The decision by Moody\u2019s Investors Service to place the debt of six major banks\u2013including State Street and Bank of New York Mellon\u2013under review for a downgrade is puzzling.<\/p>\n
It comes a full five months after a few regional lenders collapsed. Silicon Valley Bank and Signature Bank were brought down by depositors fleeing for higher-interest rates elsewhere and the declining value of the government-bond assets they were holding. <\/p>\n
For them, it was a failure of term management\u2013making sure the duration of the assets on the books wasn\u2019t too far removed from the time scale of the liabilities the banks had.<\/p>\n
Since then, other banks have managed to fend off speculative attacks and regulators have reiterated many times that the sector looks healthy. After all, banks tend to be more profitable when interest rates rise because it increases their margins on loans, other things being equal.<\/p>\n
So Moody\u2019s intervention on Monday evening feels like a meek warning that the stable door might just still be open long after the horses have bolted. Fitch seemed similarly behind the curve when it downgraded U.S. bonds last week, months after the debt ceiling crisis was resolved and the economy had strengthened. <\/p>\n
And it might seem like a long time ago, but it\u2019s worth remembering that these ratings firms kept the highest marks on the complicated financial products that brought the financial system to the brink in the 2008-09 financial crisis even as the subprime sector was in flames.<\/p>\n
But Moody\u2019s might also be providing a healthy reminder. The commercial real estate market still looks bad. A sharp economic downturn could be destabilizing, and yields on longer-term Treasuries are rising.<\/p>\n
Moody\u2019s call may be an opportunity to buy the dip in bank shares\u2013the S&P Banks Industry Group index is up 15% over the past three months. But investors should also be wary of getting too bullish. <\/p>\n
\u2014Brian Swint<\/em><\/p>\n *** Join Barron\u2019s senior writer Lauren Foster and Todd Rosenbluth, head of research at VettaFi, today at noon for a timely discussion on the appeal of active management in fixed income, the rise of active bond ETFs, and recent fund launches. Sign up here.<\/em><\/p>\n <\/em><\/em>Try your hand at this morning\u2019s Barron\u2019s Daily crossword puzzle and sudoku games. For all games, including a digital jigsaw based on the week\u2019s cover story, click here.<\/em><\/p>\n Paramount Makes Progress on Streaming, Heaping Pressure on Disney<\/h2>\n Paramount Global grew subscription revenue in its streaming segment by 47% over the last quarter and announced a deal to sell its publishing business, Simon & Schuster, for $1.62 billion to private-equity firm KKR.<\/p>\n What\u2019s Next:<\/strong> Investors will be keen to see some signs of improvement in Disney\u2019s fiscal third quarter results after the bell Wednesday. CEO Bob Iger has made turning around the media and entertainment giant\u2019s streaming business a priority.<\/p>\n <\/em>\u2014Callum Keown<\/em><\/p>\n Obesity drugs have investors excited for big growth, but results of a trial expected any day from Ozempic-maker What\u2019s Next:<\/strong> Congress would need to approve Medicare coverage of the drugs for weight loss. A New England Journal of Medicine paper has estimated that if 10% of qualified Medicare patients took Wegovy, it would cost Medicare Part D $26.8 billion a year, nearly a fifth of what it spent in 2019.<\/p>\n \u2014Josh Nathan-Kazis and Janet H. Cho<\/em><\/em><\/em><\/p>\n Palantir Swings to Profit and Sees Growing AI Opportunities<\/h2>\n \n Palantir Technologies What\u2019s Next:<\/strong> CEO Alex Karp and CFO David Glazer told Barron\u2019s<\/em> that with a fourth consecutive quarter of GAAP profitability, the company would become eligible to join the <\/em>\u2014Eric J. Savitz and Liz Moyer<\/em><\/em><\/em><\/em><\/p>\n \n Tyson Foods What\u2019s Next:<\/strong> Tyson expects full-year sales to range from $53 billion to $54 billion, which is in line with expectations. The Agriculture Department expects domestic beef production to fall about 3% in fiscal 2023, and Tyson expects chicken production to increase 3%.<\/p>\n \u2014Janet H. Cho and Jack Denton<\/em><\/em><\/p>\n Retail gasoline prices are inching up again, a blow to household budgets during the summer driving and vacation season. The increase is driven by Russia\u2019s war in Ukraine, and decisions by major oil-producing nations Saudi Arabia and Russia to cut production amid increasing demand.<\/p>\n What\u2019s Next:<\/strong> Oil prices have risen for six straight weeks, the longest winning streak in over a year, boosted by Saudi Arabia\u2019s decision to cut production by another one million barrels a day through September. Russia will cut production by 300,000 barrels a day in September, from 500,000 barrels a day this month.<\/p>\n \u2014Janet H. Cho and Avi Salzman<\/em><\/em><\/em><\/em><\/em><\/p>\n***<\/h4>\n
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Obesity Drug Investors Await Novo Nordisk\u2019s Wegovy Results<\/h2>\n
\n Novo Nordisk
\n could encourage or throw a wet blanket on the enthusiasm. The pharmaceutical company is testing whether its identical drug Wegovy cuts the risk of heart attack and strokes.<\/p>\n\n
\n Eli Lilly\u2019s<\/span>
\n very similar Mounjaro have shown an extraordinary ability to help patients lose weight<\/strong>, but the cardiovascular health benefits associated with weight loss haven\u2019t been proven. Wegovy\u2019s trial results could have implications for how the medicines are prescribed.<\/p>\n<\/li>\n
\n Pfizer\u2019s<\/span>
\n Covid vaccine.<\/p>\n<\/li>\n<\/ul>\n***<\/h4>\n
\n
\n met expectations for the quarter, swinging to a profit as revenue rose by double-digit percentages. The software maker announced a new $1 billion share buyback authorization and said the scale of the opportunity in artificial intelligence has increased significantly in recent months.<\/p>\n\n
\n S&P 500
\n index. Palantir hasn\u2019t discussed the potential inclusion with S&P.<\/p>\n***<\/h4>\n
Tyson Foods to Close More Chicken Plants as Sales Drop<\/h2>\n
\n is closing more chicken plants in an attempt to boost its chicken production operation after reporting lower-than-expected earnings and revenue. Closing the four plants resulted in a $210 million charge.<\/p>\n\n
\n Campbell Soup
\n is making a push into gourmet pasta sauce, reaching an agreement to acquire
\n Sovos Brands,<\/span>
\n the maker of Rao\u2019s, for about $2.7 billion. Campbell already sells pasta sauce under the Prego brand, and the addition of premium-priced Rao\u2019s is seen as complementary<\/strong> as canned soup sales slide.<\/p>\n<\/li>\n
\n reported a 30% drop in second quarter revenue as demand for fake, or plant-based, meat products continues to fall<\/strong> despite price cuts. It cut its full-year net revenue forecast. It is hoping a new ad campaign will win over new customers.<\/p>\n<\/li>\n<\/ul>\n***<\/h4>\n
Gasoline Prices Inch Higher on Russia\u2019s War, Production Cuts<\/h2>\n
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