July 13, 2023
US Inflation Slows to 3%, Lowest Level Since March 2021
📰 News Organizations
US Annual Inflation Slows to 3% in June. The US annual inflation rate dropped to 3% in June, below the consensus estimate of 3.1%, continuing its 12-month decline. This easing can be attributed to the significant baseline effect from last year's energy and food price spike, resulting in a 9.1% rate.
SEC Excludes 'Swing Pricing' from Money-Market Fund Overhaul. Money-market funds will receive relief as the Securities and Exchange Commission excludes "swing pricing" from its regulatory rules aimed at addressing rapid outflows during financial stress periods. While other fees affecting parts of the $5.5 trillion industry will still be imposed, swing pricing will not be among them.
Big Automakers Grab $1 Billion Deal for Battery Metals. Volkswagen and Stellantis are each committing $100 million in a complicated transaction that will create a publicly traded mining company producing nickel and copper from two Brazilian mines that run on hydropower. They are joining with a SPAC and Glencore is also putting in $100 million and has agreed to turn the nickel and copper from the mines into battery-grade material.
Illumina Faces Record $476 Million Fine for Grail Acquisition Without EU Approval. Illumina has been fined a record €432 million ($476 million) by European Union regulators for completing its acquisition of cancer test developer Grail without obtaining regulatory approval. The DNA sequencing company has stated its intention to appeal the fine.
Nvidia Invests $50 Million in Recursion, Boosting AI Drug Discovery. Nvidia has invested $50 million in biotech firm Recursion to accelerate the training of its artificial intelligence models for drug discovery, with potential licensing opportunities for the chip designer in the future. This collaboration aims to enhance Recursion's AI capabilities, which can be licensed to other biotech firms through BioNeMo.
The restart of student loan payments will be a drag on consumer spending later this year, and will make it even harder for first-time buyers with debt to buy a home. Source.
Poor sales not yet a major issue for small businesses, but it has tended to be more of a coincident indicator, surging most when economy was in thick of recessions (and climbing even after recessions concluded). Source.
The spread in government borrowing costs between emerging and developed markets fell to less than 2.9 percentage points, the lowest level in 16 years. Source.
After 25 consecutive increases, YoY Shelter CPI has moved down for 3 straight months, from 8.2% in March (highest since 1982) to 7.8% in June. A continued move lower in Shelter inflation will have a big impact on overall CPI as Shelter represents more than a third of the index. Source.
The good news for the Fed: US consumer inflation expectations over the next year have fallen to the lowest since April 2021. The bad news: longer-term expectations have climbed to the highest since March 2022. This underscores fear of sticky core inflation. Source.
📓 Online Publications
Domino's Pizza Strikes Menu Listing Deal with Uber. Domino's Pizza and Uber Technologies have announced a partnership, allowing the world's largest pizza company to list its menus on Uber Eats and Postmates food-delivery apps across 28 markets, including the US, UK, and Canada.
Lucid May Have a Serious Demand Problem. The reversal in momentum came after Lucid announced its second-quarter vehicle production and delivery results, and they were disappointing. The EV start-up said it delivered just over 1,400 vehicles when analysts on average expected deliveries to reach 2,000 units, according to FactSet Research Systems.
Leading Index for Commercial Real Estate Decreased in June. The Dodge Momentum Index (DMI) declined 2.5% in June to 197.3 from the revised May reading of 202.4. A deceleration in institutional planning caused the Momentum Index to decrease in June. In contrast, growth in the commercial segment may be fleeting, as the continued elevation in interest rates and increasingly tight lending standards weigh down the sector in the latter half of the year.
Nvidia in Talks for Anchor Investment in Arm IPO. Nvidia is reportedly in discussions to become an anchor investor in Arm's upcoming IPO, with plans for a New York listing as early as September. While Nvidia aims for a valuation of $35-40 billion, Arm seeks a value double that amount. Source(0:51)
JPMorgan Hires Start-Up Bankers to Fill Void Left by SVB Collapse. Capitalizing on the collapse of Silicon Valley Bank earlier this year, JPMorgan is bolstering its team by hiring numerous bankers globally to cater to the start-up and venture capital clients previously served by SVB. Source(6:01)
Bank of America Caught Making Fake Accounts. Bank of America faced extensive penalties and customer repayments after federal regulators discovered misconduct involving double charging for overdraft fees, withholding credit card points, and creating fictitious customer accounts. The Consumer Financial Protection Bureau ordered over $100 million in repayments and imposed $90 million in penalties. Source(12:00)
Currency Debasement is Driving Global Asset Prices. Raoul Pal thinks that currency debasement is the main driver of global asset prices, with excessive printing and inflation devaluing fiat currencies. This phenomenon has led to the apparent rise in asset values, but adjusting for currency debasement reveals minimal actual wealth increase, while technology and cryptocurrencies have outperformed due to their ongoing adoption cycles. Source(11:26)