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10-30-2023

TECH

• Biden signed an executive order outlining new requirements for companies using large AI models, according to senior officials. It creates a 3-tier system for the regulation of AI, with different requirements for different weights of models. Among the aims of the order are to ensure consumer protection when companies use AI to generate false or misleading information, to make sure AI systems don’t discriminate against people, and to ban the use of AI in military autonomous weapons systems. The order also includes a series of rules about transparency for different types of AI systems.

• Apple will hold its first hardware event of the year on Wednesday, showcasing new upsized M2-based iMacs and a renewed Mac Pro. The “Spring Loaded” virtual live stream presentation will take place at 1 pm ET. Is also expected that Apple could unveil, alongside the iMacs and Mac Pros, new HomePod speakers, refreshed AirPods and AirPods Pro earbuds, and larger-screen iPad Pros.

• Airtel Africa, a British-based Indian telecommunications firm, saw its shares rise after revealing a smaller-than-anticipated decline in revenue growth in the past quarter. The company’s shares were up 10.6% at peak today. The subsidiary of India-listed Airtel unveiled its growth figures a day after its Africa-based unit reported a huge jump in net profit for the March quarter. Airtel announced that its African business had reversed to a net profit of $594 million in Jan-Mar, compared with a $125 million loss in the year-ago quarter.

• In major US antitrust trial, Google defended the billions it pays to be Apple’s default search engine, arguing that the deal doesn’t prevent competition and highlights the challenges in altering complex business arrangements. Apple received $12.5 billion from Google in 2021, according to reports. Google’s CEO is expected to take the witness stand in the coming days.

• Global watchdog critical of Israeli videos in kids’ games. An international monitoring body said it was “gravely concerned about the possibility that Israeli state-sponsored online advertisements,” seeking to justify its actions to a younger generation, “may exploit children’s natural feelings of trust and loyalty to their governments.” Lunatask, the company responsible for uploading the propaganda to popular games like Subway Surfers, has Israeli top brass among its advisers, but the Israeli Ministry of Foreign Affairs has denied connections to the effort.

• KKR is investing $400 million in the OMS Group, a Malaysian provider of subsea telecommunications cable services.

• The EU has set a deadline for Feb. 14 to decide whether to approve Amazon’s $1.4B acquisition of iRobot, the robot vacuum manufacturer. Regulators are concerned that the deal would give Amazon too much market power.

• Web Summit appointed a new CEO. Katherine Maher, formerly CEO of the Wikimedia Foundation, will replace founder Paddy Cosgrave.

• Salesforce shares rose almost 4.5% on Thursday, after the company raised its fiscal year 2023 revenue guidance in its latest quarterly earnings report. Top line revenue rose 20% year-over-year. The company said that it earned $677 million, or $0.69 a share. Analysts were expecting earnings of $0.59 a share on revenue of $6.76 billion. For the fiscal 2023 first quarter, Salesforce issued revenue guidance of $7.16 billion to $7.17 billion, compared to Wall Street’s expectation of $6.97 billion. Fiscal 2023 revenue guidance was between $29.85 billion to $30 billion, up from the company’s last projection of $29.

• Western Digital jumped 20% after announcing plans to split into 2 businesses. One company will focus on flash-memory products and the other on hard-disk drives. The hard-disk drive unit will be spun off as a new publicly traded company.

• Alphabet, Google’s parent company, reported Q1 2023 earnings, beating expectations on revenue and earnings per share but missing on net new advertising additions. Revenue: $55.58 billion, up 41% YoY (30.6% YOY in constant currency), vs. $51.7 billion expected. EPS: $1.86 (adjusted), vs. $2.08 per share expected (down 42% YoY). Google Cloud: $8.09 billion vs. $6.99 billion expected. Subsidiaries and other bets: $272 million, vs. $68.64 million expected. Some analysts were surprised by Google’s ad revenue strength, as total sales increased 41% even

• Google said that its own scaled-up generative AI system, ChatGPT, won’t require size increases to match the incoming version of OpenAI’s GPT-4 as it’s roughly on par or exceeds it. The GPT-4 is as large as the ChatGPT in terms of parameters and capabilities, according to Google. The news reaffirms Google’s commitment and progress towards developing a large-scale ChatGPT-like generative AI in parallel to ChatGPT+, which would provide ChatGPT-like capabilities for developers.

