Finimize - 🍟 McDonald's craving: satisfied

What’s going on here?

McDonald’s reported golden third-quarter results on Monday, and they may be worth some lovin’.

What does this mean?

Investors have been keeping McDonald’s at arm’s length, wary that the US’s new obsession with weight-loss drugs won’t exactly jibe with Happy Meals. But it seems the fast food giant kept its “Supersize Me” spirit: by beefing up prices, McDonald’s managed to make 9% more in same-store sales – that's sales from restaurants open for at least a year – and better-than-expected profit. Wall Street even reckons that this hustle could leave the company’s bottom line 15% higher at the end of this year than last. Maybe, then, investors are being too cautious. After all, every dieter craves a chicken nugget now and then.

Why should I care?

The bigger picture: Death, taxes, and Big Macs.

McDonald’s has survived many health-conscious waves before, mind you. The first salad appeared on the menu almost forty years ago, and a number of savvy offerings and even smarter marketing strategies have managed to keep McDonald’s reputation shining ever since. So even if this health craze is the one that sticks, a few grilled burger alternatives and low-calorie dips may well keep the Golden Arches glowing.

For markets: Spot the difference.

Instead of swallowing rising costs itself, McDonald’s has been serving them up to its money-conscious customers. And it’s not alone: just about every business that can get away with it is doing the same. Thing is, inflation – and its impact on costs – will come down at some point. When that happens, some firms will need to lower prices again to keep customers coming back, while others will be able to get away with keeping prices where they are and pocketing the difference.

What’s going on here?

Inflation’s finally cooling down in Germany and Spain, but at the cost of a slowdown in Europe’s biggest economy.

What does this mean?

Europe’s a diverse place: drive a couple of hours, and sangria and paella turn into champagne and escargot. The same is true on the economists’ tour. A trip to Spain features prices that picked up less than expected in October, meaning inflation there held steady from September. Then fly to Germany, and while inflation’s also calming down, the main attraction is the economy’s 0.1% dip in the third quarter versus the second. That’s an ominous sign that Europe’s biggest economy is hurtling toward a recession, which would make it hard for the rest of the region to avoid following suit. Not even a stein of beer and a currywurst will help wash that down.

Why should I care?

Zooming out: En Lagarde.

That data at least shows the European Central Bank is starting to win points in its long-fought battle against inflation. And if it stays that way, the bank can slash interest rates to buoy up the region's economy if it does enter an all-out recession. The Federal Reserve, though, still has some hard yards to go. Despite an onslaught of aggressive rate hikes, inflation hasn’t moved for a while and the economy’s still keeping pace, which will only add fuel to the fire and keep prices on the up.

For markets: An unfair exchange.

The prospect of higher rates usually floats a country’s currency higher, so you’d think the dollar would be towering above the euro. But the difference between the two is fairly flat versus the beginning of the year. And while the dollar looks decent against its historical standards, it’s way below its standing from this time last year. Here’s what gives: investors are more worried about the massive US debt pile these days, so they aren’t going all-in on greenbacks even though they have a lot going for them.