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mXa Roundup - Volume 25

February 19th - 23rd, 2024

Capital markets enjoyed a mostly positive week, boosted by strong AI earnings and expectations of peak interest rates

  • The S&P 500 is up 1.31%, the Nasdaq is up 0.73%, and the Dow Industrials is up 1.38% WTD; a week of neutral economic economic activity mixed with strong Nvidia earnings have propelled equities higher across the board

  • The 10-Yr U.S. Treasury yield has increased +0.050% to a current yield of 4.331%, whereas the 30-Yr U.S. Treasury yield increased +0.031% to a current yield of 4.468%; Federal Reserve meeting minutes suggest a delayed push for cutting interest rates in 2024

  • Crude oil prices increased 3.81% to a current $78.85/bbl while bitcoin increased 0.01% to a current $51,667/coin; continued geopolitical conflict with a confirmed interest rate peak from the Federal Reserve have supported oil prices

  • Nvidia shares rose ~9% after beating Q4 earnings and revenue estimates and forecasting better-than-expected Q1 sales, even against elevated expectations for growth [CNBC

  • Rivian shares plunged 15% after forecasting full-year EV production that widely missed estimates and announcing plans to cut 10% of its workforce [CNBC

  • Warren Buffett's Berkshire Hathaway has seen its cash reserves grow steadily for five consecutive quarters, reaching a record $157.2 billion by September's end, with investors eager to learn Buffett's plans for the surplus in the upcoming annual report [WSJ]

  • Japan's Nikkei Stock Average reached a new intraday record high, surpassing the previous milestone set over 34 years ago during the country's recovery from a historic economic bubble burst [WSJ]

  • Saudi Arabia has been a conveyor belt of flashy spending plans over the past year – it is all getting rather expensive; the country’s sovereign-wealth fund last month said its cash levels as of September had fallen by roughly three-quarters to about $15 billion, the lowest since December 2020 [WSJ]

Japan celebrates a 34-year return to equity highs, while China faces a different reality, but recent signs suggest a potential rebound

  • After three consecutive years of decline, China's CSI 300 index showed signs of recovery, closing up 1.35% and marking the first time it had entered positive territory since the beginning of 2024 [WSJ

  • Albemarle's plans for a $1.3 billion lithium plant in South Carolina, hailed as transformative for the state's electric-vehicle industry, have been hindered by a crash in battery metal prices and a slowdown in EV sales growth [WSJ]

  • China’s economic malaise has pushed policymakers and state-owned banks to attempt an escalating series of remedies – their latest attempt: a surprisingly aggressive cut to a key lending rate [WSJ]

M&A activity continues to remain mixed, while developments within energy, tech, and data science prove to be encouraging

  • Walmart agreed to acquire TV maker Vizio for $2.3B to grow its high-profit ad business [CNBC]

  • US energy firm Chord Energy will acquire Canada's Enerplus in a cash-and-stock deal that will create an $11B combined entity [RT

  • French software company Axway began potential discussions to acquire most of Sopra Banking Software activities from Sopra Steria in a $357M deal [RT

  • S&P Global will acquire research platform Visible Alpha from a consortium of investment banks for over $500M [BBG

  • Shares of Discover jumped 11% in premarket trading after the news that the credit-card lender would be bought by Capital One for more than $35 billion [WSJ]

  • Occidental Petroleum is exploring a ~$20B sale of natural gas-focused pipeline operator Western Midstream Partners [RT]

  • Investment group RedBird IMI agreed to acquire film production company All3Media from Warners Bros. Discovery and Liberty Global for $1.4B [BBG

  • Gabon’s state-owned Gabon Oil Company agreed to acquire Carlyle's Assala Energy for $1.3B, preempting a $1.3B sale to France's Maurel & Prom [RT

  • Siberian gold miner Mangazeya Mining will acquire precious metals producer Polymetal International’s Russian assets for ~$3.7B [FT

  • PE firms Stone Point Capital and General Atlantic will acquire HireRight Holdings in a deal valuing the employee-screening company at a $1.7B EV [WSJ]

Recent developments across four key industries highlight AI’s influence, the importance of semiconductors, and Ozempic usage surge

Energy & Natural Resources

  • Glencore's adjusted earnings before interest, taxes, depreciation, and amortization dropped to $17.10 billion from $34.06 billion, largely due to decreased coal prices following Russia's invasion of Ukraine, leading to a significant decline in earnings from coal assets [WSJ

