September 1, 2023

📰 News Organizations

• Consumer Spending Surge Fuels Economic Growth. Household spending rose a robust 0.8% in July. Americans spent more on groceries, recreational goods, and vehicles, and on services such as housing, dining out, and insurance. The Core PCE Price Index, rose 0.2% in July.
  

• Dell Stock Surges After Earnings Blow Past Forecasts. For the fiscal second quarter that ended Aug. 4, Dell posted revenue of $22.9 billion, down 13% from a year ago, but up 10% sequentially. 20% of server orders were related to machine and AI applications.
  

• Broadcom Gives Downbeat Forecast, Signaling Sluggish Chip Demand. Revenue will be about $9.27 billion in the fiscal fourth quarter. AI boom is benefiting the company, but not at the same scale as Nvidia. The company is also contending with slower demand for smartphones.
  

• Amazon, Shopify Strike Deal to Open Amazon Logistics to Sellers. Amazon’s “Buy with Prime” will soon be among the tools available to Shopify’s merchants in the US. The program will roll out to all Shopify merchants who want to use Amazon’s logistics network by the end of September.
  

• Klarna Cuts Losses In First Half But Falls Short Of Profit. Klarna reported overall net operating income of $843.8 million, up 21% year-over-year. Klarna didn’t manage to report a profit though. The firm posted a net loss for the period of 2.1 billion Swedish krona, down 67%.

• Lululemon Sees Sales and Profit Jump 18%. The athletic apparel retailer now expects sales of $9.51 billion to $9.57 billion for the fiscal year. The results show that higher-income shoppers still spending on apparel and defy the broader retail slump.

🐦 Twitter

• Real estate investors have pulled back on home purchases to the tune of -45% year/year as of 2Q23, Aside from 1Q23, it marks the largest decline since 2008 per Redfin data. Source.
  

• Commercial property prices in the US are down 16% from their peak in March 2022. The Office sector has fared the worst, down 31%. Source.
  

• Nvidia insider trading alert. Mark Stevens, the 2nd largest Nvidia shareholder and board member since 2008, just sold more than $25 million worth of $NVDA shares. The company's CFO also sold roughly $2.3 million worth of shares. Source.
  

• China’s HY real estate index is down nearly 85% in 2 years. On top of this, Evergrande, China’s largest real estate company, just filed Chapter 15 bankruptcy. Inflation and high rates are hurting consumers around the globe. Source.
  

• We are now seeing the widest spread between mortgage rates and 30-year risk-free rates in history. The last times we experienced cyclically large spreads were in the tech bust, the global financial crisis, and the pandemic recession. Source.

📓 Online Publications

• Elon Musk’s X Obtains License To Enable U.S. Crypto Payments. With this authorization, X may store, transfer, or exchange digital assets within its platform, as well as maintain those assets on behalf of others. X is now well-positioned to introduce crypto payment services.

• Robinhood’s Crypto Wallet Adds Bitcoin and Dogecoin. The company is adding custody, send, and receive support for Bitcoin and Dogecoin, in addition to enabling Ethereum swaps. The added functionality comes in response to users requesting additional support.

• Coinbase Lists PayPal stablecoin PYUSD. Once a sufficient supply of this asset is established trading on the PYUSD-USD trading pairs will launch in phases. Support for PYUSD may be restricted in some supported jurisdictions.

• Binance to 'Gradually' End Support for BUSD Product. A decision to end support for BUSD has been expected since stablecoin issuer Paxos was ordered to stop minting the coin in February. Users have been asked to convert their BUSD into other assets by February next year.

• BTC Price Jumps to 2-week Highs on Grayscale vs. SEC Bitcoin ETF Win. The news upended a stale Bitcoin trading environment after snap losses in mid-August. The court’s decision could have a positive impact on the existing ETF applications, notably that of BlackRock.

🎧 Podcasts

• Fed Warned Goldman Sachs Over Oversight at Fintech Unit. US regulators are worried about Goldman Sachs and its relationship with financial technology companies. Goldman teams stopped signing on risky fintech clients after a warning from the Federal Reserve. Source(0:52)
  

• US Health Officials Urge Moving Pot to Lower-Risk Category. Leaders at the Department of Health and Human Services urged the DEA to ease restrictions on marijuana by changing to a Schedule III substance, like pain medications and testosterone. Source(7:30)
  

• Hurricane Idalia’s Multibillion $$$ Impact. The lack of available insurance and the high cost of insuring property in the state may mean some homeowners go without coverage, which can make rebuilding from a storm financially devastating. Source(3:28)
  

• The 2% Target Is Not Going Anywhere. There had been some calls to raise the target to 3%, but Fed Chair Jerome Powell has been adamant that the target will remain at 2% until the job is done. He has also refused to discuss any plans to reduce the Fed's balance sheet. Source(27:21)
  

• Forthcoming Recession and Inverted Yield Curves. Bob Murphy anticipates it to happen in late 2023 or early 2024, and discusses the complex factors affecting the economy like the inverted yield curve. The stability of the real estate and employment markets is noted, with potential changes predicted in the coming months. Source(23:10)