February 26th - March 1st, 2024
While artificial intelligence companies reported strong earnings last week, equities and bonds exhibited muted performance, contrasting with the significant rise in Bitcoin
The S&P 500 is down 0.30%, the Nasdaq is down 0.35%, and the Dow Industrials is down 0.52% WTD; following a lackluster earnings week and anticipation surrounding the upcoming PCE report, stock prices experienced minor decline
The 10-Yr U.S. Treasury yield has decreased -0.004% to a current yield of 4.242%, whereas the 30-Yr U.S. Treasury yield increased +0.011% to a current yield of 4.376%; Treasury and bond markets remain muted as investors focus on Bitcoin's volatility and upcoming inflation data
Crude oil prices decreased 0.05% to a current $78.22/bbl while bitcoin increased 18.98% to a current $61,355/coin; the SEC's approval of 11 spot-bitcoin ETFs and sustained retail interest are fueling renewed growth in Bitcoin
The S&P 500 and Dow industrials are set to close February with their strongest two-month starts since before the pandemic, with gains of 6.3% and 3.3% respectively, while the Nasdaq Composite is up 6.2% year-to-date [WSJ]
An unusually warm winter and roaring U.S. output have pushed natural-gas prices to some of the lowest levels of the shale era; that is good news for American consumers, who can look forward to lower utility bills [WSJ]
Nvidia is not just a stock-market favorite: It has also morphed into one of the most popular trades in the options market, with traders placing more than $20 billion in stock-options bets tied to the company last week [WSJ]
Polestar Automotive secured $950 million in financing from 12 banks, nearly enough to sustain the company until it becomes cash-flow positive next year [WSJ]
Macy's new CEO Tony Spring plans to close approximately 150 underperforming stores, about 30% of its fleet, over the next three years, while focusing on enhancing remaining locations and opening smaller versions of Macy's, Bloomingdale's, and Bluemercury stores [WSJ]
Investors are growing increasingly sanguine about the U.S. economy, piling into stocks and bonds; the extra yield that investors demand to hold investment-grade corporate debt over safer Treasurys is now hovering around some of the lowest levels since the 2008 financial crisis [WSJ]
The recent surge in Bitcoin and the strong performance of Japanese markets underscore the growing significance and dynamism of international markets
Bitcoin has surged to levels not seen in over two years, hitting an intraday high above $64,000 and reaching an all-time peak of $68,990.90 on November 10, 2021 [WSJ]
Following the recent launch of bitcoin exchange-traded funds (ETFs), several Wall Street firms, including BlackRock and Fidelity Investments, are now seeking approval to launch ETFs holding ether, the second-largest cryptocurrency [WSJ]
SRS Investment Management, heavily invested in Avis Budget Group, has faced substantial losses exceeding $1 billion as Avis shares plummet due to declining used car prices and increased vehicle write-downs [WSJ]
Warren Buffett was into Japanese stocks before their recent comeback – Buffett’s company, Berkshire Hathaway, revealed in August 2020 that it had built stakes of about 5% in five Japanese trading companies; Berkshire has since added to its positions in Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo, themselves conglomerates with wide ranges of businesses and investments [WSJ]
Despite overall M&A activity remaining subdued, positive year-on-year growth is observed in the energy, media, and infrastructure sectors
Swisscom is nearing a deal to buy Vodafone's Italian unit for $8.7B on a cash and debt-free basis [BBG]
Walt Disney and Reliance Industries signed an $8.5B deal to merge their media operations in India [FT]
ExxonMobil is considering a move (related to Hess’s 30% stake in Guyana’s Stabroek oil field) to break up Chevron's $53B acquisition of Hess [BBG]
Warner Bros. Discovery halted its merger talks with Paramount Global; Paramount has a $14B offer from media mogul Byron Allen [CNBC]
Philippine conglomerates Metro Pacific Investments and San Miguel began talks to explore combining their toll road businesses, which would form a combined entity worth up to $10B [BBG]
The FTC sued to block Kroger’s $24.6B bid to acquire supermarket chain Albertsons [WSJ]
$5.8B R1 RCM’s biggest shareholder New Mountain Capital is considering taking the healthcare services provider private [BBG]
KKR agreed to acquire Broadcom’s end-user computing division for ~$4B [WSJ]
France’s Cie. de Saint-Gobain will acquire Australian building materials maker CSR for $3B [BBG]
Agiliti’s majority owner THL Partners will take the medical inventory management services provider private in a deal that values the company at $2.5B [RT]
