Morning News: May 27, 2024
Posted by Eddy Elfenbein on May 27th, 2024 at 7:04 am

How China Pulled So Far Ahead on Industrial Policy

BOJ Signals Room for Interest Rate Hikes After Price Norm Shift

ECB’s Lane Says Way Is Clear for Rate Cuts, With Inflation and Wage Rises on Downward Trend

Dollar Bulls Retreat as US Economic Print Cools, CFTC Data Show

Some Good News for Bond Traders Stuck in Fed Waiting Game

Crypto Traders Eye Ether Record, Rising Volatility From US ETF Hype

‘Bond King’ Bill Gross Warns Trump Would Worsen Deficits And Be ‘More Disruptive’ For The Bond Market Than Biden, Report Says

China Creates $47.5 Billion Chip Fund to Back Nation’s Firms

France Envisions AI Tent Big Enough for US, China and French Startups

Musk’s xAI Raises $6 Billion in Bid to Challenge OpenAI

Tesla Shareholders Advised to Vote Against Elon Musk’s Pay Package

Another Roadblock to the EV Transition: Personal Politics

Shares of China Evergrande’s EV Unit Soar After Liquidators’ Stake Sale Deal

An Oil-Patch Brawl Over a $53 Billion Megadeal Entwines the Legacies of Three CEOs

Vedanta Is Said to Weigh $1 Billion Share Sale as Soon as June

Lendlease Quits International Construction to Free $2.98 Billion

Why a California Plan to Build More Homes Is Failing

Astra, Daiichi Drug Extends Lives of Some Lung Cancer Patients

What Happened to Our Ad-Free TV?

The NCAA Has a $15 Billion Problem. Private Equity Can Help.

Reebok Isn’t a ‘Hobby’ for Shaquille O’Neal

Sneaker Rivals Race to Find the Next Super Foam

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Morning News: May 24, 2024
Posted by Eddy Elfenbein on May 24th, 2024 at 7:02 am

Russia, in New Push, Increasingly Disrupts Ukraine’s Starlink Service

Rich Investors Cheer Milei as Argentines Bear Brunt of Austerity

Nigerian Economy Grows at Slightly Slower Pace in First Quarter

Britain to World: Don’t Let What Happened to Us Happen to You

China Has a Plan for Its Housing Crisis. Here’s Why It’s Not Enough.

Why Biden Is Doubling Down on Trump’s China Tariffs

Central Bankers Should Acknowledge Blind Spots, Fed’s Mester Says

Atlas Shrugged as Bonds Steal Nvidia’s Thunder

U.S. Approves Investment Product Tied to Popular Cryptocurrency Ether

Kabosu, Shiba Inu Who Helped Define the Doge Meme, Dies at 18

Cathie Wood Sees a Great Depression-Like Search for Safety in the Stock Market

Carry Trade Is All the Rage Across Global Bond and FX Markets

The Rise and Fall of Simon Sadler’s Segantii, One of Asia’s Most Successful Hedge Funds

Citi, HSBC, Barclays Ramp Up Demands for Five Days in Office

Facing Possible Cash Crunch, Giant Real Estate Fund Limits Withdrawals

A Lender to Consumer Start-Ups Falters, Rattling Its Clients

Nvidia’s Huang Is Now Richer Than Every Member of Walmart’s Founding Family

How TikTok’s Looking for a Man in Finance Became a Viral Hit

Alibaba to Raise $4.5 Billion Through Convertible Bonds to Fund Buybacks

BHP’s Push to Woo Anglo Investors Hangs on South Africa

Novo’s Ozempic Slashes Risk of Death in Kidney Disease Study

Are University Athletes About to Earn a Big Payday?

U.S. Calls for Breakup of Ticketmaster Owner

Sony’s Entertainment Unit Syncs Up for Success, With or Without Paramount

Why a Shabby Luxury Brand Is Hard to Fix

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Morning News: May 23, 2024
Posted by Eddy Elfenbein on May 23rd, 2024 at 7:04 am

The Six Choke Points That Can Upend Global Trade

Will ‘Finland’s Achilles Heel’ Become a Problem for Europe?

