DEBATE: Interest Rate Face-Off

Two of Wall Street's major banks, Morgan Stanley and Goldman Sachs, have wildly different predictions about the Federal Reserve's interest rate trajectory, highlighting the prevailing uncertainty.

Goldman Sachs forecasts a more gradual approach, expecting the first 25-basis-point cut in the fourth quarter of 2024. This would be followed by a series of quarterly cuts until mid-2026, totaling 175 basis points

Morgan Stanley anticipates that the Fed will initiate rate cuts in June 2024, followed by another in September, and then continue with 25-basis point reductions at each meeting from the fourth quarter onwards.

In terms of long-term expectations, Morgan Stanley predicts the rate will drop to 2.375% by the end of 2025. Goldman Sachs, on the other hand, estimates that the rates will stabilize in a range between 3.5% and 3.75%.

🎯 GRIT TAKE: Goldman Sachs' predictions … upgrade to VIP to read the full GRIT take. Click below!

CONSUMER: Spending Shifts

Consumers have shown a notable pullback in spending just before the holiday season kicks in. This trend is reflected in the October retail sales data, which reveals a slight decrease in sales, excluding autos and gas, by 0.08%. A closer examination of core retail sales, which further excludes restaurants, indicates a marginal drop of 0.03%.

The data from October indicates a slowdown in consumer spending, aligning with the general expectations of Wall Street analysts. Compared to the same period last year, overall retail and core retail sales have increased by 2.6%.

In October, there was a noticeable decline in sales at gas stations and in the electronics, appliances, furniture, and home goods sectors. However, this was counterbalanced by robust sales in sporting goods, hobby stores, and non-store retail, which includes online sales. Additionally, there was a positive trend in the health and personal care segment.

The Retail Monitor, a collaborative project between CNBC and the National Retail Federation, is set to debut on Monday.

EMIRATES: Places Huge Order

On Monday, Emirates Airlines initiated the first significant transaction of the 2023 Dubai Airshow by placing a $52 billion order for 95 Boeing aircraft. This state-run leading airline of Dubai, operating under the Emirates Group umbrella, has expanded its order to include an additional 55 Boeing 777-9s and 35 Boeing 777-8s. This brings the airline's total commitment to 205 units of the 777X widebody jets. Additionally, Emirates has revised its existing order of Boeing 787 Dreamliners, increasing the number from 30 to 35 aircraft. This updated order consists of 15 787-10s and 20 787-8s. Emirates holds the distinction of operating the world's largest fleet of Boeing 777 aircraft.

Emirates Airlines’ ongoing interest in acquiring more widebody jets underscores the significance of the Middle East market in driving demand for this aircraft model. The Middle East region's prominence as a key transit point for long-haul flights largely contributes to this trend.

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Gushing Success

A small town in Texas became one of the richest towns in America because one man believed in the ground… Throughout the early 1900s, people raced out to Texas to hopefully strike oil and change the state and country forever. However, there were so many failures that people became hopeless and started losing faith in the American oil boom. There was a settlement near Beaumont in southeast Texas known as Gladys City that Anthony Lucas believed had oil. He had a hunch that, with a big salt dome nearby, there had to be oil, even though most geologists in the day had their doubts and thought he was wasting time.

On January 10th, there was a massive rumble in Gladys City that sounded like a severe thunderstorm. All of a sudden, drilling pipes came shooting out of the ground. Then mud. Then, natural gas. Then oil ... a steady stream so massive that it shot 100 feet in the sky. Anthony Lucas struck oil. To this day, everything changed for Gladys City and the entire state of Texas. The wealth spread throughout. Schools, roads, and towns sprang up almost overnight. Even today, the University of Texas sits on a massive endowment thanks to oil-rich land

Chart of the Day

📊 Mortgages Rates

30% of all mortgages have an interest rate under 3%.

The author, publisher or insiders of the publisher may currently have long or short positions in the securities of the companies mentioned herein, or may have such a position in the future (and therefore may profit from fluctuations in the trading price of the securities). To the extent such persons do have such positions, there is no guarantee that such persons will maintain such positions.