July 3, 2023

📰 News Organizations

• Goldman Sachs in Talks to Exit Apple Partnership. In an effort to shift focus from its underperforming consumer banking ventures, Goldman Sachs is engaging in discussions with American Express regarding the potential transfer of its Apple credit card and high-yield savings account offerings. CEO David Solomon's decision to pursue this strategic move comes amidst criticism and scrutiny.
  

• SEC Deems Spot Bitcoin ETF Filings Insufficient. The SEC has notified Nasdaq and Cboe Global Markets, along with asset managers such as BlackRock and Fidelity Investments, that their spot Bitcoin ETF filings lack clarity and comprehensiveness.* The SEC's rejection echoes similar decisions made since 2017 based on concerns regarding potential fraud and market manipulation.
  

• Spotify in Talks to Test Full-Length Music Videos in App. In an effort to enhance its competitive position* against YouTube and TikTok, music streaming giant Spotify is in discussions to introduce full-length music videos to its app. By exploring this expansion, Spotify aims to offer users a more comprehensive multimedia experience, with ongoing talks being held with potential partners.
  

• Adobe-Figma Deal Faces U.K. Scrutiny. The CMA is examining the proposed merger between Adobe and Figma, citing potential drawbacks such as reduced innovation and higher costs for companies* relying on their digital tools. With Figma's significant market share in screen-design software and Adobe's investments in the same sector, the CMA emphasizes the importance of competition driving investment and development.

• Elizabeth Warren Asks Goldman Sachs to Detail Profits in SVB Collapse. Warren is demanding transparency from Goldman Sachs in relation to Silicon Valley Bank's collapse. Warren raises concerns about potential gains made by Goldman Sachs* as a bond buyer from SVB shortly before the bank's failure, prompting her to seek detailed disclosures.

• Banks Pass Fed Stress Test With Mixed Outlook for Higher Payouts. All 23 major U.S. banks have successfully cleared the Federal Reserve's annual stress test, providing a sense of relief to investors.* Following the release of the results, JPMorgan Chase, Morgan Stanley, Goldman Sachs Group, and Wells Fargo experienced stock price increases, although the outlook for higher payouts varied among the banks.
  

• Nike Reports Strong Sales, Slightly Misses Profit Estimates. Nike's Chief Financial Officer, Matthew Friend, predicts mid-single-digit revenue growth for fiscal year 2024, primarily driven by its direct-to-consumer business.* While analysts anticipate close to 6% growth, Nike's profit fell just short of estimates, indicating overall sales strength for the company.

🐦 Twitter

• There will come a time when we have a recessionary setup and the Fed looks poised to cut rates, and people will say rate cuts/ZIRP in 2001 and 2008 weren’t enough to prevent a lot of pain, and the “housing ATM cycle” on the other side of this will be massive. Source.
  
  

• Services portion of personal consumption expenditures within GDP has reaccelerated in year/year terms ... no clear recession/non-recession indication given we've seen current rate in both cases throughout history. Source.
  
  

• US Rents were down slightly over the last year, the first YoY decline since February 2021. Still a ways to go before reversing some of the 2021 spike (18% increase), but moving in the right direction. Source.
  
  

• To things into perspective: All 40 Dax comps are worth just the equivalent of $1.66tn, less than Apple at $3tn or Microsoft at $2.53tn. And the Dax suffers from obsolescence: The average Dax company is 109 years old, the avg S&P 500 company only 42yrs. Source.

📓 Online Publications

• Low Inventory Impacts Contract Signings, but Strong Buyer Demand Persists. Contract signings experienced a significant 22% decline from the previous year, primarily due to low housing inventory. Nonetheless, the housing market demonstrates resilience as strong buyer demand continues to drive approximately three offers per listing, highlighting a robust market environment.
  
  

• Berkshire Hathaway Recently Upped Stake Again in Occidental Petroleum. Berkshire revealed via a regulatory filing that it invested an additional $122.1 million in Occidental Petroleum over a three-day period. The latest purchase means Berkshire's stake in Occidental now exceeds 25% of all outstanding shares. The oil stock ranks as the sixth-largest holding in Berkshire's portfolio.
  

• Virgin Galactic Invests $700 Million in New Spacecrafts. Following the successful launch of its first commercial space tourism flight, Virgin Galactic plans to accelerate its flight frequency by flying once per month. To achieve this, the company will sell additional stock to raise funds for building more spaceplanes.

• Rising Home Prices Favor Real Estate Buying Platforms. The S&P CoreLogic Case-Shiller Home Price Index reveals a 0.5% increase in home prices, prompting a surge in Opendoor stock as investors anticipate favorable market conditions. With a significant short interest on Opendoor's shares, the potential for a short squeeze is notably high.

• Positive Economic Outlook May Drive Mortgage Rates Up. Favorable economic indicators, including a decline in jobless claims, an upward revision to second-quarter GDP, and the Federal Reserve's positive assessment of bank stress tests, increase the likelihood of future rate hikes.* Consequently, mortgage rates in 2023 could reach new highs.

🎧 Podcasts

• Cruise Companies are Top Performers This Year So Far. Cruise companies like Carnival, Royal Caribbean, and Norwegian have experienced impressive stock performance this year, with each seeing their prices rise by over 55%. Nvidia comes fourth despite the AI craze. Amid this positive trend, it's important to note that these companies are still operating at a loss, with Carnival and Norwegian stocks remaining 60% lower than their 2019 levels. Source(15:26)
  
  

• S&P 500 Faces Declining Usefulness Amid Growing Concentration on Tech Giants. The S&P 500's effectiveness as an index is diminishing due to its growing concentration on a few key stocks, such as Apple and Microsoft, which together make up a substantial portion of its market cap. This trend may prompt money managers to consider alternative benchmarks, like the equal-weight S&P or the Russell 1000, to ensure a more diversified and broad-based investment approach. Source(3:19)
  
  

• Databricks Acquires MosaicML for $1.3 Billion. DataBricks' $1.3 billion acquisition of MosaicML underscores the increasing focus on AI within the enterprise infrastructure. With MosaicML playing a vital role in maximizing GPU efficiency and model training, the acquisition highlights the growing importance of comprehensive toolchains in the AI-driven industry. Source(51:03)
  
  

• Data Shows Markets are Looking Better. Bank of America's 20 city composite growth diffusion index reveals three consecutive months of positive month-over-month growth in major metropolitan areas. Despite year-over-year declines in home prices, the recent data suggests a potential recovery in the housing market, attributed to strong demand for new homes and the lock-in effect of low mortgage rates, which has helped stabilize prices. Source(52:41)