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mXa Roundup - Volume 43

June 24th - 28th, 2024

Large-cap stocks and bonds saw continued gains in June, with the S&P 500 up ~3.7% this month, driven by strong performance in mega-cap technology stocks

  • Market attention will turn to inflation with the May PCE inflation report expected to show a flat headline PCE month-over-month and a 2.6% year-over-year increase, while core PCE is anticipated to rise by 0.1% month-over-month and 2.6% year-over-year

  • The S&P 500 is up 0.29%, the Nasdaq is up 1.00%, and the Dow Industrials is down 0.11% WTD

  • The 10-Yr U.S. Treasury yield has increased +0.047% to a current yield of 4.312%, whereas the 30-Yr U.S. Treasury yield decreased +0.044% to a current yield of 4.452%

  • Crude oil prices increased 1.29% to a current $82.20/bbl while bitcoin decreased 2.58% to a current $61,542.40/coin

  • Americans have invested a record $6.12 trillion in money-market funds due to Fed rate hikes, now facing the challenge of redeploying cash amid potential rate cuts and market volatility [WSJ]  

  • Investor enthusiasm for AI has driven significant gains in the stock market, with Nvidia's 150% surge contributing 30% to the S&P 500's total return this year, and major tech companies like Alphabet, Microsoft, Meta, and Amazon also benefiting from AI advancements [WSJ

  • Housing prices have surged, making homes overvalued like the 2000s bubble, signaling potential risks of stagnant or negative returns, especially for investors, as rental yields remain low and future price adjustments are likely through weak prices rather than higher rents [WSJ

  • High interest rates have led to a "lock-in" effect, where homeowners with low-rate mortgages are staying put, reducing the supply of homes on the market and pushing prices to a record high of $419,300 [WSJ]

  • In Q1 2024, private credit funds outperformed private equity, prompting institutional investors to shift focus due to higher interest rates, which made buyout loans expensive and boosted private credit returns [WSJ]

Hyundai and Kia are thriving in the EV market, startups are innovating in ocean-based carbon absorption, and copper prices surged then dropped due to speculative trading 

  • Ship backups are resurging as Houthi attacks in the Red Sea disrupt global routes, causing gridlock and tripling the cost of shipping a 40-foot container since last year [WSJ

  • Investors' bets on a copper shortage drove prices to a record high in May, but speculative trading led to a 14% drop as profits were taken and supply concerns eased [WSJ]

  • South Korean automakers Hyundai and Kia are gaining significant traction in the U.S. and global EV markets, with their shares surging due to strong hybrid and EV sales, record earnings, and geopolitical advantages over Chinese competitors [WSJ]

  • Startups are developing ocean-based carbon absorption technologies with significant federal and corporate funding, though the approach is unproven at commercial scale and poses potential risks [WSJ

M&A activity continues to remain depressed

  • German engineering group Bosch is considering a bid for appliance maker Whirlpool, which has a ~$5.6B market cap [RT]

  • Brookfield agreed to buy a ~53% stake in French renewables company Neoen at a $6.5B valuation [WSJ

  • Volkswagen will invest $5B to form a JV with EV maker Rivian [BBG

  • Blackstone is exploring a sale or IPO of sustainability consulting firm Legence that may fetch a $5B valuation, including debt [BBG

  • Investment firm MNC Capital raised its offer for recreation products maker Vista Outdoor to ~$3.2B, intensifying a takeover battle with CSG [FT

  • Thoma Bravo is exploring the sale of Canadian automotive market place and software provider Trader, which could be valued at $2.9B, including debt [BBG

  • Italy's UniCredit and Hungary’s largest lender OTP Bank submitted competing bids for Baltic bank Luminor, whose owner Blackstone is seeking a $2.3B equity valuation [BBG

  • Quantum Capital Group agreed to buy Caerus Oil and Gas for $1.8B [BBG

  • A consortium led by global investor Equitix will acquire Macquarie's 40% stake in Italy's Hydro Dolomiti Energia at a ~$1.1B valuation [RT

  • $2.1B listed industrial technology manufacturer Barnes is exploring a sale [BBG]

  • Blackstone will acquire UK hotel operator Village Hotels for reportedly ~$1.1B [RT

  • China Merchants Group bought a 40% stake in the fiber assets of HKT Trust & HK, a unit of Hong Kong telecom group PCCW, for ~$870M [BBG]

  • Indian pharmaceutical company Dr. Reddy's will acquire Haleon's non-US nicotine replacement therapy business for $633M [RT

  • UK investment trusts Alliance Trust and Witan will merge to create a $6.3B AUM asset manager [RT

Recent developments across four key industries highlight Goldman’s AI platform, Amazon's market cap surpassed $2 trillion, and Nvidia shares pushed the Nasdaq up 1.3%

Energy & Natural Resources

  • Canada's oil sands producers have outperformed their U.S. counterparts, with shares of the largest companies rising by 37% over the past year due to improved pipeline capacity, reduced operating costs, and steady long-term production rates [WSJ

  • EnCap Investments' $2.55 billion sale of oil-and-gas assets in Utah's Uinta Basin to SM Energy and Northern Oil and Gas signals a shift in private-equity exit deals beyond the Permian Basin [WSJ]

Technology, Media, & Telecommunications

  • Amazon's market cap surpassed $2 trillion, joining tech giants like Nvidia and Apple, driven by excitement around AI, cost-cutting, a 27.5% share surge, and the rebound of its Amazon Web Services business [CNBC

  • Goldman Sachs is rolling out its generative AI platform, GS AI Platform, for code generation to thousands of developers, centralizing all proprietary AI uses to enhance efficiency and maintain regulatory compliance [WSJ]

Healthcare & Life Sciences

  • Hims & Hers Health's stock surged over 150% by offering compounded versions of weight-loss drugs like Ozempic, but future abundant supply and legal challenges from pharmaceutical giants could threaten this strategy's viability [WSJ]

  • Walgreens CEO Tim Wentworth plans to close many underperforming stores and reduce the company's stake in VillageMD, causing a record 22.16% stock drop after missing earnings expectations and lowering full-year guidance [WSJ

  • GSK shares plunged after U.S. health officials limited the recommendation of its RSV vaccine, Arexvy, to high-risk individuals aged 60 to 74 and those 75 and older [WSJ]

Financial Services

  • The latest annual stress test by the Federal Reserve found that the 31 largest U.S. banks could continue lending during a severe recession, despite projected losses of nearly $685 billion, due to maintaining strong capital levels [WSJ

  • A rebound in Nvidia shares pushed the Nasdaq Composite up 1.3%, ending a three-session decline and highlighting investor shifts, while optimism persists that the tech-driven rally could extend to other market sectors despite mixed corporate news and economic concerns [WSJ

Cole LaCour

Jun 28, 2024

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