June 21, 2023

Morgan Stanley Predicts Stock Market Rally to Weaken

📰 News Organizations

  • China Cuts Borrowing Rates Amid Economic Challenges. China reduces borrowing rates in an effort to stimulate economic recovery, as the country faces an economic slowdown and strained relations with the US, prompting multinational manufacturers to reassess China's role in their supply chains.*

  • Alibaba CEO Steps Down to Focus on Cloud Business. Alibaba's CEO, Daniel Zhang, will step down to concentrate on the company's cloud unit, which faces increased competition domestically and internationally. Eddie Wu will take over as CEO, with Zhang focusing on reviving cloud business growth and preparing the unit for an initial public offering.

  • Morgan Stanley Predicts Stock Market Rally to Weaken. Morgan Stanley's Michael Wilson warns that fading fiscal support, reduced liquidity, and declining inflation will weigh on the US equity rally in the second half of the year, emphasizing that equities are currently stretched* to their limits.

  • PayPal Expects $5 Billion in Buybacks After BNPL Deal. PayPal plans to repurchase significant stock following a deal in which KKR-managed funds will purchase up to €40 billion* of buy now, pay later loan receivables originated in Europe, bolstering the payments company's buyback program.

  • Amazon Set to Become Top Beauty Retailer, Surpassing Walmart. Morgan Stanley projects that the e-commerce giant will become the biggest player in another space: beauty. Analysts at Morgan Stanley project that Amazon will surpass Walmart as the largest US beauty retailer* by 2025, with Amazon projected to represent about 14.5% of the $180 billion beauty market.

  • KoBold Metals Raises $200 Million, Becomes Silicon Valley's Newest Unicorn. KoBold Metals, a mining company based in Berkeley, California, utilizes artificial intelligence for metal exploration and is raising approximately $200 million in a funding round, valuing the company at over $1 billion.*

  • UBS to Face Penalties Over Credit Suisse's Archegos Fiasco. UBS is expected to face fines from the US Federal Reserve and the UK's Prudential Regulation Authority, with potential penalties of up to $300 million* and £100 million ($128 million), respectively, related to the Archegos Capital Management scandal.

  • Hyundai Considers Joining Tesla's North American Charging Standard Alliance. Hyundai's president, Jaehoon Chang, expresses the company's openness to joining the alliance of automakers adopting Tesla's North American charging standard, as Tesla's Superchargers currently dominate the US fast-charging market.

🐦 Twitter

  • The “very bullish” positioning in US equity futures grew last week, taking it to the most extended levels for the S&P 500 and Nasdaq 100 in data going back to 2010: Citigroup strategists. Source.

  • The US Housing Market Index rose for the 6th consecutive month, moving above 50 for the first time since last July. Homebuilder confidence increasing due to extremely low levels of existing inventory (new homes representing a larger share of overall supply). Source.

  • US office buildings are only about 50% as full as before Covid: Kastle Systems. Columbia & NYU professors estimate that the value of office property across US cities is 38% lower than pre-pandemic, equaling a loss of about $500 billion. Source.

  • Staying put: Americans are less willing to move per latest update from US Census Bureau. Thru 2021, American mobility rate fell to record low; exact figures vary by survey, but citizens are moving at roughly half rate they were in middle of 20th century. Source.

A traders mindset is the greatest asset they possess. Feed it with knowledge, patience, and resilience; it’s not just about the numbers, but the discipline to stick to your plan.

Steve Burns

📓 Online Publications

  • Amazon, Hilton and Starbucks to Hire Thousands of Refugees Across Europe. Amazon has pledged to hire at least 5,000 refugees across Europe over the next three years. Dozens of other companies, including Hilton and Starbucks, are joining the initiative to mark World Refugee Day. It’s part of a growing movement towards corporate social responsibility.

  • Intel Expands with $33 Billion Investment in Germany and Poland. Intel will spend more than 30 billion euros to develop two chip-making plants in Magdeburg as part of its expansion push in Europe. The German deal marks Intel's third big investment in four days. It unveiled plans on Friday for a $4.6 billion chip plant in Poland and would spend $25 billion on a factory in Israel.

  • NASA Aims to Address $6 Billion Cost Overruns in Moon Program. NASA's ambitious Project Artemis, with a total cost of $93 billion, is facing $6 billion in cost overruns primarily attributed to the price of SLS rocket engines. To tackle these extra costs, NASA plans to secure new fixed-price contracts with its space contractors.

  • Wix Embraces AI to Enhance User Experience and Drive Business Growth. Wix actively integrates AI into its products, recognizing its potential to help users achieve their goals more effectively, leading to improved satisfaction, higher conversion rates, and long-term business growth.

🎧 Podcasts

  • Xi Jinping sees ‘progress’ in China-US ties at a meeting with Antony Blinken. Ties between the countries have been rocky. The US is concerned about China’s increasing military activity around Taiwan and its refusal to condemn Russia over its invasion of Ukraine. Both Blinken and Xi appear keen to indicate that the two countries were now preparing for a thaw in relations. Source(0:43)

  • Which flying taxi will take off first? Among the most skepticism is how are these actually going to fit into the national airspace. Because in the United States, it’s already really crowded. We already don’t have enough air traffic controllers for the number of planes that are going around as it is. And so the idea is that there will be corridors that these air taxis will use. Source(5:56)

  • The "Due O Sale" Clause- addressing the housing shortage. If somehow by an act of Congress and the supreme court, the due o sale clause gets repealed, people could sell their properties and allow the new buyer to assume the mortgage. That can increase the housing inventory in the market. Another possible scenario is to have low rates again to address the housing problem. Source(6:09)

  • Data-driven AI is a powerful tool in today's world, where data serves as a valuable asset for leaders, entrepreneurs, and businesses. From sales information to sensor data, the abundance of available data provides an opportunity to extract valuable insights and unlock previously unknown knowledge. Source(11:40)