June 26, 2023

📰 News Organizations

• Goldman Sachs Faces Writedown on Ill-Fated GreenSky Deal. Goldman Sachs is expected to incur significant losses due to CEO David Solomon's decision to sell the business after mounting losses and dysfunction in the consumer division prompted a strategic shift. However, bids for the installment-loan business are falling short of Goldman's expectations.

• Flavored E-Cigarette Sales Thriving Despite Federal Crackdown. Despite stricter regulations on flavors and marketing for tobacco products, e-cigarette unit sales experienced a significant increase of nearly 47% from January 2020 to December 2022. The surge in sales is driven by popular brands of disposable e-cigarettes that are not FDA-approved and are deemed illegal by the CDC.

• Global Economy Shows Signs of Cooling. The global economy is showing signs of cooling as strong demand for services weakens, indicating that rising borrowing costs are taking effect.* Surveys also reveal a slowdown in inflationary pressures, with businesses reporting reduced costs and prices, which will be welcomed by central banks.

• 3M Settles 'Forever Chemicals' Litigation for Up to $12.5 Billion. A tentative national class-action settlement was reached in the environmental fight involving PFAS chemicals in firefighting foam, with 3M agreeing to pay between $10.5 billion and $12.5 billion.* The settlement will cover public water systems across the U.S., marking a significant step towards resolving the landmark litigation.

• Goldman Sachs Implements Global Layoffs, Cutting 125 Managing Directors. Goldman Sachs is reducing its headcount and eliminating approximately 125 managing directors* worldwide, including some in investment banking, due to a decline in deal activity. This move aligns with similar actions taken by JPMorgan and Citi, who are also reducing their investment banking staff.

• SpaceX's Tender Offer Propels Valuation to $150 Billion. Elon Musk's SpaceX is conducting a tender offer, aiming to raise its valuation to approximately $150 billion by selling insider shares* at a price exceeding $80 per share. This offering represents an initial pursuit of $750 million and positions SpaceX as a valuable startup in the United States.

• YouTube Explores Online Gaming with Playables Feature. Google's YouTube is testing a new product called Playables,* allowing users to access and play games instantly on mobile devices and desktop computers. Playables will be available through the YouTube site on web browsers and the YouTube app on Android and iOS devices.

• IBM in Talks for Potential $5 Billion Acquisition of Apptio. IBM is engaged in discussions to acquire software company Apptio as part of its strategic expansion into automation technology.* The negotiations involve a potential purchase price ranging from $4.5 billion to $5 billion, with Apptio currently being owned by Vista Equity Partners.

• Homebuilding to Drive US Economic Growth Following Two-Year Decline. The Federal Reserve Bank of Atlanta's GDPNow tracker indicates that residential investment is poised to contribute 0.1% to the second-quarter GDP growth. With new construction activity reaching its highest level in over a year, the homebuilding sector is expected to bolster* the US economy.

🐦 Twitter

• Weaker finish to week with every sector down; Utilities in last place and sector continues to lag YTD (Energy worst, however) … small caps couldn’t hold onto any strength today and are seeing MTD lead slip (giving way to large-cap growth and NASDAQ). Source.

• Global Container Freight Rates (cost of 40′ Containers) are now at their lowest levels since 2019, down 88% from their peak. Source.

• AI is being pumped by the same cast of characters who have been pumping tech for the past decade, says Conor Sen. Source.

• The rental market downturn right now is about a reversal of pandemic household formation plus a glut of supply coming, but demographically the setup for renting isn’t nearly what it was in the 2010’s. Source.

📓 Online Publications

• Prologis Explores Technological Innovations in New Canadian Warehouse. Prologis, the warehouse giant, is introducing significant technological changes in its experimental project for a new warehouse in Canada. The company is experimenting with construction materials to create a more environmentally friendly warehouse, exploring innovative approaches to building new assets.

• Largest Drop in U.S. Existing Home Prices Since December 2011. Existing home prices in the U.S. experienced the largest decline since December 2011, while sales of existing homes increased by 0.2% in May, surpassing economists' expectations. Despite the rise in sales, the housing market still faces challenges compared to a typical spring season.

• U.S. Faces Shortage of 4.3 Million Homes, Urgent Need for Zoning Reform. Zillow estimates that there were 8 million "missing households" in the U.S. in 2021, while only 3.7 million housing units were available for rent or sale. Experts widely agree that loosening restrictive zoning laws* to facilitate more housing construction is crucial in closing the affordability gap.

• JPMorgan to Pay SEC Fines for Deleting Electronic Records. The SEC has fined JPMorgan Chase & Co. $4 million for allegedly deleting 47 million electronic records, including emails and instant messages between employees and customers. The SEC said JPMorgan accidentally deleted the records in the first quarter of 2018 as it was troubleshooting glitches.

🎧 Podcasts

• Global Inflation Keeps Rising. Central banks worldwide, including the Bank of England, European Central Bank, and central banks of Australia, Canada, Switzerland, Norway, and Turkey, are raising interest rates to address lingering inflation concerns. This coordinated response reflects a clear pattern of aggressive measures taken by central banks to combat global inflationary pressures. Source(8:23)

• Analysts remain skeptical about the performance of the commercial real estate sector in the next one or two years, particularly with regard to loan refinancing. Analysts believe that it is important to monitor the exposure of banks, especially smaller regional banks, as they hold a significant portion of commercial real estate loans. Source(13:56)

• Ford Gets $9.2Billion to Help US Catch Up With China's EV Dominance. A Ford joint venture to build three new electric vehicle battery plants is set to receive up to $9.2 billion USD in federal loans under a program backed by President Joe Biden. The loan would be the largest in the history of the Advanced Technology Vehicles Manufacturing program, US officials said. Source(1:16:36)

• Commodities Poised to Outperform Equity Market. The recent rebound in some commodities, excluding energy, suggests the possibility of outperforming the equity market in the next three to six months. Positive momentum indicators and the potential impact of weakening U.S. policy on the dollar support this trend, after a year that initially proved disappointing for commodities. Source(1:04:04)