July 2, 2023

📰 News Organizations

• Apple Surpasses $3 Trillion Market Cap. Apple's market cap crossed the $3 trillion mark, reaching the required share price of $190.73. This achievement demonstrates investor confidence in Apple's stock and its diverse portfolio of products and services, despite the company's warning of an anticipated 3% decline in revenue for the current quarter.
  

• Tesla Nears New Deliveries Record, Driven by Price Reductions. Tesla is expected to report sales of approximately 448,350 vehicles for the past three months, a 6% increase from the first quarter.* While maintaining its position as the leading global battery-electric vehicle manufacturer, Tesla will need to sustain its momentum to meet its target of producing 1.8 million to 2 million vehicles this year.

• Google to Block Canada News Links From Search Function in Response to Law. Following Meta Platforms, Google plans to block news links from its search function once Canada implements the recently approved law, requiring digital platforms to establish commercial agreements* with news publishers.

• JPMorgan Abandons Bullish Treasuries View Due to Strong US Economic Data. JPMorgan Chase & Co. has reversed its optimistic stance on Treasuries as recent US economic data surpassed expectations.* The bank's fixed income strategists are adjusting their positions, including unwinding their long position in five-year Treasuries, citing the need to reassess their tactical duration view.

• House Hunting is About to Get Harder. As mortgage rates surge above 7% on the 30-year fixed rate, homeowners have less incentive to sell, leading to a tighter housing market. With limited inventory and increasing prices, the housing market is likely to remain competitive, even as single-family housing starts gradually increase but remain below historical levels.

🐦 Twitter

• The rise in 2-year yields is getting a lot of attention. While the odds of a second hike this year are inching higher, the real shift has been pricing fewer cuts over the next year — only 60bps of cuts priced between September 2023-June 2024 from a peak of ~150bps in early May. Source.
  
  

• Over the last two quarters GDP has grown at a 2.3% annual rate while GDI has fallen at a 2.6% annual rate. That's the largest discrepancy in these 2 ways of measuring the same thing in at least twenty years. Source.
  
  

• S&P 500 starting to see more favorable trend in terms of % of members making new 52-week high ... getting to consistent double-digit territory an important step from here. Source.
  
  

• Home builders keep cutting the price. With new home prices down -16% from the peak last October. A much faster decline than what occurred in the beginning stages of the 2008 housing downturn. Source.
  
  

• Despite the lower inflation trend, market is still pricing in an 87% probability that that Fed hikes again at the July meeting, 25 bps increase to 5.25-5.50%. Source.

📓 Online Publications

• Pending Home Sales Decline Nationwide, as Northeast Outperforms. Pending home sales across the country saw a 2.7% decrease in May compared to the previous month, with a significant 22.2% drop from the previous year. However, the Northeast region stood out with a notable 12.9% increase* in sales, indicating strong interest despite the limited housing inventory.

• PCE Measure Indicates Slowing Year-Over-Year Growth in Shelter Costs. The year-over-year growth of the Personal Consumption Expenditures (PCE) measure for housing shows signs of deceleration, with CPI Shelter increasing by 8.0% in May (down from 8.1% in April) and Housing (PCE) rising by 8.3% YoY (down from 8.4% in April). Softening asking rents and ongoing rent growth deceleration suggest that these measures will continue to slow in the upcoming months.

• Amkor Surges on Nvidia Partnership Rumor. Amkor witnessed a significant stock price increase of over 8% following rumors of a potential partnership with Nvidia published in Taiwan technology publication Digitimes. Despite this recent surge, Amkor remains an appealing choice for investors, as its stock trades at around 11 times earnings, positioning it as a value play within the AI industry.
  

• Joby Aviation Got FAA clearance to Fly Electric Robo-Taxis. The company received a Special Airworthiness Certificate from the FAA. That FAA approval means Joby can begin flying its actual production-line air taxi in a real setting. On the heels of that approval, the company also received a fresh $100 million investment from a major South Korean telecom, lending even further confidence to the early-stage company.

🎧 Podcasts

• US Supreme Court Ruling’s Potential Impact on Business Practices. The US Supreme Court issued a ruling on affirmative action, urging universities to reduce the emphasis on race when selecting students, potentially leading to future implications for businesses. This decision has the potential to create a ripple effect, raising concerns about businesses facing similar cases in the future. Source(0:35)

• China's New Foreign Relations Law Bolsters Xi Jinping's Authority. China recently passed a law granting President Xi Jinping increased authority in foreign policy and allowing the government to take countermeasures in response to perceived threats to the economy or national security. This legislation undermines the perception of China as an open-for-business nation, raising apprehensions about business engagements. Source(5:44)
  
  

• Virgin Galactic Launches First Customers to Edge of Space. It took nearly 20 years, but Richard Branson’s space tourism company finally sent its first paying customers to the edge of space. After losing $500 million last year, Virgin Galactic hopes to start generating meaningful revenue by charging space tourists up to $450,000 a seat for a joyride in its Unity spacecraft. Source(12:05)
  
  

• The FED Needs to Fine-Tune Its Inflation Fighting Efforts. Warren Pies thinks the housing market's current dynamics, including borrowing channels and interest income effects, stimulate economic activity for a wealthy group. Policymakers should prioritize reducing borrowing channels to address this, aiming to slow the economy, control inflation, and alleviate housing costs through measures like quantitative tightening or more assertive balance sheet operations. Source(6:04)
  
  

• Restrictions on AI Chip Exports. The Biden administration seeks to restrict AI chp exports. Nvidia's CFO said over the long term, restrictions like these would "result in a permanent loss of opportunities for the US industry to compete and lead one of the world's largest markets". She is essentially saying that this restriction will set the US back a couple of years. Source(39:15)