Good morning. Happy Friday.
The Asian/Pacific markets were weak. Japan, South Korea, Hong Kong, India, Australia and Singapore posted moderate or big losses. Europe, Africa and the Middle East are weak. Turkey and Greece ar up, but the UK, Denmark, Poland, France, Germany, Russian, South Africa, Norway, Spain, the Netherlands, Italy, Portugal and Austria are down. Futures in the States point towards a moderate down open for the cash market.
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The dollar is up. Oil and copper are down. Gold is up; silver is down. Bonds are up.
Stories/News from Seeking Alpha…
Going after tech
2023 has been full of lawsuits and regulatory actions against some of the biggest names in tech, with the battles picking up pace as the year progresses. First, it was the FTC vs. Microsoft (MSFT) over its deal to acquire Activision (ATVI), followed by several attempts to break up Google’s (GOOG, GOOGL) advertising business, as well as a coming antitrust suit against Amazon (AMZN) (it was just sued over deceptive practices this week). Other names are now in the firing line, which control the lion’s share of activity that take place on social media.
The latest: Canada has gone through with plans that would require digital firms to pay domestic media organizations for their content. The legislation, known as the Online News Act, had triggered many warnings from Meta Platforms (META), which said it will now end access to news on Facebook and Instagram for its users in Canada. It had fought a previous attempt when Australia passed a similar law in 2021 – before brokering a deal with the government – while it recently finding itself in the crosshairs of California and even lawmakers on Capitol Hill.
Regulatory headwinds are also blowing in Europe where popular online platforms, most notably Twitter, face a ticking clock to comply with the Digital Services Act by the end of the summer. The legislation, which is expected to become a global benchmark like GDPR, will make it easier to report illegal content, as well as provide more information on recommended content and revamp algorithms to prevent disinformation. Content generated by AI will also have to be clearly labeled, while targeted advertising will be restricted and platforms will face annual audits for “systemic risks.”
Interestingly enough, some of the biggest gainers this year have been Big Tech, which have together supported the broader market. “The most recent stock market rally is carried by AI speculation. And AI speculation is carried by the Big Tech giants,” writes SA analyst Cavenagh Research, who expects the rally to continue. Check out a chart of some of the YTD returns:
Go deeper: Forces that encourage competition are not only rising from outside forces, but are growing among the tech titans themselves. Rumors continue to circulate about “Threads” and “Project 92,” which would be Meta’s response to Twitter, and allow Instagram users to directly transfer their followers and user information to the new app. In typical PR fashion, Elon Musk overlaid a popular Twitter thread that discussed the news by saying “Earth can’t wait to be exclusively under Zuck’s thumb” and even dared the Meta CEO to a cage match fight, with the latter responding to the challenge on Instagram. (2 comments)
Powell – Day 2
Federal Reserve Chair Jerome Powell is committed to ramping up oversight of midsize lenders, according to his testimony before the Senate Banking Committee. As for rates, Powell said “it’s not so important now” to continue aggressive hikes as “we’re relatively close to where we need to get.” While losses were recorded earlier in the week, the testimony did little to move markets on Thursday, which ended mixed after a flurry of hawkish moves by central banks. “Powell’s tone has been uber-hawkish, but the Fed’s actions suggest latent optimism,” said SA analyst Christopher Robb, adding that a soft landing is still possible. (17 comments)
Forever chemicals
3M (MMM) will pay up to $10.3B over 13 years to provide funding for U.S. water utilities that have detected PFAS chemicals, or “forever chemicals,” in drinking water. The settlement sent the stock 4.5% higher in AH trading given the extended timeframe and another chapter closed in the barrage of lawsuits. 3M has pledged to stop all PFAS manufacturing by the end of 2025 as these chemicals have been linked to cancer and environmental damage. Morgan Stanley also said the possibility of avoiding a trial is encouraging, but it still leaves 3M as a target for other litigation. (34 comments)
Charitable giving
As part of his annual philanthropic pledge made almost two decades ago, Warren Buffett donated around $4.64B of Berkshire Hathaway class B (BRK.B) shares to five charities this week, with the most going to the Bill & Melinda Gates Foundation Trust. “The five foundations have [so far] received Berkshire B (BRK.B) shares that had a value when received of about $50B, substantially more than my entire net worth in 2006,” the 92-year-old investing legend declared. The Oracle of Omaha attributed several factors to his wealth, including “a very long runway, simple and generally sound decisions, the American tailwind and compounding effects.” Buffett added that his will provides for over 99% of his estate to be used for philanthropic activities. (130 comments)
Today’s Economic Calendar
9:45 PMI Composite Flash
1:00 PM Baker Hughes Rig Count
1:40 PM Fed’s Mester Speech
What else is happening…
Existing home sales rise slightly in May, still more than expected.