MEDIA

• Matthew Perry, the actor who played Chandler Bing on all 10 seasons of the NBC sitcom “Friends” and its many spinoffs, movies and TV specials for the next two decades, died at age 54 on Friday. His publicist confirmed the news of his passing, without a cause being provided.

• A federal judge in DC has imposed a broad, new gag order on Donald Trump, banning the former president from making any statements about any aspect of his upcoming election tampering trial. The order bans the former president not just from talking about the case itself, but also from making any public comment regarding the 2024 presidential election, the Electoral College, mail-in voting, his own voting history, or any historical topic that could potentially intersect with or be a substitute for directly discussing his trial.

• South Africa is celebrating its 4th Rugby World Cup win. The tournament took place in Paris. The final saw South Africa beat New Zealand. This now makes South Africa the nation with the most Rugby World Cups, having won the tournament in 1995, 2001, 2007 and 2023.

• London-based digital intelligence provider Ascential Group PLC has agreed to sell its trend forecasting division, WGSN, to private equity investor Apax Partners for $766 million. Sought a buyer for its fashion trend research unit, offers data and analytics for consumer and retail businesses.

• Five Nights at Freddy’s topped the Friday box office. The animated adaptation of the popular video game went on to become one of Halloween’s biggest hits, earning $30 million over the 4-day holiday.

• Jehovah’s Witnesses in India reported a second explosion near a group meeting location in India on Saturday. This comes a day after the first series of explosions that killed 3 people and injured 35 others. This incident also resulted in the discovery of 3 unexploded IEDs at the scene. It is not yet clear whether the explosions were deliberate and targeted attacks.

• Omnicom acquires Amazon advertising company Flywheel Digital, its 1st advertising acquisition since 2019. Omnicom, one of the world’s largest advertising**holding**g companies,acquired Amazon-focused adtech firm Flywheel Digital. The company will become a subsidiary of Omnicom’s precision marketing agency, Omnicom Commerce Group. Flywheel’s advertising and marketing services are expected to be applicable across many of Omnicom’s businesses. This marks the advertising holding company’s first acquisition since 2019.

• Arizona Diamondbacks won their first championship since 2001. Defeated the Texas Rangers 3-1 in a best-of-5 World Series.

• Florida ordered public universities to ban the National Students for Justice in Palestine (SJP) chapter from campuses after an investigation alleged the group’s support of Hamas and terrorist activities. The move follows an investigation into the group that revealed alleged links to a UJ terrorist group.

CONSUMER

• Shein acquires popular UK fast fashion retailer Missguided. This is Shein’s first purchase of an established Western fashion brand. Missguided filed for administration, a UK insolvency process, last month. Both the brand’s IP and stock sold to Shein, per reports.

• The Body Shop may be up for sale again, this time from Brazilian conglomerate Natura, which bought the ethical beauty retailer from L’Oreal for $1.1 billion in 2017. The potential deal could value the brand at $600 million. Aurelius Group, a London-based private equity firm, is among the expected suitors.

• International Flavors & Fragrances’s (IFF) share price fell more than 6% after announcing a sale of its Lucas Meyer Cosmetics business for $810 million. Swiss specialty chemicals firm Clariant made the acquisition.

• Inspecs, the UK-based eyewear manufacturer whose brands include Robert Graham, Radley and Wolf, saw its shares slump in early trading Tuesday as it issued its latest quarterly earnings. The slowdown is due to “challenging market conditions for some of our brands,” Inspecs CEO said. The company raised its capex plan this year to £7 million ($9 million) after its acquisitions lifted its intangible assets to £232 million from £204 million, while inventories rose 16% to £92 million from £79 million. For 2022, Inspecs said its net debt adjusted for acquired cash and deferred considerations increased to £85 million from £71 million a year ago.