French billionaire Xavier Niel will acquire a 19.8% stake in Swedish telecom Tele2 from Nordic investor Kinnevik for ~$1.3B [BBG]
Recent developments across four key industries highlight continued regulatory hindrances and strategic shifts away from EVs into AI
Energy & Natural Resources
Oil and gas companies like Chevron, BP, and Devon Energy are increasingly investing in geothermal energy startups and projects, utilizing drilling technologies similar to those used in fracking to tap into underground heat for clean power generation [WSJ]
A new report indicates that the pressure on companies to reduce their carbon footprint is primarily coming from within their own organizations rather than from customers or regulators, a new report shows [WSJ]
BP Plc announces plans to invest approximately $1.5 billion in Egypt over the next few years to develop gas projects and drilling, following the formation of a gas-focused joint venture with Abu Dhabi National Oil Co. [RZ]
South32 has agreed to sell its Illawarra Metallurgical Coal business in Australia for up to $1.65 billion to Golden Energy and Resources and M Resources, with an upfront cash payment of $1.05 billion [WSJ]
Technology, Media, & Telecommunications
Google's Gemini faced backlash for generating ahistoric images and exhibiting bias by blocking depictions of white people and providing controversial responses to philosophical questions, prompting CEO Sundar Pichai to promise structural changes and a thorough review [WSJ]
Nvidia's recent earnings report highlights the growing willingness of companies to invest significantly in artificial intelligence, often with allocations directly from the CEO, signaling AI's prioritization at the highest levels of organizations [WSJ]
The company that helped create meme stocks is becoming a stock; Reddit filed to go public last week in an IPO that will resemble the platform itself—unusual, chaotic, and reliant on its opinionated users – planned for next month, Reddit’s public listing will be the first social media IPO since Pinterest in 2019 and the first major tech IPO of the year [CNBC]
Zoom shares jumped ~10% after beating Q4 earnings and revenue estimates on a boost from its AI services [CNBC]
Apple is reportedly canceling plans to build an electric car – your dreams of someday wearing an Apple Vision Pro inside an Apple car are dead; Bloomberg reported that the tech giant is scrapping the decade-old, multibillion-dollar effort to develop an autonomous EV and either laying off or shifting the department’s 2,000 employees to AI projects [BBG]
Healthcare & Life Sciences
UnitedHealth, owner of the nation’s biggest health insurer, is the target of an antitrust investigation by the Justice Department [WSJ]
Financial Services
Berkshire Hathaway reported a 28% rise in Q4 operating earnings and a record $167.6B cash pile; it also posted a record $97B YoY profit [CNBC]
Apollo co-founder Leon Black sold stock worth $172.8 million nearly three years after stepping down as its chief executive; based on the closing price of the stock, he now owns more than 43 million shares worth $4.8 billion in Apollo, whose stock has surged nearly six times since its market debut in 2011 [RT]
Outside of standard macroeconomic updates and M&A developments, Donald Trump’s continued victories and Sweden’s introduction into NATO have led news cycles
Donald Trump defeats Nikki Haley in her home state – Trump romped in another presidential primary, securing 60% of the South Carolina vote compared to just 40% for Haley, the former SC governor [AP]
Many Americans are adjusting their eating habits and lifestyles due to record food inflation, opting for cost-effective alternatives like rice and beans over meat, planning meals in advance, and growing more food in backyard gardens [WSJ]
Sweden is set to become a NATO member – Sweden will soon be the 32nd member of the military alliance, after Hungary’s parliament voted on Monday to allow the nation to join NATO following more than a year and a half of saying “you can’t sit with us” [AP]
After facing criticism over comments suggesting potential dynamic pricing, Wendy's CEO clarified that the company has no plans to raise menu prices during peak demand times [RT]
Smokers are switching to smoke-free products such as vapes in higher numbers than expected; if the trend continues, it will only take another three years for cigarettes’ share to slip below 50% [WSJ]
McKinsey-led think-tank advised China on policy that fed US tensions; U.S. republicans have called for McKinsey to be banned from federal contracts [FT]
Senate Minority Leader Mitch McConnell announced his decision to step down from his leadership role in November after nearly two decades, citing the need to transition to life's next chapter and acknowledging his advancing age [WSJ]
Cole LaCour
Mar 1, 2024