Odds of U.S. slipping into recession have diminished – Yellen.
Goldman adds 25 new stocks with growth potential to its ROE basket.
Overstock (OSTK) lands Bed Bath (OTCPK:BBBYQ) IP and assets.
Amazon (AMZN) pops as AWS slowdown expected to bottom soon.
JPMorgan (JPM) settles SEC probe surrounding 47M deleted records.
Another rough week for solar and alternative energy shares.
Moderna (MRNA) seeks FDA approval for updated COVID shot.
Virgin Galactic (SPCE) files to sell another $400M worth of stock.
Ford (F) preps for another round of layoffs amid major EV push.
Wall Street Lunch podcast discusses Tesla (TSLA) losing another bull rating.
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Good morning. Happy Thursday.
The Asian/Pacific markets were weak. South Korea did well, but India, Australia, Indonesia and Taiwan posted losses. China and Hong Kong were closed. Europe, Africa and the Middle East are weak. Turkey is up, but the UK, Denmark, France, Greece, South Africa, Finland, Norway, Spain, the Netherlands, Italy, Portugal, Austria and Sweden are posting sizeable losses. Futures in the States point towards a negative open for the cash market.
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The dollar is down. Oil is down; copper is up. Gold and silver are down. Bonds are down.
Stories/News from Seeking Alpha…
Will consumers bite?
U.S. regulators have approved the sale of chicken made from animal cells for the first time in what could be a landmark development for a long list of companies looking to produce lab-grown meat. The Agriculture Department gave the green light to two California firms, Upside Foods and Good Meat, to sell what is referred to as “cell-cultivated” or “cultured” meat and poultry. The approval came months after the FDA determined the products were safe to eat, and will see the USDA inspect lab-grown facilities just as it does slaughterhouses and processing plants.
Under the microscope: The move could launch a new era of meat production that could compete with the #plantbased theater. Cultivated meat is typically grown in steel tanks known as bioreactors, using cells that come from a living animal, a fertilized egg or a special bank of stored cells. In terms of production, Upside takes large sheets of the cells, forming them into shapes like chicken cutlets and sausages. Good Meat, which produces items like nuggets and satays, already sells cultivated meat in Singapore, which was the first country to approve it in 2020.
Advocates say lab-grown meat is much less likely to be infected by E. coli bacteria and other contaminants that might be found in processing facilities, while there could also be reduced exposure to antibiotics by taking farm animals out of the equation. Harm to them and the environment is also cited as an advantage, though some say cultivated meat could require even more energy and emit more greenhouse gases. For investors, Tyson Foods (TSN) is an early backer of Upside Foods, while Steakholder Foods (STKH) is more of a pure-play stock. The growth of lab-based meat could also eventually be of interest to Hormel (HRL), JBS (OTCQX:JBSAY), Bridgford (BRID), Sysco (SYY) and Pilgrim’s Pride (PPC).