Russia Says EU Will Feel ‘Full Measure’ of Retaliation Over Frozen Assets Plan

Eurozone Rebound Continues Apace as Germany Powers Recovery, Surveys Show

Turkey Holds Rates Again, Pledges Measures to Mop Up Liquidity

Singapore’s Economy on Track as Inflation Steadies, Trade Improves

Yellen Warns Israel Against Cutting off Palestinian Banks

Some Prominent Silicon Valley Investors Shift to the Right

What Trump 2.0 Could Mean for the Federal Reserve

Fed’s Inflation Debate Shifts to How Much Goods Prices Can Drop

Prices at the Pump Are Dropping Just in Time for Memorial Day Weekend

CFOs Lock in Savings with Interest-Rate Swaps Amid Uncertainty About Fed Cuts

Losses Pile Up in Top-Rated Bonds Backed by Commercial Real Estate Debt

JPMorgan CEO Jamie Dimon Says Can’t Rule Out ‘Hard Landing’ for the U.S., Stagflation Will Be ‘Worst Outcome’

JPMorgan Hunts for Private Credit Firm to Bulk Up in Hot Sector

Segantii Hedge Fund to Shutter Amid Insider Trading Charges

Hedge Funds Chip Away at China’s Dominance of Metals Market

TikTok Moves to Limit Russian and Chinese Media’s Reach in Big Election Year

Nvidia Stock Surges as Sales Forecast Delivers on AI Hopes

Xiaomi’s First-Quarter Profit, Revenue Beat Expectations

Some Mondelez Shareholders Say It’s Not Doing Enough on Russia

Hydrogen-Powered Private Jets Can Cut Emissions — If They Can Get Off the Ground

How Dodgers Billionaire Mark Walters’ Bet on India Ended in Disaster

How Taylor Swift’s Eras Tour Left Ticketmaster In Trouble

The Case for Japan’s Amazing Clothes-Drying Bathrooms

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Morning News: May 22, 2024
Posted by Eddy Elfenbein on May 22nd, 2024 at 7:04 am

Reagan’s Uncomfortable Question Confronts China’s Leader

China’s Housing Crash Could Set Back Millions of Promising Careers

Iran’s Center of Power Shifts From ‘Clerical Slippers to Combat Boots’

Indonesia’s Central Bank Stands Pat as It Keeps Eye on Rupiah, Inflation

Japan’s 10-Year Government Bond Yield Hits 1%, An 11-Year High

Japan’s Exports Rise for Fifth Straight Month

US Bonds Fall as Traders Look to Fed Minutes for Rate-Cut Clues

US Consumer Watchdog Will Apply Credit Card Rules to Buy Now, Pay Later Companies

Citi Fined $79 Million by UK Regulators Over ‘Fat-Finger’ Failures

What Do Students at Elite Colleges Really Want?

Even Advertisers Are Telling You to Get Off Your Smartphone

Some Corporations Seek to Silence ‘Trojan Horse’ Activists

Testing the Nvidia Boom

Nvidia Is the Final Hurdle for Mega Tech’s Earnings Victory Lap

Qualcomm Bets on AI to Knock Intel From PC Perch

China’s $10,000 EV Is Coming for Europe’s Carmakers

EU Car Registrations Jump on Growth in Major Markets, Extra Sales Days

Germany to Push for Stricter EU-Wide Climate Rules for Industry

Anglo’s Second Largest Investor Says BHP Proposal Needs Revising

Target Reports Another Sales Drop

Lululemon’s Product Chief Departure Adds to ‘Wall of Worry’

How the $17 Desk Salad Won

TV Networks Embrace Their Aging Audience With a New Mantra: Age Doesn’t Matter

Millennials are ‘Quiet Vacationing’ Rather than Asking their Boss for PTO: ‘There’s a Giant Workaround Culture’

Fraud Trial to Begin for Chinese Billionaire Who Allied Himself With America’s Right

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CWS Market Review – May 21, 2024
Posted by Eddy Elfenbein on May 21st, 2024 at 6:34 pm

(This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

The S&P 500 has closed higher 11 times in the last 14 sessions. What’s interesting is how small those three drops have been.

