July 24, 2023

📰 News Organizations

• Big Regional Banks Reported Stable Deposits. Despite experiencing sharp profit declines, regional banks like KeyCorp, Western Alliance Bancorp, and Zions Bancorp found solace in stable or higher deposits compared to the first quarter, countering the earlier trend of customers withdrawing funds from the industry.

• Nasdaq 100 Reshuffle Sparks $2.4 Trillion Options Event with a Twist. The special index rebalance, aiming to lessen the dominance of technology megacaps, is expected to increase the presence of smaller members, potentially leading to approximately $60 billion in two-way transactions, according to a JPMorgan Chase & Co strategist's estimate.

• Cathie Wood's Ark Innovation ETF Completely Exits China. Tech investor Cathie Wood's Ark Innovation ETF, valued at nearly $9 billion, has divested from stocks generating revenue from China, streamlining its portfolio towards favored bets like Tesla, Coinbase, Roku, and Zoom during the market downturn.

• Airline Cargo Revenue Plummets, Indicating Positive News for Travel Recovery. Delta, United, and American reported year-over-year declines of about 40% in their second-quarter cargo revenue, signifying an upswing in travel demand, particularly for international trips, as airlines ramp up flying and reduce air freight rates.

• KKR to Acquire Chemical Maker Chase in $1.3 Billion All-Cash Deal. Private equity firm KKR & Co will acquire chemical maker Chase in a $1.3 billion all-cash deal, bolstering its holdings in the chemical specialty sector. The acquisition, subject to shareholder and regulatory approvals, is anticipated to close in Q4 2023.
  

• Dream On Me Snagged 11 Buy Buy Baby Store Leases At Auction. Dream on Me Industries, a long-time supplier to Buy Buy Baby acquired the rights to 11 of the chain's leases for $1.17 million. The New Jersey-based baby products retailer, which sells cribs, strollers, and other infant goods, previously acquired Buy Buy Baby's intellectual property for $15.5 million.

🐦 Twitter

• Rice prices have surged to multi-year highs. And with global rice inventories projected to fall to 6-year lows in the next 6 months, prices could go even higher. Source.
  

• Monetary and fiscal authorities are currently running unsustainably divergent policies. The simultaneous rise in the cost of debt by central banks and their deliberate reduction of balance sheet assets is entirely incongruous with the growth in government debt. Source.
  

• For context, through June, builders are selling homes in 2023 at a pace year to date that's 28% higher than more 'normal' years of 2014-2019. Source.
  

• Rents in New York City are reaching record highs with the median listing price in Manhattan now at $4,396 per month as of June. New York City’s median asking rent, including all five boroughs reached $3,750 in June up 7.1% YoY according to data from StreetEasy. Source.
  

• Last week ended with strong day for YTD laggards like Utilities, Health Care, and Energy; YTD winners took a breather again and continue to underperform MTD. No decisive move for small caps relative to large caps, but Russell 1000 Value pulled ahead while S&P 500 was nearly flat. Source.
  

📓 Online Publications

• Musk Says Tesla Would Buy More Nvidia AI Chips. Turns out that Tesla's new Dojo data center will be using plenty of Nvidia GPUs. Tesla needs to process an enormous amount of real-world footage recorded by its cars on the road. Musk clarified that Dojo will use a blend of Nvidia and custom-designed D1 chips. It's implied that Tesla's own D1 chip isn't as good as Nvidia's yet.

• FOMC Preview: Likely 25bp Rate Hike. Most analysts expect the FOMC to raise rates 25 bps at this meeting, increasing the target range for the federal funds rate to 5‑1/4 to 5-1/2 percent. The key question is how strongly Chair Powell will nod toward the “careful pace” of tightening he advocated in June and the Fed's path of policy into September and beyond.

• A Slower Pace Of Home Sales Hits The One-Year Mark. Homes have officially spent a longer amount of time on the market for an entire year. For the week ending July 15, homes spent 10 extra days on the market compared with this time last year. This marks 52 weeks that it’s taken longer to sell a home than the same time a year prior.

🎧 Podcasts

• Nasdaq Drops More Than 2% After Netflix And Tesla Results Disappoint. Disappointing results and commentary for Tesla (TSLA) and Netflix (NFLX) weighed on the tech-heavy index. That appeared to dampen hopes that techs could give a boost to the second quarter earnings season, which got off to a good start with upbeat reports from Wall Street heavyweights. Source(1:02)
  

• The S&P 500 Transformed Into a Tech-Heavy Index. Jared Dillan says that the S&P 500 has transformed into a tech-dominated index, with over 40% comprising tech-related companies, communication services with Meta and Google, and consumer discretionary with Amazon and Tesla. As a result, any potential rotation away from tech stocks could lead to a decline in the overall index. Source(3:58)
  

• Rally in Equities and the Risk of Recession. Andreas Steno Larsen believes that for an ultimate recession to occur, there needs to be a pickup in economic activity, a shift toward a bull market, and a relaxed attitude toward risks. He thinks that the ongoing equity rally may contribute to the laid-back attitude and positioning that could potentially lead to a recession. Source(16:47)