What to watch: Executives at Upside and Good Meat have been quick to note that their products are meat, not substitutes like the Impossible Burger (IMPF) or offerings from Beyond Meat (BYND), which are made from plant proteins and other ingredients. However, consumer polling indicates there are initial concerns about the concept, as well as the high costs associated with mass-producing lab-grown meat. The new products will only be available in exclusive restaurants during the initial rollout phase, while industry analysts estimate it will take seven to ten years before lab-grown meat will be seen broadly in grocery stores. (32 comments)
Prime deception
The Federal Trade Commission has filed a lawsuit against Amazon (AMZN), alleging that the e-commerce giant used deceptive practices for Prime sign-ups and cancellations. The agency cited violations of the FTC Act and the Restore Online Shoppers’ Confidence Act through the use of dark patterns, upping its regulatory and legal actions against Amazon to three over the past six weeks. The lawsuit comes at a time when Amazon is mulling discounted mobile phone services for Prime members, which SA contributor Johnny Zhang said is concerning as its core retail business struggles with margin pressures. (52 comments)
Powell speaks
In his Congressional testimony before the Senate Banking Committee, Fed Chair Jerome Powell reiterated that more rate hikes are expected this year. “The level to which we raise rates is a separate question from the speed at which we move,” he said, adding that it may “make sense” for the central bank to raise rates at a “more moderate pace” than it has over the past 15 months. Powell’s largely hawkish reiteration dampened sentiment on Wall Street and prompted a selloff in chip stocks led by AMD (AMD). However, Fed Funds Futures still continue to price in just one more hike this year, while the market will get another dose of Powell this morning as he appears before the House Financial Services Committee. (51 comments)
Red carpet
Indian Prime Minister Narendra Modi is in the U.S. for his first state visit, which is expected to result in major investments as the country makes its mark as a major potential counterweight to China. The U.S. is expected to offer drones in a multibillion-dollar deal, as well as fighter-jet engines from General Electric (GE), as it tries to lure New Delhi away from its major arms supplier Russia. Later today, Modi will also meet with top U.S. CEOs at a White House state dinner, which includes Apple’s (AAPL) Tim Cook and others. Modi previously met with Elon Musk, after which the billionaire hinted at making Tesla (TSLA) available in India “as soon as humanly possible.” (6 comments)
Today’s Economic Calendar
4:00 Fed’s Waller Speech
8:30 Initial Jobless Claims
8:30 Current Account
8:30 Chicago Fed National Activity Index
10:00 Existing Home Sales
10:00 Leading Indicators
10:00 Powell hearing before Senate Committee
10:00 Fed’s Mester Speech
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
11:00 Kansas City Fed Mfg Survey
4:30 PM Fed Balance Sheet
What else is happening…
Google (GOOGL) accuses Microsoft (MSFT) of unlawful cloud practices.
Activist investor Elliott seeks ouster of NRG Energy (NRG) top brass.
Does small U.S. output gains and OPEC cuts mean higher oil prices?
Petrobras (PBR) says failure to replenish oil reserves would be ‘fatal error.’
Report: Netflix (NFLX) once explored a Paramount (PARA) acquisition.
AMC (AMC) dips as special master backs APE (APE) conversion plan.
Tesla (TSLA) is downgraded at Barclays ahead of Q2 earnings.
Deeper dive: The good, the bad and the ugly of investing in China.
New model sees Intel (INTC) restructure its manufacturing business.
Analysts and contributors weigh in after last week’s FOMC meeting.
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Good morning. Happy Wednesday.
The Asian/Pacific markets leaned down. Japan and Indonesia did well, but China, Hong Kong, South Korea and Thailand were weak. Europe, Africa and the Middle East lean down. Poland, Russia, Greece and Hungary are up; the UK, France, South Africa, Finland, Norway, Portugal and Sweden are down. Futures in the States point towards a negative open for the cash market.
————— Online Course: Jason Leavitt’s Masterclass in Trading —————
The dollar is up. Oil and copper are down. Gold and silver are down. Bonds are down.
Stories/News from Seeking Alpha…
Powell on the Hill
Get ready for Fed Chair Jerome Powell’s semiannual monetary policy testimony before Congress, which will take on additional importance this time around as investors size up last week’s FOMC meeting. While policymakers kept rates on hold, or what some are calling a hawkish pause, an additional two hikes were telegraphed for later this year. “Nearly all policymakers” felt similarly about monetary tightening, while Powell portrayed the skip as an opportunity for the central bank to evaluate how policy direction was impacting the overall economy.