The largest loss of the three came on May 16 when the index fell just 0.30%. By historical standards, that’s not much. The second-worst drop came on May 13 when the S&P 500 lost a tiny 0.02%, but that doesn’t compare with the absolutely miniscule loss from May 8.

On May 8, the S&P 500 closed lower by 0.03 points. In percentage terms, the S&P 500 lost 0.0006%. The drop from May 13 was 41 times that of the loss from May 8, and the loss from May 8 was tiny to begin with.

If the stock market were to suffer May 8’s loss every single trading day for 10 years, the combined loss would still be less than 1.5%.

The good news is that the S&P 500 closed at another all-time high today of 5,321.41. The index is now up 11.56% for the year. The S&P 500 hasn’t had a daily loss of more than 0.25% since May 1. The Wall Street adage to “sell in May and go away” isn’t holding up well this year.

The market has been helped in recent weeks by an earnings season that was better than expected. We nearly have all the numbers for Q1 and the S&P 500 posted Q1 earnings growth of 5.36%. One month ago, Wall Street had been expecting growth of just 0.38%. The market beat very low expectations.

There’s growing concern over exactly where the Federal Reserve stands. In fact, I think it’s possible we may see the Fed split into two camps in the coming months.

Earlier today, Fed Governor Christopher Waller gave a speech to the Peterson Institute for International Economics in Washington. This is noteworthy because Waller has gained a reputation as one of the most influential Fed members, perhaps second only to Jerome Powell. He’s also seen as one of the more hawkish members of the FOMC.

In his remarks, Waller noted that inflation is indeed slowing down and, for the time being, no more rate hikes are needed. However, Waller said that he wants to see more solid data before he’s convinced that the Fed should start cutting rates. This view could be gaining strength within the Fed. It seems to be a bit odd to call for rate cuts as the stock market is rallying and inflation is above the Fed’s own target.

Waller conceded that some recent economic reports have been weak, such as retail sales and manufacturing data. Higher rates take some time to work, but they’re clearly having an effect. Waller also said that there are signs that the labor market is loosening.

Specifically, Waller said, “in the absence of a significant weakening in the labor market, I need to see several more months of good inflation data before I would be comfortable supporting an easing in the stance of monetary policy.” That’s clearly different from what Powell has been saying.

Waller said that the recent inflation report was a pleasant surprise, but it wasn’t enough to alter his view. The next jobs report will be out on June 7. For now, Wall Street still sees the Fed cutting rates in September, but if Waller’s view gains strength, those rate cuts could be off the table.

Silver: The Poor Man’s Gold

Last month, William Herbert Hunt passed away at the age of 95. Forbes estimated his net worth at $5.3 billion.

I mention Mr. Hunt’s passing not only because he was a man of great wealth but also because he was involved in one of the most spectacular investment schemes in recent history. Forty-five years ago, Mr. Hunt and his brother, Nelson Bunker Hunt, tried to corner the world silver market.

The scheme failed and the Hunts lost billions. In two months, the Hunts’ silver position, including futures, fell from $7 billion to negative $1.7 billion, or as Nelson Bunker put it, “A billion dollars ain’t what it used to be.” Tell me about it. In 1990, Herbert Hunt filed for bankruptcy.

Silver, often called “the poor man’s gold,” has rallied impressively in recent weeks. It’s currently trading around $32 per ounce. That’s up from $22 per ounce less than three months ago. Buying silver is like buying gold but even more so. Silver is almost like a natural 2X or 3X gold ETF.

Yet even after this rally, silver is still going for well below its Hunt-induced peak from 45 years ago. At its height, silver breached $50 per ounce.

