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11-01-2023

TECH

• President Biden’s executive order on AI requires developers to share safety test results with the government, prompting reactions from big tech companies and trade groups. The order also calls for a review of AI risks to critical infrastructure and the development of new AI standards. The UK is hosting an AI Safety Summit at Bletchley Park, attended by global leaders and tech executives, to discuss AI regulation and potential risks. China expresses willingness to enhance communication on AI regulation and calls for global cooperation in sharing AI knowledge. The US plans to launch its own AI Safety Institute to assess risks associated with emerging AI models. Vice President Kamala Harris will emphasize the urgency of addressing AI threats to democracy and privacy at the UK summit. The UK, US, EU, and China have signed a declaration acknowledging the risks of AI and encouraging transparency and accountability in its development.

• Apple announces new MacBook Pro and iMac models powered by M3 chips, offering improved performance and graphics capabilities. Mixed reviews from analysts.

• Google has settled an antitrust lawsuit with Match Group, allowing Match to implement Google’s billing system and drop out of the lawsuit.

• Nvidia’s shares dropped by nearly 5% to a five-month low after reports that it may have to cancel $5 billion worth of chip orders to China due to US export restrictions.

• Southeast Asia’s internet economy is expected to grow at its slowest rate in 2023, with a projected 11% increase in online spending to $218 billion. Private funding has also dropped to 2017 levels.

• The Dutch regulator rules that Apple’s app subscription fees violate EU antitrust laws, prompting Apple to reduce its cut.

• The US Supreme Court is considering whether public officials can legally block critics on social media, impacting free speech rights.

• Apple expects similar revenue growth in Q4 compared to the previous quarter, with a decline in revenues and an increase in earnings compared to the year-ago quarter. The iPhone remains their top revenue contributor, while Services revenues are expected to accelerate. However, their holiday-quarter expectations may be affected by Huawei’s resurgence in China and weak iPhone sales in the international market. Additionally, analysts forecast a possible decline of approximately 1% in hardware sales for Q4. Investors are also interested in the demand for the newly released iPhone 15 and supply constraints.

• Zebra Technologies reports significant decline in Q3 2023 sales due to soft demand, expects larger drop in Q4 sales. Taking cost restructuring actions.

• Qualcomm and Apple are set to report Q4 earnings. Qualcomm expected to beat estimates, while investors hope Apple’s earnings will boost its stock.

• Microsoft faced criticism for an AI-generated poll asking readers to vote on the cause of a woman’s death, damaging The Guardian’s reputation.

• Apple has sent warnings to politicians and journalists in India about potential government-sponsored hacking using the Pegasus spyware.

• Commvault Systems exceeded Q2 expectations with total ARR growing 18% YoY to $711 million and subscription ARR growing 32% YoY to $530 million. Metallic ARR grew 77% YoY to $131 million.

• PROS Holdings (PRO) reported Q3 revenue of $77.25 million, a 9.8% increase YoY, with positive EPS of $0.09 compared to last year.

• Arista Networks stock hits new high, outperforms competitors, and trading volume increases after beating Q3 earnings estimates.

• Match Group, the online dating company, expects lower Q4 2022 revenue due to weak spending and market unrest, citing various factors.

MEDIA

• AB InBev reports Q3 earnings with revenue growth of 5%, announces $3 billion bond tender and $1 billion share buyback program.

• Grand Canyon University, the largest Christian for-profit college in the U.S., has been fined $37.7 million by the Education Department for misleading students about program costs.

• Jewish students plan to sue elite universities like Cornell and Harvard over rampant antisemitism allegations. Cornell student Patrick Dai arrested for making online threats against Jewish students.

• The Texas Rangers are on the brink of their first World Series title with a 3-1 lead over the Diamondbacks.

• SiriusXM Holdings Inc reported strong Q3 earnings with revenue of $2.27 billion, 34 million subscribers, and increased net income of $363 million.

• Caesars Entertainment reports strong Q3 2023 earnings, with record adjusted EBITDA, growth in digital segment, and increased revenue.