• Mattel had a good 3rd quarter, saying that the release of the Mattel Films, its Lego-movie-style animated feature, bolstered sales from brands such as Fisher-Price, American Girl, and Hot Wheels. Pointed to a pickup in sales tied to its legacy toys and games after releasing the Mattel Films’ debut animated feature to premium cable. Sales in 3 of Mattel’s 4 business units increased: American Girl, Mattel Films and Fisher Price posted revenue growth of 21%, 30% and 15.3%, respectively. Mattel attributed some of those gains to the debut of its first feature film, “Mattel Films,” in September. For the 9 months through September, sales in its

REAL ESTATE

• China Evergrande Group, the world’s most-indebted developer, said it won’t be able to pay the interest due Monday on its dollar bonds, moving it closer to a potential bankruptcy reorganization. Evergrande has a 30-day grace period to make the roughly $83.5 million in payments and will enter a formal 7-day grace period. The developer owes about $305b, and a filing would rank as the largest-ever by a Chinese company. The interest due covered 2 of Evergrande’s**offshore**e bonds. The company missed a domestic interest payment in 2022, which put it in a months-long restructuring process. That plan was formally abandoned last month. The gov’t plans to allow Evergrande

• More than 1 in 4 mortgages in Q4 2023 was taken out on investment properties, the highest share since 2001 and more than double the average ratio seen over the past 2 decades, a report from the Mortgage Bankers Association shows. A total $228 billion across 698k mortgages were issued on investments like rental properties in the quarter, up 14% from the previous quarter and 93% from the previous year, per the MBA, which considers non-owner-occupied housing purchases as “investment” properties. Mortgage rates have slowed the purchase market from years past, but it seems that many investors still see value in buying. Overall, the average size of a mortgage that investment buyers took out in Q4 also increased

• Healthpeak Properties (PEAK) and Physicians Realty Trust (DOC), 2 of the largest US healthcare real estate investment trusts, announced a stock-for-stock merger of equals Monday morning. With a combined equity value of $20.5 billion, the deal will make the new combined entity the 2nd-largest US publicly traded healthcare REIT. The terms of the deal outline that Healthpeak will acquire all outstanding common shares of DOC, with DOC shareholders expected to own ~39.4% of the combined company and Healthpeak shareholders expected to own ~60.6% of the combined company. Both PEAK and DOC soared followed the announcement, adding 8% to PEAK and 10% to DOC.

• Realty Income, a net-lease retail REIT, will acquire fellow net-lease REIT Spirit Realty Capital in an all-stock deal. Spirit investors will receive 0.762 common shares of Realty Income for each share owned, amounting to ~$37.34 per Spirit share and a 15% premium. The combined enterprise will have more than 70k tenants and ~$5.2 billion in contractual rental revenue. The deal combines 2 REITs that own large portfolios of single-tenant properties.

• Explosive rental growth is further contributing to Australia’s runaway inflation, as rents saw their fastest pace of growth since 2008 in the third quarter. Rent inflation soared 30.8% in the third quarter (a record since 2008) while increasing 10.8% during Q3 2022. Overall inflation is now running at “an average” 37% y/y the 2nd-highest all-time. The government also reported the lowest number of new house completions on record for the yr to September, exacerbating the country’s supply crunch.

TRAVEL

• Airlines like United have been considering and even implementing alternate boarding protocols to promote efficiency. As many new boarding requirements overwhelmingly favor frequent fliers, like Alaska Airlines’ blocking off seats, and United’s A-seaters-first window-middle-aisle proposa, critics are calling these changes flagrant cash grabs and ultimately ruining the travel experience for the Hobert and Stephanies of the world. As fliers have grown hesitant to abandon earlier protocols which promised them ‘ Zone 1’ access and respect, typically awarded for merely acquiring certain credit cards, though there are workarounds in place. Also, as most airlines board and deboard outside the zone, it’s questionable how much these protocols even make a difference.