Gold now trades at 75 times silver. During the early part of Covid, the Gold/Silver ratio reached 125. The Gold/Silver ratio has been an important ratio through history. Way back in antiquity, Plato mentioned that the ratio was 12-to-1.

In 1792, the U.S. Congress, at the advice of Alexander Hamilton, passed the Coinage Act of 1792. This was the government’s first attempt at price-fixing (and it wasn’t the last). In other words, Hamilton pegged the Gold/Silver ratio at 15. He wasn’t quite right and in 1834, Congress had to bump it up to 16.

Here’s the Gold/Silver ratio since 1990:

When the Hunts launched their plan, silver was around $6 per ounce. By early 1980, it rose to $50 per ounce. Time Magazine estimated the Hunts made between $2 billion and $4 billion in just nine months. To pull this off, they had to borrow zillions of dollars. At one point, it was estimated that they held one-third of the world’s silver. Tiffany took out a full-page article to denounce them.

The Hunt brothers were the sons of the legendary oilman, Haroldson Lafayette “H.L” Hunt, Jr. Hunt the senior was one of those people who’s called eccentric, but if he’d had less money, he probably would have been called something else.

To give you an idea, H.L. Hunt wrote a novel outlining his ideas for a utopia called Alpaca. I recall one person calling it 1984, but Big Brother is the good guy. After he died, the Hunts learned that their father had two other families.

Another brother was Lamar Hunt who was one of the most influential people in the development of modern football. He helped start the AFL and owned the Kansas City Chiefs. He was the person who came up with the name “Super Bowl.” Each year, the winner of the AFC title game is awarded the Lamar Hunt trophy in his honor.

The Hunt brothers were convinced that the Establishment was out to crush them, and they were right. The exchange changed the margin requirement which forced the brothers to put up much more collateral. They soon faced a $100 million margin call.

On March 27, 1980, the bottom fell out of the silver market. This is now known as “Silver Thursday.” The Hunts had to put up more money, but they couldn’t reach their margin requirement. The government was worried that Wall Street banks were so much in debt to the Hunts that if the Hunts went under, so would the banks. A silver panic could start a banking panic. With a margin call, you either put up more money or sell. There is no third option. Eventually, a consortium of banks offered a $1 billion line of credit to keep the banking system going.

The Hunts were wiped out. The brothers eventually become the models for brothers Randolph and Mortimer Duke in the movie Trading Places.

Hunt’s son Bruce said of his father, “Yeah, we took some hits. But his whole deal was: That’s the past. Let’s look forward. Let’s go back to what we do.”

That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Morning News: May 21, 2024
Posted by Eddy Elfenbein on May 21st, 2024 at 7:02 am

Spain to Fully Withdraw Ambassador From Argentina

ASML and TSMC Can Disable Chip Machines If China Invades Taiwan

U.S. Seeks to Join Forces With Europe to Combat Excess Chinese Goods

Botswana Seeks Brazil, Australia Grain as El Niño Withers Crops

Is Net Zero by 2050 Still Possible? Yes, But It’ll Cost 19% More

Power Grids Can No Longer Be Tomorrow’s Problem

Yellen Warns German Banks to Boost Compliance with US Sanctions on Russia

Global Government Bonds Face Period of Temporary Calm

FDIC Chair Says He’ll Leave Job After Toxic Workplace Report

FDIC Fight Exposes Grubby Politics of Regulation

This Man Did Not Invent Bitcoin

What a World Growing Older Fast Means for Investing

Conservative Investor Pulls JPMorgan Resolution, Cites Changes Addressing ‘Politicized Finance’

US Tech Battle With China Not Helping New Grads

Scarlett Johansson Said No, but OpenAI’s Virtual Assistant Sounds Just Like Her

Scarlett Johansson and OpenAI’s Trust Issues

Nvidia Earnings Could Spark $200 Billion Swing in Shares, Options Show

Google’s Moonshot Factory Falls Back Down to Earth

The Battle Over Project Management Software Is Getting Personal

Real-Estate Downsizing Finally Comes for Your Pharmacy

One Dead, Others Injured as Singapore Airlines Flight Hits Turbulence

Lowe’s Quarterly Sales Decline Slower than Expected on Steady Demand for Small Repairs

Macy’s Reports Another Drop in Sales

The Siblings Who Changed How We Party

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Morning News: May 20, 2024
Posted by Eddy Elfenbein on May 20th, 2024 at 7:05 am

Chinese Firms Face Authoritarianism at Home and Hostility Abroad

The U.S. Finally Has a Strategy to Compete With China. Will It Work?