• Hezbollah, the Lebanese militant group, faces a dilemma: maintaining credibility as a defender of Palestinians or engaging in a full-scale war with Israel.

• Chile recalls ambassador, Bolivia severs ties, and Colombia expresses strong rejection of Israel’s actions in Gaza.

• YouTube is cracking down on ad-blocker usage by showing warnings and urging users to disable them or subscribe to YouTube Premium.

• During the trial period, users can access FT.com with complete digital access and the option to change or downgrade subscription plans.

• Actor Tyler Christopher, famous for his role on “General Hospital,” has passed away at 50 from a cardiac event.

CONSUMER

• Big 5 Sporting Goods reports Q3 earnings below expectations, cuts dividend in half due to weaker sales and consumer spending. Stock drops 13%.

• Estée Lauder’s stock plummets as the company lowers its annual profit forecast due to slower sales and margins in China.

• Online retailer Asos plans to close its UK warehouse in Lichfield to reduce costs, expecting to save £20m annually. Asos also predicts a sales decline in 2024.

• Canada Goose Holdings cuts annual sales forecast due to challenges in China and US, appoints new CFO. Q2 profit rises, but revenue falls short.

• Canadian Tire Corp has repurchased a 20% stake in its financial-services business from Scotiabank for $647 million in an all-cash deal.

• The Container Store Group Inc. experienced a decline in net sales for Q2 2023 due to lower customer traffic and fewer purchases in core categories. Gross margin increased, but challenges in gross profit are expected in the second half of the fiscal year.

• Tennant Company reports strong Q3 results with a 15.9% increase in net sales and increased full-year 2023 guidance.

• Alibaba’s stock fell 0.72% and underperformed its competitors, while Altria’s stock fell 0.20% but outperformed some competitors. Altria faces challenges due to poor performance and lowered guidance, but offers potential for above-market returns. The acquisition of NJOY is important for future growth.

• Walmart is investing $9 billion to remodel and modernize 1,400 US stores with improved layouts, new technology, and expanded product selections.

REAL ESTATE

• WeWork shares have plummeted 37-43% amid concerns of imminent bankruptcy, while Paycom Software’s stock dropped 25-36% due to weak revenue projections.

• The National Association of Realtors and major real estate brokers have been found guilty of colluding to inflate real estate commissions, resulting in a $1.78 billion damages verdict.

• Equity Residential lowers revenue growth forecast due to weak rental markets in San Francisco and Seattle. LXP Industrial Trust reports successful Q3 results. NexPoint Residential Trust Inc and Noble Corp PLC report Q3 earnings. Newpark Resources Inc sees a decrease in revenue but an increase in net income. Acadia Realty Trust and Brixmor Property Group report strong Q3 earnings. Nexa Resources experiences a decrease in net revenue. Urban Edge Properties acquires shopping centers and sells warehouse portfolio. Centerspace sees an increase in revenue in its same-store portfolio. MPLX LP announces dividend and reports record Q3 earnings.

• US home prices continue to rise, reaching a new record high in August with 5.6% annual growth, defying expectations of weakened demand.

• Former President Donald Trump and his three children, Donald Jr, Eric, and Ivanka, are set to testify in the New York fraud trial against the Trump Organization. The trial is in its fifth week and involves allegations of manipulating asset values and engaging in widespread fraud.

• UK house prices rose unexpectedly by 0.9% in October due to a constrained supply of properties, but are down 3.3% YoY.

• LGI Homes had a strong Q3 2023, with a 13.2% increase in home closings and adjusted gross margins of 27.2%. Green Brick Partners is undervalued and has potential for 112% upside, with strong profitability and operational excellence. LGI Homes reported a net income of $67.0 million and home sales revenues of $617.5 million in Q3 2023.

TRAVEL

• Investors have until a certain date to buy Las Vegas Sands Corp. shares to receive a dividend of $0.20 per share.

• The Economist Impact report “Destination always” examines the global impact of tourists on cities and regions, emphasizing sustainable practices.

• MakeMyTrip Limited, an online travel company, saw Q2 2024 gross bookings of $1.8 billion, a 23.8% YoY growth, and expects India’s travel industry to outpace GDP growth. They invested in Savaari and utilized generative AI technology.