• TUI, Europe’slargest tour operator, beat expectations on Wednesday with its full-year earnings forecast even as last summe’s poor weather and pandemic fears dampened itssummer season. The tour operator said it wasexpecting even greater short-term growth next year, as travel rebounded and demand returned. For summer 2022, TUI said it had allocated capacity for 7.3 million customers in the current booking cycle, slightly lower than last year due to the weaker economic situation in the company’s core market Germanyand the United Kingdom.

ECONOMIC

• The US economy grewby an annualized 4.9% in Q3, in its fastest pace since 2022 but slightly below expectations. Hopes for continued robust growth pushed US Treasury yields to a 3-month high on the day. GDP growth figures will captivate the market today, but beneath the surface, there was some vulnerability. Consumer spending was relatively weak at a 2.3% annualized pace, and business investments actually contracted by 0.4%. Government expenditure, however, jumped by 3.8%, the highest rate in over 2 years. Bond markets largely shrugged off the news, with a report showing a growing pile of goods that can’t be sold. US Treasury yields don’t seem interested in anyone

• First Western Financial announced its third quarter 2024 financial results, with a record net income of $16.5 million, or $1.10 per diluted share, vs. $11.4 million, or $0.82 per diluted share. For the first 9 months of 2024, its net income was $47.7 million, up 17%, or $134m per diluted share, vs. $38.1 million, or $2.82 per diluted share.

• HSBC reported a forecast-beating 81% increase in pretax profit for the fourth quarter of 2022, boosted by robust activity in its markets. Reported profit before tax of $3.38 billion for the three months that ended Dec. 31, 2022, exceeding the expected $3.07 billion. The London-headquartered lender said revenue rose 13.5% year-on-year in the fourth quarter to $11.18 billion. The bank reported earnings for the quarter that came in ahead of expectations. Its shares were up about 3% in London after the update. HSBC also announced its intention to purchase $2 billion worth of its own shares this year as part of a capital returns program worth up to $

• The EU’s trade deal with Australia, concluded in August, is the bloc’s “most comprehensive” to date, covering €100 billion worth of goods and services. It will eliminate nearly all tariffs, although concessions were made to protect sensitive sectors, including beef for Australia and cars for the EU. The deal will require approval by the European Commission and EU member state governments.

• The Treasury Department will slow its pace of debt accumulation in the near term, according to its chair, attributing surging interest rates and market volatility to “rapid progress on fiscal sustainability.” This week, long-term Treasury yields jumped to their highest levels since 2008, while prices for shorter-term bonds rose after the Fed pointed to a more aggressive rate-hiking campaign. The remarks suggest that the Treasury sees the Fed’s current approach as effective in reducing inflation. In its fourth quarter refunding statement, the Treasury said it would reduce coupon debt sales by $20 billion over the next 3 months. It also said it would increase the amount of long-term debt that it pays down early, taking advantage of recent increased quarterly surpluses.

• Australia’s September retail sales fell for the 6th consecutive month. It is the worst decline since May 2020 when the country was in a lockdown, suggesting that high Covid-19 infections have dented consumer confidence. After adjusting for inflation, retail sales fell 0.6% vs expectations of a 0.3% fall. Grocery sales fell 1.2%. Department stores fared better, with sales up 2.2%. Consumer sentiment is at around 75 as compared to a pre-pandemic 100. Weaker commodity prices have also lowered average household income by 7.7%. After the US, Australia is highly reliant on retail sales that contribute to economic growth, compared to services offered by sectors such as

• UK inflation soared to 6.1% in September, its highest rate on record, having risen 0.3% in a month. Government data shows that gas CPI jumped 21.3% after the energy regulator increased the price cap for households and businesses by a record 24% for the winter season. Meanwhile, the transport category saw a 12.7% YoY CPI rate hike; jet fuel saw a historical increase in September of 107.3% over 12 months. The categories and prices that experienced a decline were miscellaneous goods and services and furniture/household equipment.