Senate Inquiry Finds BMW Imported Cars Tied to Forced Labor in China

Li Auto Profit Fell on Higher Operating Expenses

Putin’s Pipe Dream Exposes China’s Energy Advantage

Djibouti Emerges as a Rare Hub of Stability in Red Sea Turmoil

Europe Wants to Build a Stronger Defense Industry, but Can’t Decide How

Raisi Crash Exposes Dangers of Iran’s Threadbare Aviation Fleet

Gold Climbs to Record on Fed Rate-Cut Hopes

Speedier Wall Street Trades Are Putting Global Finance On Edge

Japan’s Inexperienced Investors Fall for Scams ‘Like Babies’

JPMorgan Raises 2024 Interest Income Forecast to $91 Billion

Millennium Covets Citadel-Size Commodities Gains, Just Not the Risk

Archegos Risk Head Lied to Wall Street. Now He’s a Star Witness

Renting Forever and Trying to Create a Strong Financial Future

The Cooling in Apartment Rents Won’t Last Long

Musk Effect Drives Spread of Supersize CEO Pay Packages

Google Attacks Microsoft Cyber Failures in Effort to Steal Customers

Apple Puts Rival App Stores Behind a Tall Barricade

Inside Oracle’s Deadly Gamble on Cerner and Electronic Health Records

Quantum Computing Gets Real: It Could Even Shorten Your Airport Connection

What We Lose When ChatGPT Sounds Like Scarlett Johansson

This Nintendo Game Emulator Shows What a Freer iPhone Looks Like

These 10 Startups Are Shaking Up the Race Into Space

Red Lobster Chain Goes Bankrupt After Unlimited Shrimp Deal

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Morning News: May 17, 2024
Posted by Eddy Elfenbein on May 17th, 2024 at 7:03 am

How Tiny Djibouti Said ‘No’ to the US Over Houthi Red Sea Attacks

US Biofuel Markets Are in Turmoil Over Imports From China

China Attempts to End Property Crisis With Broad Rescue Package

Global Equity Funds Draw Inflows on Rate Cut Hopes, Soft US Economic Data

Supreme Court Rejects Challenge to Consumer Watchdog’s Funding

Despite Consumer Watchdog’s US Supreme Court Win, Agency Powers Still on Chopping Block

US Money-Market Assets Rise to Highest Level in a Month

BlackRock’s Rieder Says Cut, Not Hike, Would Tame US Inflation

Goldman Sachs Looks to Expand Private Equity Credit Lines as Dealmaking Picks Up

Revival of Meme-Stock Frenzy Points to a Frothy US Stock Market

GameStop Shares Retreat on Preliminary 1Q Report

Taiwan, on China’s Doorstep, Is Dealing With TikTok Its Own Way

Microsoft’s Mistral AI Pact Avoids UK Antitrust Scrutiny

CoreWeave Raises $7.5 Billion in Debt for AI Computing Push

Reddit Shares Jump After OpenAI Partnership Deal

Brookfield Plans to Invest $500 Million in Leap Green

Influencers Reap $1 Billion Fortune With Brazil Pharma Business

The Medicare Bubble Has Burst

Walgreens and CVS Are Trying to Fix America’s Flailing Pharmacies

Farmers Are Breeding Hybrid Dairy Cattle to Sell for Meat

The Food Court Is Back

Red Lobster Is in Trouble

Gen Z Is Fueling a Cassette Tape Comeback

FIFA Amends Rules to Allow Headquarters to Move From Zurich

Retailers’ Shelves Are Attractive Again. At Least for Skechers

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Morning News: May 16, 2024
Posted by Eddy Elfenbein on May 16th, 2024 at 7:06 am

