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mXa Roundup - Volume 44

July 1st - 5th, 2024

Ten-year yields rose 20 basis points since late June, likely due to increased expectations for a Trump win, which could push rates slightly higher due to his tariff proposals potentially raising inflation

  • The S&P 500 is up 1.16%, the Nasdaq is up 2.22%, and the Dow Industrials is up 0.51% WTD 

  • The 10-Yr U.S. Treasury yield has decreased -0.070% to a current yield of 4.316%, whereas the 30-Yr U.S. Treasury yield decreased -0.047% to a current yield of 4.507%

  • Crude oil prices increased 2.27% to a current $84.09/bbl while bitcoin decreased 11.73% to a current $55,319.50/coin

  • Suburban offices are outperforming city-center towers as home working persists, with downtown-office valuations halving since early 2022 while suburban office values dropped only 18% [WSJ]

  • Elections are increasingly challenging for investors, who must now consider potential surprise landslides and their market impacts [WSJ

  • Tesla's vehicle sales declined for the second consecutive quarter but exceeded expectations, boosting its stock price and maintaining its lead over rival BYD in global EV sales [WSJ]

  • The likelihood of a second Trump administration has led to a sharp selloff in U.S. government bonds, with investors anticipating that policies like tax cuts could drive up deficits and inflation [WSJ

  • U.S. construction spending fell 0.1% in May to $2.14 trillion annually, the first decline since October 2022, surprising economists [WSJ

Treasury yields surged to 4.447%, Temu and Shein raise air cargo demand and freight rates, and China's EV battery market control and Boeing's Spirit AeroSystems acquisition highlight trends in supply chain dominance and reversing outsourcing

  • Ahead of the Fourth of July holiday, U.S. indexes were muted, Tesla stock surged, and investors are awaiting Friday's monthly jobs report [WSJ

  • Treasury yields surged to 4.447% on Monday amid investor concerns that a potential Republican sweep in November could lead to larger deficits and increased inflation, devaluing existing Treasurys [WSJ

  • Bargain shopping apps Temu and Shein are driving up air cargo demand from China, raising freight rates and concerns about a capacity squeeze during peak shipping season [WSJ

  • China's dominance in the electric vehicle battery market, led by companies like CATL and BYD, is substantial, with significant control over the supply chain for battery materials [WSJ]

  • Boeing's $37.25 per share acquisition of Spirit AeroSystems highlights a trend of companies reversing outsourcing to regain supply chain control and improve air-travel safety [WSJ

M&A activity continues to remain depressed

  • Italian oil major Eni plans to raise over $4.3B from the sale of global upstream assets [BBG

  • Billionaire Xavier Niel offered to buy out other shareholders of Millicom International Cellular in a deal that values the LatAm telecom at ~$4.1B [BBG

  • EQT is nearing a deal to acquire a 30% stake in German transit operator Flix at $3.2B valuation [BBG

  • Skydance Media reached a preliminary agreement to buy Shari Redstone’s National Amusements for $1.7B and merge with Paramount Global [WSJ]

  • North Asia-focused PE firm MBK Partners is nearing a deal to acquire Japanese supplement maker Alinamin Pharmaceutical from Blackstone for ~$2.2B [RT

  • Norwegian supply shipping company DOF agreed to acquire offshore marine service provider Maersk Supply Service from Maersk for $1.1B in cash and stock [RT

  • Philippine fast food chain Jollibee will acquire a 70% stake in South Korea's Compose Coffee for $238M [RT]

  • PE firms including EQT, BC Partners, and General Atlantic are interested in a stake in Europe's top basketball league EuroLeague, whose owner is seeking a ~$1.1B valuation [RT]

  • Infrastructure company Metro Pacific Tollways and Singapore SWF GIC will acquire a ~$1B, 35% stake in Jasamarga Transjawa Tol, a unit of Indonesian toll-road operator Jasa Marga [RT

  • PE firm Altor agreed to acquire a majority stake in business resilience software provider F24 from PE firm Hg [BBG

Recent developments across four key industries highlight U.S. crude oil inventories falling by 12.2 million barrels and Walmart and Walgreens closing health services

Energy & Natural Resources

  • Shell expects up to $2 billion in post-tax impairments from delaying its Rotterdam biofuels plant and selling its Singapore chemicals refinery [WSJ

  • U.S. crude oil inventories fell by 12.2 million barrels last week, significantly more than the expected 1.1 million barrels, as refineries increased their capacity use [WSJ

  • Shell will pause construction of its Rotterdam biofuels facility to control project costs amid weak global demand and reduced profit margins in the biofuels market [WSJ]

Technology, Media, & Telecommunications

  • Samsung Electronics forecast a surge in second-quarter earnings to 10.4 trillion won ($7.52 billion), a nearly 16-fold increase from the previous year, driven by a strong recovery in its semiconductor business amid high demand for computing chips and the AI boom [WSJ

  • A network of buyers, sellers, and couriers is bypassing U.S. export restrictions to smuggle Nvidia's advanced AI chips into China at a fraction of their market value [WSJ

  • Microsoft will pay $14.4 million to settle allegations that it discriminated against employees for taking protected leave, impacting their bonuses, reviews, and promotions [WSJ

Healthcare & Life Sciences

  • GSK will acquire the rights to CureVac’s Covid-19 and flu vaccines for up to €1.45 billion to bolster its vaccine portfolio and regain ground lost to mRNA competitors during the pandemic [WSJ

  • Walmart is closing its 51 health centers and virtual-care offering due to unsustainable business models, joining Walgreens in retreating from direct healthcare services amid rising costs and staffing shortages [WSJ

  • Indivior expects U.S. revenue growth from addiction treatments amid the opioid crisis, targeting $1.24 billion to $1.33 billion in 2024, and is moving its main stock listing to the U.S. [WSJ

Financial Services

  • Robinhood's acquisition of Pluto Capital, an AI-powered investment research firm, hints at a future move into offering full-fledged investment advice, though it currently doesn't manage assets like a robo adviser [WSJ

Cole LaCour

Jul 5, 2024

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