85 a share, on an adjusted basis, down from its forecast in July of between $11 and $12 a share, based on its projection for the fourth quarter. Jet fuel prices in major U.S. airports are up nearly 25% since the start of summer. Its shares dropped around 4% in after-hours trading.

United posted third-quarter net income of $1.14 billion, or $3.42 a share, versus $942 million, or $2.86 a share, a year earlier. Adjusting for one-time items, United posted earnings per share of $3.65.

The carrier will hold a call with analysts and media on Wednesday at 10:30 a.m. ET, when it will face questions on fourth-quarter demand and how the carrier plans to tamp down rising costs.

Rite Aid has $4 billion in debt, $8.6 billion in total liabilities and $7.65 billion in assets, according to court filings in the U.S. Bankruptcy Court for the District of New Jersey. Rite Aid closed 200 stores before its bankruptcy, and it expects to close more stores as its Chapter 11 case proceeds.

The company appointed Jeffrey Stein as its CEO and chief restructuring officer, replacing interim CEO Elizabeth Burr.

Source: https://www.usnews.com/news/business/ https://www.reuters.com/markets/deals/drug-retailer-rite-aid-files-bankruptcyarticles/2023-10-09/2-federal-reserveprotection-2023-10-16/ officials-say-spike-in-bond-yields-mayallow-central-bank-to-leave-rates-alone

Photo: CNBC Source: https://www.cnbc.com/2023/10/17/united-airlines-ual-3q-2023-earnings-.html

October 18, 2023

October 19, 2023

Strong Economic Data ‘Could Warrant’ Higher Rates, Fed Chair Says Jerome H. Powell, the chair of the Federal Reserve, reiterated the central bank’s commitment to moving forward “carefully” with further rate moves in a speech on Thursday. But he also said that the central bank might need to raise interest rates more if economic data continued to come in hot.

Photo: CNBC

Biden administration to invest $3.5 billion to improve the resiliency of the electric grid The Biden Administration is putting almost $3.5 billion into improving the strength and resiliency of the United States’ electric grid, government officials said on Wednesday. Annual increase in the core PCE price index to 3.7% in September from 3.9% in August.

Mr. Powell pointed to several possible reasons behind the recent increase in long-term rates: Higher growth, high deficits, the Fed’s decision to shrink its own security holdings and technical market factors could all be contributing factors.

The S&P 500 ended almost 1 percent lower for the day. The move came alongside a further rise in crucial market interest rates, with the 10-year Treasury yield rising within a whisker of 5 percent, a threshold it hasn’t broken through since 2007.

The Fed chair reiterated the Fed’s commitment to bringing inflation under control even at a complicated moment.

The money is coming from the Bipartisan Infrastructure Law, which President Joe Biden signed in November 2021, and Wednesday’s announcement marks the first round of funding out of $10.5 billion that was allocated as part of the Grid Resilience and Innovation Partnerships (GRIP) Program to improve the nation’s electric grid.

The $3.46 billion announced Wednesday will go to 58 projects across 44 states, including some 400 microgrids across the country, the Department of Energy said. As an example of one of the successful applications.

Georgia will receive $507 million will invest in battery storage, local microgrids, other investments in grid reliability and in new transmission lines. Also, some of the $3.46 billion in funding will go towards multiple inter-regional transmission projects.

Source: https://www.cnbc.com/2023/10/18/biden-administration-to-invest-3point5-billioninto-the-electric-grid.html

Photo: The New York Times Source: https://www.nytimes.com/2023/10/19/business/economy/powell-fed-interestrates.html

October 19, 2023

Photo: NBCDFW

U.S. weekly jobless claims total 198,000, fewer than expected Weekly jobless claims totaled a seasonally adjusted 198,000, a decline of 13,000 from the previous week and below the Dow Jones estimate for 210,000. Weekly jobless claims totaled a seasonally adjusted 198,000 for the period ended Oct. 14, the Labor Department reported Thursday. That marked a decline of 13,000 from the previous week and was below the Dow Jones estimate for 210,000. It was the lowest weekly level since Jan. 21.

The labor market has been a critical factor in the Federal Reserve's deliberations over monetary policy.

Officials worry that a still-tight labor market could provide upward pressure on prices even after the central bank has raised rates 11 times totaling 5.25 percentage points since March 2022. The labor market thus far has shown few effects of the United Auto Workers strike as well as other labor unrest. Claims spiked briefly over the summer but have been in a generally declining pattern since early August, holding in a range below 230,000 in recent weeks.

In other economic news Thursday, the Philadelphia Fed reported its manufacturing index rose 5 points in October but remained in contraction territory at -9, lower than the -6.8 forecast. The survey gauges companies reporting expansion against contraction, so any reading below zero indicates contraction. New orders, shipments and employment all turned positive after being in negative territory for September.

Source: https://www.nbcdfw.com/news/business/money-report/u-s-weekly-jobless-claims-total-198000-lessthan-expected/3364467/