August 8, 2023

📰 News Organizations

• Moody’s Cuts US Banks on Mounting Funding Costs. The credit rater downgraded 10 lenders while U.S. Bancorp and BNY Mellon are among six major firms facing potential cuts. Higher funding costs and rising risks tied to commercial real estate loans amid weakening demand for office space are among strains prompting the review.
  

• Trucker Yellow Files for Bankruptcy. The bankruptcy follows years of struggles for the Nashville, Tenn.-based trucker as it tried to address the debt it accumulated through a series of mergers and a $700 million federal Covid-19 relief loan during the pandemic.
  

• PayPal Launches Dollar-Pegged Stablecoin. PayPal USD, or PYUSD, would be redeemable on a one-to-one basis with dollars and backed by cash deposits, short-term Treasuries, and other cash equivalents. The token will be issued by Paxos Trust Company.

• Oil Giant Saudi Aramco Posts 38% Drop In Second-Quarter Profit. Aramco reported $30.07 billion in net profit for the second quarter, a drop of nearly 40% from the $48.4 billion recorded in the same period last year amid a decline in hydrocarbon prices.
  

• Paramount to Sell Simon & Schuster to KKR for $1.62 Billion. Paramount plans to use the proceeds in part to reduce debt levels. The announcement of the sale comes as Paramount reported second-quarter earnings and said it swung to a loss of $299 million from a profit of $419 million in the year-earlier period.

• Sage Therapeutics Stock Plunges More Than 50% after FDA Decision. The FDA approved the company’s oral drug zuranolone for postpartum depression, but not for major depressive disorder. The FDA’s decision to deny the drug’s approval for a much larger population of patients appears to be a notable setback.
  

• Palantir Reports 13% Revenue Growth. Palantir reported revenue of $533 million. The data analytics company also said third-quarter revenue will likely be between $553 million and $557 million. Company's fastest area of growth was international government revenue.

🐦 Twitter

• The US is now spending 44% of GDP per year, the same levels as World War 2. In 2020, the US spent a record-breaking 54% of GDP in one year. This is what Fitch meant by “fiscal deterioration” when they downgraded the US credit rating. Source.
  

• For month of July, economy added 972k part-time jobs, which was most since October 2020. The number of full-time positions fell by 585k, which was worst drop since April 2020. Source.
  

• Commercial Bank Lending has declined by 1.63% from its all-time high which marks only the 4th time (1975, 2001, and 2009-10) in the last 50 years that commercial bank lending declined by more than 1.50%. The S&P 500 lost roughly 50% of its value each of the 3 previous times. Source.
  

• Public builders will soon be increasing the number of actively selling communities by 18% in Jacksonville and 9% in Atlanta. The more interesting story might be Austin, Orlando and Denver, where the number of communities is projected to decline. This will help home price appreciation in all 3 of those markets. Source.
  

• Market-implied inflation expectations over the next 5-10 years have risen to the highest levels in more than a year. Traders are starting to game out a future with sustainably higher inflation and higher long-term bond yields. Source.

📓 Online Publications

• Tyson Foods to Close Four Plants as Chicken Business Slumps. Tyson said it plans to close facilities in Corydon, Ind.; Dexter, Miss.; Noel, Miss.; and North Little Rock, Ark., shifting production to other facilities as part of a broader effort to cut costs.
  

• Home Prices Increased Month-to-month to New Record High in June. A later-than-normal peak in inventory levels, as noted on the previous page, could ease price pressures later this year, although if interest rates begin to ease, prices could heat up on what would still be chronically low inventory.

• Wholesale Used Car Prices Decreased 1.6% in July. The July drop of 1.6% is an indicator of slowing wholesale price declines, at least when compared to the month-over-month losses we’ve seen since April and down 11.6% from a year ago.
  

• Millennials Are Losing the Home-Buying Edge to Baby Boomers. Based on the NAR’s data, 39% of home buyers are baby boomers, while only 28% were millennials. Millenials are losing bidding wars with all-cash buyers and are being priced out of the market. Almost four in ten sales were all-cash transactions.

🎧 Podcasts

• Private Equity Firms Offer Sweeteners In Struggle To Lure Reluctant Investors. They’ve all recently started offering investors some kind of incentive like discounts on management fees. Some firms are even offering big backers like pension plans and sovereign wealth funds a slice of the management fee. Source(0:53)

• Latin America's Central Banks Declare Victory In War On Inflation. Brazil actually started cutting rates last week. Chile did the same about a couple of weeks ago. Latin America started raising rates long before the Fed and Europe. In fact, a full year. Brazil was a full year before the Fed. And so reaping the benefit now, they’re able to start cutting because inflation has come right down. Source(5:16)
  

• Zoom Wants Employees Back in The Office. The company which became synonymous with remote work said that those living within 50 miles of a Zoom office are required to work there at least two days a week, as the company's leadership adopts a structured hybrid approach as the way forward. Source(7:18)
  

• This Week's Earnings Calendar Will Be Focused on Disney. Disney's earnings report will be drawing particular attention for insights into its plans for ESPN and its amusement parks amid ongoing challenges. Other notable earnings reports to watch out for include Lyft, UPS, Lucid, Roadblocks, and AMC. Source(23:22)