August 29, 2023

📰 News Organizations

• OpenAI Launches ChatGPT Enterprise That Competes With Microsoft. ChatGPT Enterprise, unveiled on Monday, is tailored to help employees learn new concepts or skills such as coding and to analyze internal corporate data. The product is built on GPT-4.

• Avon Owner Natura & Co Considers Sale Of The Body Shop. Brazilian beauty conglomerate is considering a sale of The Body Shop after the skin care and cosmetics line saw another quarter of declining sales, according to a Monday securities filing.

• Noco-noco Debuts on Nasdaq. The company is making its debut under the symbol NCNC after merging with the blank-check company Prime Number Acquisition I Corp. It plans to enter the domestic leasing business with electric vehicles that use its battery separator technology.

• SEC Probes Major Lender Over Mortgage-Backed Securities Sold to Wall Street. The Change Company is facing scrutiny over its securities products. The firm says it’s unaware of the SEC investigation and denies wrongdoing.

• Goldman Is Selling a Wealth-Advisory Unit to $240 Billion Money Manager. The offloading of the company just four years after Goldman acquired it signals the firm’s intention to refocus its attention on the ultra-rich segment where it has a dominant presence.
  

• Uber Eats’ New AI Chatbot Will Offer Recommendations to Customers. The AI chatbot that will provide suggestions to customers using the food-delivery service and assist in placing orders. This effort is part of a broader competition to seamlessly integrate artificial intelligence into apps.

🐦 Twitter

• The 3-Month Treasury Bill Yield has moved up to 5.61%, its highest level since January 2001. The market is now pricing in a 60% probability of another Fed rate hike (to 5.50-5.75%) at the November FOMC meeting. Source.
  

• Mortgage rates hit 7%, yet new home sales are slow in only 12% of the largest markets in the country. Largely because new home buyers are getting mortgages with rates below 6%. Many builders are allocating 4-6% of the home sale proceeds toward buying down the mortgage rate. Source.
  

• Gold remains impressively resilient despite the pressure from real rates. The weakening of the correlation between inflation-adjusted yields and precious metals is becoming more apparent. With inflation running hotter than historical standards, gold is highly likely to decouple. Source.
  

• Despite opening up >5% in response to measures announced by the Chinese government to support financial markets, the CSI 300 rally faded throughout the day and ended up just 1.2%. So far, investors are not impressed by the stimulus. Source.
  

• I could see apartment rents having an L-shaped recovery in 2024 as the supply backlog gets delivered but go V-shaped by 2026 since there will be so few projects entering the pipeline over the next 12-18 months. Source.
  

• Cap-weighted S&P 500 is outperforming equal-weighted version by nearly 11% YTD. So far, widest performance gap since 1998 and second widest on record. Source.

📓 Online Publications

• 3M Nears Roughly $5.5 Billion Earplugs Settlement. 3M and plaintiffs attorneys are nearing a settlement that would resolve hundreds of thousands of claims by veterans that earplugs made by the company and a subsidiary failed to protect them from hearing loss.
  

• Single-Family Mortgage Serious Delinquency Rate Lowest since 2002. Since lending standards have been solid and most homeowners have substantial equity there will not be a huge wave of single-family foreclosures this cycle and no cascading price declines.
  

• The GPU Age. Nvidia CEO Jensen Huang insists that the current wave of demand is in fact the dawn of what he calls 'accelerated computing.' If GPUs are going to be this big of a market,, it will be because applications that are only possible with GPUs generate the demand to make it so.
  

• Vehicle Home Delivery Law Passed. Carvana announced that a bill it had championed in Illinois permitting vehicle home delivery for car buyers became law. This bill will make it easier for consumers in the sixth-largest U.S. state to buy and sell cars online through its platform.
  

• No Sign of Rates Slowing Down. The average mortgage rate has gone from about 6.6% in the summer to about 7.53% today. This trend is unlikely to slow as long as the Fed does not pivot and does not see inflation numbers come down. Now we have much higher rates heading into the worst part of the real estate season.

🎧 Podcasts

• Chinese Companies’ Earnings to Show Economic Slowdown. There is a lot of pessimism surrounding Chinese companies reporting second-quarter earnings this week. Forecasts expect that these companies will downgrade outlooks, especially in sectors that are heavily exposed to struggling real estate and finance. Source(0:48)

• Central Bankers Warn of Structural Changes. The world’s central bankers wrapped up their annual economics symposium in Jackson Hole, Wyoming, over the weekend. And while the threat of inflation isn’t as bad as it was a year ago, central bankers are worried about the structural changes upsetting the global economy. Source(1:26)
  

• Strike to Freeze Big Automakers. Members of the United Auto Workers Union might strike on September 14th due to contract disputes with major automakers like Ford, Stellantis, and GM. The potential strike could result in an estimated $10 billion economic loss within the first ten days, according to a recent analysis. Source(7:07)
  

• More Earnings and Economic Data. Another significant week for economic data, with upcoming inflation and jobs reports that will influence the Fed's interest rate decisions. Earnings season is also winding down, but companies like Salesforce, Lululemon, and Dollar General are yet to share their results. Source(25:56)
  

• Strategic Investments in an A.I. World. Jason Hartman and economist Robert "Bob" P. Murphy discuss the implications of artificial intelligence on the economy. Bob advises considering investments in assets that A.I. cannot easily replicate, like real estate and physical resources. Source(30:46)