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Today in the Market (12/22/2023)

Good Evening! On Thursday, U.S. equities slightly advanced, marking the 8th consecutive week of gains. The week’s gains were secured when the Federal Reserve’s favored inflation figure was published, revealing a steady decrease in price pressures in November, bringing them closer to the Fed’s desired 2% objective.

The S&P 500 and the Nasdaq finished the day in the green by 0.17% and 0.19%, respectively, while the Dow Jones barely ended the day below by 0.05%.

JUST DO IT MIGHT NOT BE ENOUGH FOR NIKE

The value of Nike (NKE) shares saw a decline of over 11%. Management’s presentation of a less optimistic sales forecast for international markets and emphasis on a significant cost reduction effort were the causes of this.

So what is Nike reducing? The CFO, Matt Friend, announced the company’s intention to reduce costs by $2 billion over the next three years. He emphasized that the organization as a whole will use a variety of strategies to achieve these savings rather than just relying on lower selling, general, and administrative (SG&A) costs. He provided several examples, such as simplifying the range of products, enhancing the efficiency of the supply chain, utilizing the size to decrease the additional cost of operations, restructuring the organization to streamline it, and reducing the number of management levels.

But why? CFO Matt Friend clarified that the updated outlook was a result of “increased macroeconomic headwinds,” namely in Greater China and Europe, the Middle East, and Africa. Nike included revised growth strategies in response to recent declines in digital sales and increased promotional activities in the marketplace. They also implemented life cycle management for important product brands and addressed the impact of a stronger U.S. currency.

ANOTHER COUNTRY LEAVES

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Angola is asserting its independence by managing its oil resources independently. The African country announced its withdrawal from the Organization of the Petroleum Exporting Nations (OPEC), joining a rising number of nations abandoning the Saudi-led organization due to its declining influence (in the last seven years, Indonesia, Ecuador, and Qatar have all withdrawn from the group).

So why did Angola leave? Angola expressed strong dissatisfaction with the cartel’s decision to reduce Angola’s oil production quota by 25% in November. But why? OPEC seeks to have the ability to regulate output or increase it rapidly to maximize earnings from oil. Therefore, it needs influential figures in the oil-producing industry. Following Angola’s withdrawal, the organization now consists of 12 members. Additionally, OPEC+ has 11 allied nations, with Brazil set to join next year.

So how did the market react? The price of oil has remained close to $75 a barrel. It experienced a slight decrease of $1 following Angola’s announcement of its exit, but later recovered some of its value. This occurred despite the cartel’s efforts to reduce output to raise prices, which has caused dissatisfaction among some members

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