Wall Street Breakfast: Strike Heats Up

Strike heats up

Back taxes

Microsoft (MSFT) dipped 0.4% afterhours on Wednesday after the tech giant disclosed a notice from the Internal Revenue Service, which said it owed $28.9B in back taxes plus interest and fines for the tax years 2004 to 2013. The issue pertains to the practice of transfer pricing, generally used by companies to reduce their tax burden by shifting profits to tax havens. "We disagree with the proposed adjustments and will vigorously contest the NOPAs through the IRS’s administrative appeals office and, if necessary, judicial proceedings," said Microsoft. The company does not expect a final resolution in the next 12 months. (121 comments)

Bank support

China's sovereign wealth fund Central Huijin Investment marginally raised its stake in the country's four biggest banks for the first time since 2015, including Bank of China (OTCPK:BACHF). The move kindled hopes that Chinese authorities will step in to prop up the stock market amid an exodus of global funds. Note that Beijing is weighing fresh economic stimulus, and may raise its 2023 budget deficit by issuing additional sovereign debt. "Huijin's modest yet symbolic investments are very likely aimed at supporting share prices," said Redmond Wong, market strategist, Saxo Capital Markets. Huijin's stake raise lifted Chinese banking stocks, while the CSI 300 Index (SHSZ300) rose 0.9%. (2 comments)

Weak debut

Birkenstock (BIRK) opened trading on Wednesday at $41 per share after pricing its highly-anticipated IPO at $46 apiece, which valued the company at $8.6B. The iconic shoemaker's stock stumbled throughout the session, finally ending 12.6% lower at $40.20 a share. Based on Birkenstock's (BIRK) SEC filings, the stock began trading with a higher price-to-earnings multiple than sector peers such as Skechers (SKX), Crocs (CROX), and Steve Madden (SHOO). Wider concerns regarding Birkenstock's financials remain, given the premium valuation it'd sought in the IPO. SA analyst Douglas McKenny called it a "dangerous" stock to buy on account of its weak profitability. (9 comments)

Today's Markets

In Asia, Japan +1.8%. Hong Kong +1.9%. China +0.9%. India -0.1%.
In Europe, at midday, London +0.8%. Paris +0.5%. Frankfurt +0.7%.
Futures at 6:30, Dow +0.4%. S&P +0.4%. Nasdaq +0.4%. Crude +0.8% to $84.19. Gold +0.4% at $1,894.60. Bitcoin -2.1% to $26,742.
Ten-year Treasury Yield -4 bps to 4.56%.

Today's Economic Calendar

8:30 Consumer Price Index
8:30 Initial Jobless Claims
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
1:00 PM Fed's Bostic's Speech
1:00 PM Results of $20B, 30-Year Bond Auction
2:00 PM Treasury Statement
4:00 PM Fed's Collins' Speech
4:30 PM Fed Balance Sheet

Companies reporting earnings today »

What else is happening...

Minutes show most Fed officials favored holding rates steady in Sept.

Disney (DIS) announces price hikes at Disneyland, Disney World.

1MDB scandal: Goldman sues Malaysian govt over settlement.

Chipotle (CMG) to raise prices for the first time in over a year.

Dialysis stocks tumble on Ozempic kidney failure study news.

U.S. Space Force halts generative AI use on security concerns.

BP's (BP) deal to buy stake in Israel's NewMed Energy on track.

FTC proposes new rule to ban hidden fees charged by businesses.

These analysts delve into AI's global economic impact this decade.

The Las Vegas Strip is fading concerns of a consumer slowdown.