Snapshot: Heading over to Capitol Hill, Powell will answer questions from the Senate Banking Committee at 10 AM ET and appear before the House Financial Services Committee on Thursday. Lawmakers are likely to delve deeper into why he felt that now was the right time to pause hikes, and what metrics the central bank continues to analyze following one of the swiftest hiking campaigns in history. Inflation is also running well above the Fed’s 2% target, while the labor market remains tight by historical standards.
Stock traders shrugged off last week’s FOMC decision and forecasts, with equities rising since the gathering. It builds upon the market rally in 2023, with big risks like broader banking contagion off the table and debt ceiling drama resolved until after the next election cycle. Other economic indicators have also come in stronger than expected, like the surprise jump in monthly construction of new homes.
Elsewhere: The closely-watched yield curve inversion on Tuesday widened to a four-decade high, reaching 97 basis points for the 2Y10Y. While it may make for a good headline, SA premium user mmt59 said it is “not much more.” “Another prediction of a future recession, that will probably end up being much milder and shorter, than anticipated,” he added. “Having many years investing in the markets, I am much more interested in the earnings of the companies owned in my portfolio, which so far this year have been much better than expected!” (49 comments)
Charging standards
Texas will be the first U.S. state to mandate Tesla’s (TSLA) electric vehicle charging system, in a huge win for CEO Elon Musk who is working towards making the connector the industry standard. Experts believe the decision could push other states to adopt the system. In addition, Tesla is poised to benefit from China’s $72-billion tax break for EVs, while Musk hinted at launching Tesla in another major Asian market. Investing Group Leader JR Research believes Tesla’s NACS plug is “well-primed” to assume leadership as the national standard. This automaker also just became the latest to add the connector to its EVs, following Ford (F) and General Motors (GM). (9 comments)
False advertising
Novo Nordisk (NVO) is suing medical spas and wellness clinics for allegedly selling copycat versions of its GLP-1 drugs, such as Ozempic and Wegovy, popularly used for weight loss. The Food and Drug Administration recently warned consumers not to use off-brand versions of these drugs as they may not be safe or effective. Sales of semaglutide medications soared in recent years, but demand has outstripped supply, leading to drug shortages. The World Health Organization has also sounded the alarm, cautioning that the weight-loss drugs were not a “silver bullet”. (3 comments)
Recycling plan
Mastercard (MA) has launched a global project to recycle debit and credit cards from any issuer to ensure these cards don’t end up in landfills. The pilot, which will run for six months, will be a partnership with British lender HSBC (HSBC) and will see shredding machines installed at bank branches. Once full, these will be transferred to a plastic recycling plant. Mastercard has around 3.1B cards in circulation at present and estimates that the industry produces around 600M cards per year. (1 comment)
Today’s Economic Calendar
7:00 MBA Mortgage Applications
10:00 Powell before House Financial Services Committee
10:00 Fed’s Cook hearing before Senate Banking Committee
10:00 Fed’s Jefferson nomination hearing before Senate Banking Committee
12:25 PM Fed’s Goolsbee Speech
1:00 PM Results of $12B, 20-Year Bond Auction
4:00 PM Fed’s Mester Speech
What else is happening…
Bitcoin (BTC-USD) trades higher, buoyed by BlackRock (BLK) ETF filing.
KKR (KKR) to buy PayPal’s (PYPL) $44B European BNPL loan portfolio.
Biden picks Alphabet (GOOG, GOOGL) chair for next-gen chip efforts.
Why did Alibaba (BABA) slip yesterday? Management shakeup stuns.
Warner Bros. (WBD), Netflix (NFLX) in talks to license HBO shows.
Why did Generac (GNRC) jump yesterday? Texas may hold a clue.
AMD (AMD) to invest up to $135M to expand operations in Ireland.
FedEx (FDX) falls on weak profit guidance; UPS (UPS) slips too.
Eli Lilly (LLY) to acquire Dice Therapeutics for over $2 billion.
China is holding back on stimulus – watch these stocks.
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Good morning. Happy Tuesday.