  • The opening of Canada's expanded Trans Mountain pipeline, adding 590,000 barrels-a-day of takeaway capacity, is expected to impact U.S. refiners differently depending on their location [WSJ]

  • Benchmark Energy II is acquiring upstream assets from Revolution Resources, expanding its portfolio in the Midcontinent with approximately 140,000 net acres and 470 operated producing wells in the western Anadarko Basin [HE

  • Polymetal International is selling its Russian business for approximately $3.69 billion due to the risks posed by Russia's invasion of Ukraine, with concerns including nationalization and property expropriation [WSJ]

Technology, Media, & Telecommunications

  • Elon Musk announced that a patient implanted with Neuralink's brain technology can control a computer mouse solely through their thoughts, indicating a successful recovery with no adverse effects [CNBC

  • Nokia and Nvidia have partnered to develop AI solutions for mobile networks, with Nokia using Nvidia processors alongside its software to explore the potential of AI in transforming the telecommunications industry [WSJ

  • Japan is investing $67 billion in an ambitious effort to revitalize its semiconductor industry and reduce its dependence on foreign chip manufacturers amid escalating tensions between the US and China [BBG

  • Palo Alto Networks, the cybersecurity company, cut its revenue outlook for the full year – shares plunged more than 20% in premarket trading on Wednesday [WSJ]

Healthcare & Life Sciences

  • China, facing the world's largest obesity problem with 200 million obese adults and 400 million overweight individuals, is witnessing a surge in the use of weight-loss drugs like Ozempic, despite its intended use for Type 2 diabetes treatment [WSJ

  • Shares dropped 20% premarket on Wednesday after Teladoc Health’s outlook for the current quarter and 2024 overall missed Wall Street's expectations [WSJ]

  • Parents across the U.S. are struggling to find doses of Beyfortus, a new monoclonal antibody that reduces infants' chances of serious illness from respiratory syncytial virus (RSV), with many facing weeks or months of searching without success [WSJ]

Financial Services

  • Amazon will replace Walgreens Boots Alliance in the Dow Jones Industrial Average next week, leading to a 1.3% rise in Amazon's shares and a 3% dip in Walgreens [RT

  • It wasn’t long ago that Deutsche Bank was synonymous with banking scandals, money laundering and controversial clients – Christian Sewing, its chief executive, has pulled it back to firmer ground [WSJ

  • Nvidia's fourth-quarter results demonstrated robust demand for AI systems, with sales more than tripling and earnings surging more than eightfold, exceeding analyst expectations and indicating the ongoing strength of the AI boom [WSJ]

Outside of standard macroeconomic updates and M&A developments, lawsuits abound; the FTC and state representatives are blocking mergers, FuboTV is suing Disney and Fox, and the SEC is charging a biotech executive with insider trading

  • The US Federal Trade Commission and a coalition of states are preparing to file a lawsuit to block the merger between Kroger Co. and Albertsons Cos., with the suit expected to be filed by February 28 [BBG

  • FuboTV has filed a lawsuit against Disney, Fox, and Warner Bros. Discovery over their joint venture, alleging that it will severely suppress competition in the U.S. sports-focused streaming market [CNBC

  • The SEC is pursuing an insider trading case against biotech executive Matthew Panuwat for buying options on a rival company's stock ahead of an acquisition announcement involving his employer [WSJ]

  • The Commerce Department said on Tuesday that it will send $1.5 billion to chipmaker GlobalFoundries to help it build a new factory near Albany, NY, and expand semiconductor production in Vermont; it’s the largest grant yet from the $39 billion piggy bank established by the 2022 CHIPS Act to bolster domestic chip manufacturing with direct subsidies [AP]

  • War causes Israel’s economy to shrink by nearly 20%; Israel’s GDP contracted by 19.4% on an annualized basis in the final quarter of 2023, far more than forecast, as the country’s economy buckled following Hamas’s Oct. 7 attack and its ensuing war in Gaza [FT]

  • U.S. consumers are spending about the same share of their disposable personal income on food as they did in 1991, when households were still dealing with steep food-price increases following an inflationary period during the 1970s [WSJ]

  • The FBI helped take down the world’s most infamous cybercriminal group; an international operation led by the FBI and the UK’s National Crime Agency dealt a major blow to the ransomware gang LockBit, arresting two people in the US and two others in Poland and Ukraine, while charging two more Russian nationals [RT]

  • The Biden administration announced the cancellation of $1.2 billion in student debt for approximately 153,000 borrowers who have been repaying relatively modest loans for over a decade [NBC]

Cole LaCour

Feb 23, 2024

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