July 5, 2023

📰 News Organizations

• Meta to Launch Twitter Rival 'Threads'. Mark Zuckerberg plans to launch a new app called 'Threads' that is expected to pose a strong challenge to Twitter, leveraging the user base of Instagram. Analysts believe this strategic move could lead to rapid adoption and revenue growth, addressing the challenges faced by Twitter since Elon Musk took over.

• EU Court Rules Against Meta in Antitrust Case on Data Privacy. The European Union's top court has granted competition regulators the authority to investigate companies for compliance with privacy rules. This ruling enables regulators to examine how companies leverage data to reinforce their dominant positions, expanding the scope of investigations into anti-competitive practices.

• Pfizer Enters $900 Million Manufacturing Deal with Samsung Biologics. Pfizer has signed a manufacturing agreement with Samsung Biologics, a division of the Korean conglomerate, for the production of biosimilar products in South Korea. This $900 million deal will extend until 2029 and cover a range of medical products, including oncology and immunotherapy treatments.

• Student Housing Boosts Commercial Real Estate Amid Challenges. Amidst the struggles faced by the commercial real estate sector, student housing near popular colleges emerges as a rare bright spot. Limited supply and strong demand, particularly in renowned research universities and leading athletic conferences, are poised to drive rent growth for student accommodation.

• Rivian Exceeds Expectations with Strong Second-Quarter EV Deliveries. Rivian experienced a surge in its stock price, rising over 17%, following better-than-expected quarterly vehicle deliveries. The electric vehicle manufacturer reported 12,640 deliveries in the second quarter, surpassing analysts' estimates of 11,000 vehicles.

• UK Appeals Court Rules Apple Infringed Essential Patents for iPhones. An appeals court in the UK has upheld a previous decision that Apple infringed two patents owned by Optis Cellular Technology LLC, relating to crucial communication technology used in 4G mobile devices, including iPhones.

• New EU Antitrust Rules Encompass Major Tech Companies. Meta Platforms Inc., Alphabet Inc., Microsoft Corp., Samsung Electronics Co., and Bytedance Ltd. will face new EU antitrust regulations. The rules will restrict the consolidation of personal data across services, require support for third-party payment systems and alternative app stores on mobile platforms.

• US Plans to Restrict China's Access to Cloud Services, Posing Challenges for Amazon and Microsoft. Upcoming restrictions may require government authorization for American companies like Amazon and Microsoft to provide cloud services with advanced AI chips to Chinese customers which could create a dilemma for US cloud service providers.

🐦 Twitter

• The world continues to slide further into recessionary territory with both activity and inflationary pressures falling. June global manufacturing PMI was down seven-tenths of a point to 47.7, below the 50 threshold for the 10th consecutive month. Source.
  
  

• The last 3 times ISM Manufacturing was this low, the US economy was in or about to be in a recession. You have to go back to 1995-96 to find a lower reading with no recession. Source.
  
  

• When the S&P 500 posts an above-average return (2023 qualifies) in the first half after a negative year, the index has posted an average 2nd half return of 11.1%. This implies a year-end value of approximately 4,945 (and new ATH) according to Bank of America. Source.
  
  

• Central banks have faced losses on their bond portfolios due to rate hikes and USD strength. With the "Higher for longer" scenario gaining traction, they might consider reentering bonds if real rates remain resilient. Source.

📓 Online Publications

• A Pickup of Downsizing Is Coming. Bill Mcbride says that as the leading edge of the Baby Boom generation approaches 80 years old by 2026, there is an expectation of a surge in home sales among Boomers throughout the 2020s, lasting until around 2040. These homes will be older - and most will need updating - but many of these homes will be in prime locations.

• Construction Spending Increased 0.9% in May. Construction spending during May 2023 was estimated at a seasonally adjusted annual rate of $1,925.6 billion, 0.9 percent above the revised April estimate of $1,909.0 billion. The May figure is 2.4 percent above the May 2022 estimate of $1,880.9 billion.

• Institutional Investors Are Shunning the Housing Market. Institutional investors bought 90% fewer homes in early 2023 compared to the same time last year. Recently, Starwood Capital, which owns a large REIT, sold 2,000 of its single-family rentals. The company had only bought the homes two years ago.

🎧 Podcasts

• Regulator Summons Bank Executives over Allegations of Profiteering. The Financial Conduct Authority (FCA) has called for a meeting with leading UK lenders, including HSBC, NatWest, Lloyds, and Barclays, to address allegations of profiteering, as they are accused of deliberately keeping savings rates low despite rising interest and mortgage rates. Source(0:40)

• Yahoo Plans to Make a Comeback on Public Markets. Following its spin-out from Verizon in 2021 to regain independence, Yahoo is preparing to re-enter the public market, according to CEO Jim Lanzone. Lanzone highlighted Yahoo's strong financial position, excellent balance sheet, and profitability as the company aims to revive its presence since its initial public offering in 1996. Source(6:31)
  
  

• The Bullish Market is Expected to Continue. Raoul Pal thinks the market is currently in a bullish trend driven by liquidity and the expectation that it has already priced in a recession. Despite upcoming economic weaknesses, he is optimistic and has a strong bullish stance on equities, crypto, and bonds, with a short-term correction anticipated in the overbought market in the near future. Source(1:01)
  
  

• We Have a Population Nightmare Coming, And It's Bad For Real Estate. The birth rate is steadily declining in the West as more women delay child rearing so they can enter the workforce. Jason Hartman says that while this is not something to worry about for now in the real estate scene, this will become a huge deal around the late 2040s. The US real estate market is going to be a Japan-style market where you can literally get a house for free because the supply of housing is higher than the population. Source(8:21)
  
  

• Office Space Shift and Repurposing Challenges. The shift towards remote work has led to a decline in office space usage and repurposing them into residential units is challenging because the layouts are different. Abandoned shopping malls are being repurposed into sports and recreation facilities, but their value is reduced due to the absence of anchor tenants. This poses a problem for fixed-income investments tied to these properties. Source(5:19)