August 22, 2023

📰 News Organizations

• SoftBank’s Arm Files for IPO, Likely to Be 2023’s Biggest. The U.K.-based chipmaker wants to trade under the ticker symbol “ARM.” It would be the largest tech offering since Alibaba’s in 2014. The designer of phone semiconductors looks to go big on AI chips.
  

• U.S. Stocks Struggle To Find Footing As Bond Yields Continue To Rise. The bond-market selloff is intensifying in advance of Fed Chair Powell’s Jackson Hole speech, which shows you how the market wants to position ahead of that.
  

• Treasury Yields Hit Highest Since 2007 on Elevated Rate Fears. 10-year yield tops 4.34%, the highest level since the financial crisis. Rising real yields reflect a firmer economy and higher deficits as investors position for interest rates to remain elevated.

• Subway Sandwich Chain Nears Sale. Roark has been battling it out with a group of rival private-equity firms including TDR and Sycamore, and in recent days pulled ahead. It is still possible the other group could come back with a higher offer and prevail.

• Axiom Space Raises $350 Million From Saudi And Korean Investors. The company currently flies astronauts on missions to the International Space Station via launches with SpaceX and is developing technologies including a commercial space station and a lunar spacesuit.

• Zoom Beats Expectations And Lifts Full-Year Guidance. Zoom’s revenue grew 3.6% year over year in the quarter that ended on July 31. Net income jumped to $182 million compared with $45.7 million. Still, the company is moving at a much more sluggish pace than it was two years ago.

🐦 Twitter

• U.S. nominal GDP growth (in year/year terms) has been outpacing growth in China … in 2023, latter has expanded by 6.5% while former has expanded by 4.8%. Source.
  

• US housing affordability is worse today than the peak of the last housing bubble. The median American household would need to spend 43% of their income to afford the median priced home. Source.
  

• China's smaller-than-expected rate cut again raises the question, is China unwilling or unable to provide more aggressive stimulus? In this case, authorities seem to be trying to protect bank margins instead of offering a more substantial monetary boost. Source.
  

• The reset in long rates (fueled by a rise in the term premium) is the primary driver for the market right now. The timing—just as the P/E-driven phase of the stock market’s rally comes to an end—is causing indigestion. Source.
  

• While mortgage rates have skyrocketed to a 20-year high of 7.5%, just 3.7% of borrowers have a rate of 6% or higher. Meanwhile, a massive 26% of borrowers have a rate below 3%. 91% of ALL borrowers have a mortgage rate below 5%. This is why supply is not coming to the market. Source.

📓 Online Publications

• Microsoft Resubmits Activision Deal After Being Blocked by UK's CMA. Under the restructured proposal the tech giant would not acquire the cloud streaming rights to all current and future Activision games released during the next 15 years and will be divested to Ubisoft.

• Broadcom’s $61 Billion VMware Deal Cleared by UK. The Competition and Markets Authority confirmed its provisional decision to clear the deal after finding that it wouldn’t substantially reduce competition in the supply of key computer server products, according to a statement on Monday.
  

• Rental Prices Continue To Come Down, but Not Fast Enough. Rental prices fell for the third month in a row, dipping 1% year over year in July. And rents could continue to fall as builders continue putting up more apartment buildings expected to come online over the next year.

• Compass’ Cash Crisis Closes. This past quarter is the high-water mark for revenue; from here seasonality kicks in with progressively lower revenue for the next nine months. It’s likely that cash flow will remain relatively flat for the rest of the year.

• Deere Fell Last Week Despite Reporting Better-Than-Expected Earnings. Investors appear concerned that the cyclical agriculture sector might be near a peak. Wall Street analysts share those fears, which is leading to continued pressure on the shares.

🎧 Podcasts

• Private Equity Firms Hand Over Assets To Creditors As Distress Rates Rise. Over the past few months, KKR and Bain Capital let go of portfolio companies to places they had borrowed from. Meanwhile, Goldman Sachs and Carlyle’s PE units are in the process of doing the same thing. Source(1:17)

• Severe Drought In Panama Hits Global Shipping Industry. The Canal is the gateway for shipping trade between the Atlantic and Pacific oceans. It’s a key transit route for US liquefied natural gas and fruits but a drought this year has shrunk water levels and it caused supply disruption. Source(6:01)
  

• Canada Asks Meta To Reverse News Ban. As thousands of Canadians fled raging wildfires in the Northwest Territories on Friday, the country’s top leaders called on Meta to reverse its ban preventing users in Canada from sharing news articles on its social networks. Source(6:37)
  

• Wall Street Anticipates Several Market-Shaping Events This Week. Among them, Nvidia's earnings announcement on Wednesday takes center stage due to its influence in the AI realm. And on Friday, Fed Chair Jerome Powell is set to deliver his yearly address at the Jackson Hole Fed conference. Source(24:16)

• Weakening Economy & Potential Recession. Harry Dent highlights the potential for a substantial economic decline due to the interaction of a $5.2 trillion stimulus and tightening monetary measures within the coming year, projecting a possible deep recession or depression by mid-2024. Source(29:43)