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mXa Roundup - Volume 38

May 20th - 24th, 2024

Stock markets will be closed on Memorial Day; Nvidia's market capitalization soared to $1 trillion while utilities saw substantial stock market gains due to their role in powering AI data centers

  • The S&P 500 is down 0.66%, the Nasdaq is up 0.28%, and the Dow Industrials is down -2.12% WTD; historical data suggests that between Memorial Day and Labor Day, U.S. stock indexes typically rise, with gains seen in the S&P 500, Dow Industrials, and Nasdaq Composite

  • The 10-Yr U.S. Treasury yield has increased +0.092% to a current yield of 4.479%, whereas the 30-Yr U.S. Treasury yield increased +0.028% to a current yield of 4.582%

  • Crude oil prices decreased 2.53% to a current $76.93/bbl while bitcoin increased 1.17% to a current $67,709.90/coin

  • Nvidia, the chip maker, joined the prestigious group of companies with a $1 trillion market capitalization, propelled by a $221.2 billion increase in market value on Thursday, marking the second-largest daily gain ever recorded [WSJ

  • Microsoft's Build conference highlighted its focus on hardware, unveiling new Surface devices integrated with generative AI capabilities and Qualcomm Snapdragon processors, aiming to challenge Apple's Mac computers [WSJ

  • Utilities have emerged as a surprising stock market winner this spring, with their shares climbing significantly as they are increasingly seen as a key supplier for energy-hungry data centers powering the AI boom [WSJ

  • Jamie Dimon, CEO of JPMorgan Chase, has indicated that he will likely step down within five years, a timeline shorter than previously suggested, and may stay on as chairman [WSJ]

  • The Vix, reflecting market volatility, has reached historic lows across various time frames, signaling widespread investor complacency despite potential risks such as a contentious election and economic uncertainties [WSJ]

Homeowners face rising insurance rates due to costly reinsurance policies, alongside copper prices hitting record highs driven by increasing demand influenced by long-term trends like AI

  • Homeowners in disaster-prone areas like Houston are facing skyrocketing insurance rates and reduced coverage due to increased costs of reinsurance policies 

  • Home sales dipped for the second consecutive month in April, falling below economists' expectations due to high mortgage rates and soaring home prices, which have also led to a shortage of available properties [WSJ]

  • Last week's surge in investor interest in meme stocks like GameStop led to a significant increase in off-exchange trading, with a record 51.9% of shares traded on Thursday occurring outside of public stock exchanges [WSJ]

  • Copper prices surged to a new high, driven by growing demand influenced by long-term trends such as artificial intelligence, nationalistic industrial policies, and green-energy investment [WSJ]

M&A activity continues to remain depressed, although developments within energy, healthcare, and data science prove to be encouraging

  • Miner Anglo American agreed to enter talks with larger rival BHP Group after rejecting a third proposal worth ~$49B [BBG

  • ExxonMobil and Shell are among energy giants evaluating bids for a up to 40% stake in Galp Energia's major oil field offshore Namibia, which could be worth $20B [BBG]

  • First Abu Dhabi Bank is in advanced talks to buy Turkish conglomerate Koc Group's 61.2% stake in Istanbul-based lender Yapi Kredi for ~$8B [RT]

  • Warburg Pincus and Singapore’s Temasek agreed to acquire independent insurance intermediary Specialist Risk Group in a $1.27B deal [BBG

  • Regional lender SouthState will acquire smaller rival Independent Bank Group in a ~$2B all-stock deal [RT

  • Biogen agreed to acquire Human Immunology Biosciences for up to $1.8B, with a $1.15B payment upfront [BBG

  • Information security company CyberArk will acquire cybersecurity firm Venafi from PE firm Thoma Bravo in a $1.54B cash-and-stock deal [RT

  • Logistics firm Saltchuk Resources, the largest shareholder of Overseas Shipholding, will acquire the liquid bulk carrier in a $950M all-cash deal [WSJ

  • A consortium including a Hard Rock Hotels & Resorts is considering a bid for $864M troubled Australian casino operator Star Entertainment [BBG

  • Energy company Phillips 66 agreed to acquire midstream company Pinnacle Midland from PE firm Energy Spectrum Capital for $550M in cash [RT]

Recent developments across four key industries highlight U.S. gasoline prices declining, tech companies investing billions in AI infrastructure, and a Citigroup trader's typing error causing a $444 billion sell-off of shares

Energy & Natural Resources

  • Gasoline prices in the United States are declining, reaching $3.58 per gallon on average, expected to ease inflation concerns, boost consumer sentiment, and potentially reduce summer driving expenses [WSJ]

  • Three NGOs and climate survivors are suing TotalEnergies SE's board and major shareholders in a Paris court, alleging their decisions caused climate-induced harm [RZ

  • U.S. crude oil inventories rose by 1.8 million barrels, surpassing expectations, while gasoline stocks fell by 945,000 barrels, with refinery capacity utilization reaching 91.7% for the third straight week and crude oil production remaining steady at 13.1 million barrels per day [WSJ]

Technology, Media, & Telecommunications

  • Nvidia's stock soared by 9.15% following a robust quarter, yet emerging threats in the AI market, including competition from rivals producing their own chips and shifts in AI model deployment, pose challenges to its dominance [WSJ]

  • Big Tech companies like Microsoft and Amazon are investing billions of dollars in AI infrastructure projects worldwide, with plans to spread their investments across various international markets [WSJ

  • South Korea has unveiled a $19 billion support package aimed at bolstering its semiconductor industry to compete with international rivals amid surging demand for advanced chips [WSJ

Healthcare & Life Sciences

  • AstraZeneca announces plans to construct a $1.5 billion manufacturing facility in Singapore, aimed at bolstering its global supply of cancer treatments, particularly antibody drug conjugates [WSJ

  • Hims & Hers Health saw a surge in its stock price after announcing the addition of injectable weight-loss drugs to its telehealth platform, providing patients with broader treatment options [WSJ

  • Pfizer initiates a multi-year cost reduction program targeting operational efficiencies, network restructuring, and product portfolio improvements, with the initial phase projected to yield around $1.5 billion in savings by 2027 [WSJ]

Financial Services

  • Citigroup agreed to pay £78 million in fines to U.K. regulators after a trader's typing error led to a $444 billion sell-off of shares, causing a brief "flash crash" in European stocks [WSJ

  • Regulators may slash the proposed increase in capital requirements for large banks by half, potentially saving them tens of billions of dollars, as significant changes are under consideration [WSJ

Outside of standard macroeconomic updates and M&A developments, Ebrahim Raisi’s death, paying college athletes directly, and another Boeing incident have led news cycles

  • A Singapore Airlines flight from London to Singapore encountered severe turbulence, resulting in one passenger's death and injuries to at least 30 others aboard the Boeing 777-300ER [WSJ

  • The NCAA and five major athletic conferences reached a $2.77 billion settlement in a class-action lawsuit, allowing college athletes to receive direct payments from their schools for the first time [WSJ

  • The Iranian President, Ebrahim Raisi, died in a helicopter crash, prompting a period of national mourning and necessitating a leadership transition [WSJ

  • The escalating prices of professional sports teams pose a challenge for billionaires, prompting considerations of private equity involvement to provide financial flexibility [WSJ

  • The Justice Department and over two dozen states have filed a lawsuit against Live Nation, alleging monopolistic practices in ticketing and concert promotion, with claims that the company's actions stifle competition and inflate prices for fans [WSJ

Cole LaCour

May 24, 2024

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