Japan’s Economy Shrinks Again as Inflation Hits Consumers’ Pocketbooks

US Efforts to Reshape Global Supply Chains Gather Pace in Asia

U.S. Blocks Imports From 26 More Chinese Companies Over Forced Labor Concerns

Istanbul Pushes Ahead With IPO Plan for $10 Billion Gas Grid

Big Bets on Gas Demand Show Fuel Is Far From Fading

Milei Targets Labor Law That’s Set to Hand Banker $10 Million Severance

ECB Says Risks to Financial Stability Have Eased as Threat of Recession Recedes

America Is Still Headed for a Soft Landing

In About-Face, Wall Street’s Big Donors Warm to Trump

Silicon Valley Stirs Back Into IPO Life

Buffett’s Berkshire Reveals $6.7 Billion Stake in Insurer Chubb

The GameStop Mania Is Back. Is Wall Street Ready This Time?

Walmart Sales Surge as Wealthier Shoppers Flock to Retailer

Walmart Beat Inflation. Now It Must Offer More Than Deals

JD.com Beat Estimates With Higher Profit, Sales

Baidu Posts Quarterly Beat, Helped by AI Pursuits

Neuralink’s First Patient: ‘It Blows My Mind So Much’

E.U. Investigates Meta Over Addictive Social Media Effects on Children

Netflix and the N.F.L. Sign a Three-Season Deal

Education Dept. Extends Deadline to Consolidate Loans for Forgiveness

Florida and Texas Show Signs of Home Prices Falling

U.A.W. Effort to Organize Mercedes Workers in Alabama Has High Stakes

Singapore Air Staff Get Eight Months’ Salary Bonus After Record Profits

Why It’s So Hard to Track the Fashion Industry’s Emissions

Unilever to Keep Making Russian Ice Cream Even After Spinoff

Beer Sellers Use a Loophole to Break Into Weed Drinks Market

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Morning News: May 15, 2024
Posted by Eddy Elfenbein on May 15th, 2024 at 7:07 am

China Considers Government Buying of Unsold Homes to Save Property Market

Qatar Says New Global LNG Projects Will Be Needed After 2030

Exxon Feels the Heat as More Investors Assail Climate Conduct

Copper Short Squeeze in NY Prompts Rush to Send Metal to US

BHP Shareholders See Room for One More Sweetened Anglo Bid

Thyssenkrupp Again Cuts Its Fiscal Year Sales and Profit Forecasts

Hapag-Lloyd Lifts Lower-End of Guidance as Red Sea Situation Raises Rates

European Development Bank Flags Higher Risk Premium Due to Lingering Cost of Russia’s War

Were Those Hot Inflation Numbers Just a Bad Dream?

NYCB Shares Rise as Loan Sale to JPMorgan Bolsters Liquidity

Bridgewater’s CEO Warns Investors on Overconfidence

Overdue Bills Are Rising With US Debt Delinquencies, Fed Survey Shows

Is Roaring Kitty the Internet’s Warren Buffett?

Are We Ready for AI That Sounds Like a Person?

Silicon Valley Is Searching for Its Piece of the AI Action

The Old-Fashioned Library at the Heart of the A.I. Boom

Elon Musk’s Big AI Contradiction

Tesla Board Rallies Retail Investors to Vote for Musk’s $56 Billion Pay Package

Why the Hybrid Boom Is Funding EVs

‘Stroads’ Aren’t Streets. They Aren’t Roads. And They Don’t Work

Why Is Car Insurance So Expensive?

Allianz Backs 2024 Guidance After Profit Jump

Kimberly-Clark Taps New Chief Growth Officer as It Heads Into Restructuring

The DNA Test Delusion

How MSNBC’s Leftward Tilt Delivers Ratings, and Complications

Burberry Profit Falls as Soft Demand, Turnaround Bite

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