June 22, 2023

📰 News Organizations

• Powell Expects Further Rate Hikes as Inflation Battle Persists. Fed Chairman Powell anticipates additional interest rate increases due to inflation levels being significantly above target. He acknowledges that achieving the desired inflation rate of 2% will require substantial efforts, while also noting some signs of labor market conditions loosening.

• FTC Files Lawsuit Against Amazon for Deceptive Prime Subscription Practices. The FTC accuses Amazon of employing manipulative tactics and complex cancellation procedures to mislead customers into signing up for Prime subscriptions. The agency alleges that Amazon utilized "dark patterns" to enroll users in Prime without their explicit consent.

• Top Credit Investors Anticipate Interest Rate Peak and US Recession. T. Rowe Price Group Inc., Allspring Global Investments, and AllianceBernstein Holding LP are among investors who believe that high-grade corporate bonds with longer maturities present attractive opportunities, reflecting their prediction of an approaching peak in interest rates and the potential for policymakers to reverse course due to a US recession.*

• Spotify Can Rally More Than 20%, Predicts Wolfe Research. Wolfe Research has upgraded Spotify's rating to "outperform," citing the expected growth in ad revenue and price increases as factors that will fuel the music streaming service's stock and contribute to revenue expansion.*

• SoftBank's Masayoshi Son Explores AI Development. SoftBank CEO Masayoshi Son has shifted his focus to creating his own artificial intelligence inventions, incorporating daily brainstorming sessions with ChatGPT and generating over 600 ideas.* Son aims to develop technology that enables AI programs to work synergistically with humans.

• JPMorgan Implements New Layoffs in Asia, Cutting 20 Investment-Banking Jobs. JPMorgan has initiated a fresh round of layoffs in Asia, reducing approximately 20 investment-banking positions amid subdued deal flows.* The cuts primarily affect junior staff at associate and analyst levels in sectors such as consumer, healthcare, and private capital markets

• FedEx Reports 10% Decline in Quarterly Sales Amid Ongoing Shipping Challenges. In its ongoing effort to reduce costs, FedEx is merging its Express and Ground delivery networks* into a unified business structure, resulting in reduced flight hours and grounded aircraft. The company is also implementing higher shipping rates to offset the decline in package volume.

• Gannett Files Lawsuit Against Google. Gannett alleges that Google and its parent company, Alphabet, maintain monopolies over the tools* utilized by publishers and advertisers to trade online ad space. The lack of competition in this space is believed to depress prices and limit the availability of high-quality news content for readers.

• Biden Refers to Xi as a Dictator After US-China Talks. President Biden openly referred to Chinese leader Xi Jinping as a "dictator," following a discussion between Secretary of State Blinken and Xi aimed at stabilizing tense relations* between the two countries. Biden's remark came while reminiscing about an earlier incident involving a spy balloon.

🐦 Twitter

• UK core inflation has risen to 7.1%, the highest in 31 years. “It is looking increasingly likely that it will require a recession to finally get the inflation genie back into the bottle.” Source.

• The surge in May housing starts ‘officially’ reported today mirrors what our home builder survey signaled several weeks back. Expecting similar pattern when the ‘official’ May new home sales results get released next week. Source.

• It might be that there’s some longer-term rate hike/regional bank/access to credit slowdown (the bear case) but the shorter-term recovery from the pandemic bullwhip recession is the dominant theme at the moment. Source.

• The Nikkei has been on a rather persistent upward trend ever since the Bank of Japan initiated their huge monetary base expansion. In addition to doing well in yen terms, it's been of the strongest stock markets in dollar terms since late 2012. Source.

• Rather swift recovery in homebuilder sentiment (blue) should help lead recovery in residential investment’s share of GDP (orange), but history shows recovery process takes time (especially given share has been cut by a full % point over past year). Source.

📓 Online Publications

• US Housing Starts Surge Most Since 2016. US housing starts experienced a remarkable surge, with a 21.7% increase to a 1.63 million annualized rate, surpassing expectations and indicating a positive outlook for residential construction, which is expected to contribute significantly to economic growth.

• Rivian Inks Deal to Use Tesla's Charging Network. For Rivian, which burned nearly $6.8 billion last year amid ongoing struggles to hit production goals, the move marks something of another slapdash effort to stay alive. For Tesla, it's a way to stay dominant in the EV space as its technology edge shrinks and competitors rapidly invade the market.

• Eli Lilly Acquires Biotech Firm Dice. With an estimated 7.5 million Americans affected by psoriasis, a prevalent autoimmune skin condition, Eli Lilly's acquisition of Dice, a biotech company specializing in psoriasis treatment, enhances their portfolio in the field of autoimmune diseases, which encompasses various conditions like Rheumatoid arthritis, Crohn's disease, and lupus.

🎧 Podcasts

• Singapore’s GIC accelerates US deals as China cools. Singapore’s sovereign wealth fund is accelerating its dealmaking in the US. The fund is called GIC. It told private equity and venture capital executives recently that it wants to increase exposure to US-focused funds, that’s according to FT sources. Like a lot of global investors, GIC is trying to expand beyond China. Source(0:39)

• Hunter Biden hit with federal tax and firearm charges. US President Joe Biden’s son has been hit with federal charges. Hunter Biden has agreed to plead guilty to failing to pay income tax. He’s also reached a deal with prosecutors over a separate charge that one accuses him of possessing a firearm while he was addicted to drugs. Source(1:25)

• The trials and tribulations of AI voice tech. Artificial intelligence voice technology is already being used for a bunch of things — audiobooks, video narrations, and customer service interactions. This technology is popular because it can do things like mimic the voices of political figures and celebrities. But because of that, it’s also running up against ethical and legal issues. Source(3:21)

• UPS Workers Vote to Strike. UPS union members have voted to authorize a potential strike if a contract agreement is not reached by the end of July 31st. With 340,000 unionized employees, this would be the largest employer strike in US history, posing significant implications for both the labor movement and the economy, as UPS handles 25% of parcels shipped in the country and contributes to an estimated 6% of the US GDP. Source(6:25)

• Systemic Bubbles and Inflationary Spirals. The current dynamic is marked by systemic bubbles resulting from fiscal abuses and delayed transfers, leading to inflationary spirals whenever addressed. This perpetual debt cycle dominates the global macro scene, shifting focus away from the business cycle and necessitating interventions such as energy subsidies and bailouts. Source(22:14)