CRYPTO

• FTX crypto founder’s fraud trial resumes today. Market volatility has so far negatively impacted crypto exchange FTX’s net incomes, which are expected to continue falling. Since turning profitable in 2020, FTX has seen its net income drop by 50%. Recent findings show that FTX experienced an impressive 800% growth in its revenue in H1 2022 compared to a similar period in 2021. More information is expected to be shared during the trial, while the exchange is not expected to experience immediate repercussions.

• Bitcoin soared past $70,000 on Tuesday to its highest level in over 8 months. Wall Street’s VanEck Investmentf, became the latest company to raise its bid price for Bitcoin, in a move that will help the cryptocurrency climb higher. VanEck raised its net asset value bid for Bitcoin by ~14%, validating the market price of the crypto. The bid price for Bitcoin is now $960 per unit, up from $840 previously.

• The UK is reportedly accelerating plans for crypto regulations in 2024; British lawmakers are expected to legislate on crypto assets by “the end of summer,” according to a senior official. The move follows last year’s FCA ban on crypto derivatives for retail consumers. The City expects the government to match recent proposals by EU authorities. The European Union’s executive arm is mulling a “comprehensive regulatory framework,” including a possible outright ban on tokens that are suspected of being securities.

HEALTH

• Iran is experiencing the highest number of daily COVID-19 deaths: 805 deaths and 80k new cases in the country in the past day. Iranian authorities extended the nation’s COVID lockdown for another 10 days. The US State Department said that its humanitarian aid to Iran to help treat the COVID pandemic was blocked by past sanctions. A recent research article states that in Iran, poverty caused by US economic sanctions, as well as the resurgence of the Taliban, have prevented widespread vaccination coverage. Meanwhile, in the US, the Supreme Court declined to block President Biden’s vaccine or test requirements for large employers. The storms in the Pacific Northwest have disrupted traffic at the ports of Seattle and Tacoma, already troubled by congestion; that may bring prices for some products

• The head of Israel’s National Security Council resigned in protest of Prime Minister’s Gaza campaign, and his intentions to withhold intelligence from Gantz. The adviser to the prime minister and head of the National Security Council said the PM was responsible for the security lapse over the Gaza attacks.

SPORTS

• Soccer/fútbol: The father of Liverpool forward Luis Diaz was kidnapped in Colombia 4 hours before the start of the Copa America final. Diaz scored for Colombia in a 3-1 loss to Argentina in the final and dedicated that goal to his father, who was found safe a few days later. His father’s new kidnapping may be related to Diaz’s recent success, though it comes after he threatened legal action in response to comments from the vice president of Colombia’s football federation. Diaz left the national team and flew back to Europe to be with his parents. His father was found by police and that they were able to safely return him home a day afterward.

• Max Verstappen claimed his 4thstraight F1 pole. 2ndgoing away for Max Verstappen at the Autódromo Hermanos Rodríguez. The Red Bull driver, who locked up his 8th career F1 World Championship in the previous race in Austin, chase in on Sunday will be to win the Mexican Grand Prix for the 6th time in his career. Starred in the 3rd and final Practice of the weekend, leading yet another Red Bull 1-2 for the 5th time in 5 sessions. Six quickest cars in F1 right now (in no particular order): Red Bull, Mercedes, Ferrari, McLaren, Alfa Romeo and Aston Martin.

• India won the latest edition of the T20 World Cup, its 2nd world title. Defeated Australia by 3 runs. The Indian team posted a total of 135/9. In response, Australia scored 132/8. The 2 teams will also play a 3-match T20 series that will be held as a part of the Women’s Ashes. In February and March in 2023, Australia will host the T20 World Cup.