ECONOMIC

• Euro zone bond yields have fallen due to falling inflation, a rally in US Treasuries, and the Bank of Japan’s decision to loosen its grip on long-term interest rates.

• Factory activity in Asia, including in China, Japan, and South Korea, is declining due to weaker global demand and higher prices.

• Hedge fund Odey Asset Management is closing down due to sexual misconduct allegations against founder Crispin Odey. The firm managed $3.8 billion.

• Senate appropriators express support for White House’s $106 billion emergency funding request, including aid to Israel and Ukraine. House Republicans face opposition in the Senate over their plan to provide $14.3 billion in aid to Israel without aiding Ukraine. Speaker Johnson’s proposal to combine aid for Israel and Ukraine with cuts to IRS funding is met with backlash. The GOP’s plan to fund aid to Israel by cutting IRS funds would increase the federal budget deficit by $30 billion.

• PETRONAS Chemicals Group Berhad has a low return on capital employed (ROCE) of 7.9%, which may impact its capital allocation.

XL**Holdings**s Berhad’s returns are weighed down by a low ROCE of 4.7%.

Econframe Berhad has a high ROCE of 20%, but investors may still be concerned about its returns on capital.

Texas Instruments’ ROCE has fallen from 42% to 27% in the past five years, raising concerns about diminishing returns.

Transcat’s ROCE of 7.0% is lower than the industry average of 13%, causing concerns among investors.

Portmeirion Group’s ROCE has decreased from 20% to 9.7% in the last five years, raising concerns.

Be**Lighting**hting Group’s ROCE has fallen from 34% five years ago, causing concerns among investors.

George**Kent**t (Malaysia) Berhad has low returns on capital and a decreasing trend in ROCE, leading to a 52% stock decline.

Duty**Free**e International’s ROCE of 3.2% is lower than the industry average of 8.4%, indicating potential trouble for the company.

• The IMF recommends tightening monetary policy in Australia to combat inflation and bring it within the target range by 2026.

• Companies express concerns about weak demand and economic slowdown, while consumer confidence drops due to inflation and rising interest rates.

• China’s recent spike in overnight borrowing rates, reaching as high as 50%, is due to a cash shortage and upcoming government bond issuance. The People’s Bank of China plans to inject liquidity into the money market.

• President Biden plans to meet with President Xi Jinping during the APEC summit in San Francisco next month for “constructive” talks.

CRYPTO

• Closing arguments are expected in the trial of Sam Bankman-Fried, founder of FTX cryptocurrency exchange, accused of stealing billions from customers. Bankman-Fried denies knowledge of the fraud.

• Bitcoin has seen significant gains in October, rising by around 27% due to optimism about the approval of a Bitcoin ETF.

• SEC Chair Gary Gensler calls on crypto firms to adhere to securities laws and stop deceiving investors on the 15th anniversary of the Bitcoin whitepaper.

• Turkey is developing new laws on crypto-assets to improve its anti-money laundering measures and get off the Financial Action Task Force’s “grey list.”

HEALTH

• CVS Health reports Q3 net income of $2.3 billion, beating expectations, with revenue of $89.8 billion and strong performance in pharmacy operations.

• Bayer’s Monsanto unit ordered to pay $332M in damages by California jury in Roundup weedkiller cancer trial.

• Healthcare technology company Waystar has postponed its IPO until December or possibly 2024 due to market conditions and other factors.

• FBI Director Christopher Wray warns of increased risk of foreign terrorist attacks on Americans amid the Israel-Hamas conflict. Jewish people are targeted in majority of religious-based hate crimes.

SPORTS

• Saudi Arabia is set to host the 2034 FIFA World Cup as the sole bidder, after Australia withdrew its bid.

• The Washington Commanders traded Montez Sweat to the Chicago Bears and Chase Young to the San Francisco 49ers for draft picks.

• Luka Doncic is dominating for the Dallas Mavericks, averaging 39.0 points per game and recording two triple-doubles.