The Asian/Pacific markets leaned down. Australia did well, but China, Hong Kong, Taiwan, Singapore and Thailand were weak. Europe, Africa and the Middle East lean down but are little changed. South Africa, Finland and the Netherlands are down the most. Futures in the States point towards a negative open for the cash market.
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The dollar is unchanged. Oil is down; copper is up slightly. Gold and silver are down. Bonds are up.
Stories/News from Seeking Alpha…
Right track
President Joe Biden said U.S.-China ties are on the “right trail”, hailing the progress made during Secretary of State Antony Blinken’s two-day Beijing trip at a time when geopolitical tensions are on the rise. “He (Blinken) did a hell of a job,” Biden told reporters in California. “We’re on the right trail here.”
China’s stance: Xi echoed Biden’s views, saying good progress was made on diplomatic ties. “China respects U.S. interests and does not seek to challenge or displace the U.S. In the same vein, the U.S. needs to respect China and must not hurt China’s legitimate rights and interests,” said Xi. “China hopes that the U.S. will adopt an objective and rational perception of China, work with China in the same direction, and handle unexpected and sporadic events in a calm, professional and rational manner,” the Chinese embassy in Singapore said in a statement.
Dig deeper: Blinken’s trip included a surprise meeting with Chinese President Xi Jinping. Blinken had earlier met China’s top diplomat Wang Yi and Foreign Minister Qin Gang. “The two sides had candid, substantive, and constructive discussions on key priorities in the bilateral relationship and on a range of global and regional issues,” the U.S. State Department said. The issues discussed included the contentious Taiwan issue and China’s actions against U.S. firms. Both sides agreed to meet further to continue open lines of communication.
SA commentary: Investment manager Neuberger Berman said U.S.-China ties are facing a potentially more challenging political environment, with elections in Taiwan and the U.S. slated for 2024. “More constructive engagement by both countries would be helpful, appreciating that competition between these two powerful economies will likely remain fierce.” (8 comments)
Regulatory heat
Adobe’s (ADBE) planned $20 billion purchase of Figma is expected to face an in-depth review by European antitrust regulators, sending its stock 1% lower in premarket trade today. The deal is already facing regulatory heat in the U.K. as well as the U.S., even as Adobe remains confident in the deal’s merits. The acquisition was not welcomed by Wall Street as many believe Adobe overpaid for Figma. SA contributor Zen Analyst said the uncertainty over the deal creates a layer of ambiguity in Adobe’s short-term trajectory.
Record order
Airbus (OTCPK:EADSY) (OTCPK:EADSF) received what it described as the biggest deal in civil-aviation history yesterday, with an order for 500 narrowbody jets from Indian budget carrier IndiGo. The European plane maker announced the deal, with an estimated value of $50 billion based on list prices and typical discounts, at the Paris Air Show. The planes will be delivered from 2030 to 2035. (23 comments)
Tech’s ’95 moment?
It’s becoming clearer to some that the recent AI wave is more akin to a moment for technology not seen since the mid-1990s, when the internet exploded in popularity and transformed the entire planet. “The massive $800 billion AI opportunity is now on the doorstep for the tech sector for the next decade,” said Wedbush. It expects tech stocks to continue gaining this year, perhaps to the tune of 10% to 12%, especially as the Federal Reserve slows down its interest rate hikes and the integration of AI into everything is looking more like the next Industrial Revolution. (177 comments)
Today’s Economic Calendar
8:30 Housing Starts and Permits
What else is happening…
China central bank cuts two key lending rates to prop up slowing economy.
Fed says two more rate hikes likely this year, but markets are unconvinced.
May credit card data shows more delinquencies, verging on ‘normal’ rates.
Warren Buffett boosts stakes in Japanese trading houses to over 8.5%.
Intel’s (INTC) €30B funding is largest foreign investment in Germany.
Alibaba (BABA) names Eddie Wu as new CEO in surprise shakeup.
Google (GOOG) eyes shifting Pixel manufacturing to India from China.
Archer Aviation (ACHR), Stellantis (STLA) deepen eVTOL partnership.
Civitas Resources (CIVI) nears $5B deal to expand into Permian.
U.S. Steel (X) guides for above-consensus Q2 earnings.
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