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11-17-2023

TECH

• Alibaba has canceled its plans to spin off its cloud computing division due to uncertainty caused by US restrictions on the exports of chips used for artificial intelligence. The cloud division was estimated to be worth up to $60 billion and the listing could have attracted scrutiny from regulators. Alibaba’s shares fell 8.4% in premarket trading following the announcement.

• Internet and telephone services have collapsed in the Gaza Strip due to a lack of fuel, worsening the humanitarian crisis. Israel’s military is dismantling Hamas’s military system in northern Gaza, causing a communications blackout and disrupting humanitarian aid. The UN World Food Programme warns of an immediate possibility of starvation in Gaza, as the region faces a massive food gap. Israeli forces have found weapons and a Hamas tunnel at Gaza’s Al Shifa hospital, a claim denied by Hamas.

• Apple has announced plans to adopt the Rich Communication Services (RCS) messaging standard in 2024, allowing for improved messaging between iPhones and Android devices. This move is seen as a strategic response to regulatory pressure and the need to enhance user experience. iMessage will remain the default method for connecting iPhone users.

• The US Department of Justice has concluded its antitrust case against Google, accusing the tech giant of illegally maintaining dominance in online search. The trial, compared to the historic Microsoft case, focuses on Google’s annual payments to secure default search engine status on devices like iPhones. The outcome remains uncertain, with potential appeals and significant implications for both Google and Apple.

• TikTok is actively removing videos that promote Osama bin Laden’s 2002 letter justifying the 9/11 attacks and criticizing the US government’s presence in the Middle East. The platform denies that the videos went viral and states that the content violates its rules on supporting terrorism. The Guardian has also removed the letter from its website due to its widespread sharing on social media without proper context.

• Meta has introduced two AI-based video editing tools, Emu Video and Emu Edit, that allow users to edit images and generate videos based on text instructions. The tools can be used on Instagram and Facebook and have potential applications in creating animated stickers, editing photos, and enhancing social media posts.

• Samsung Executive Chairman Jay Y. Lee is facing a final court hearing over alleged accounting fraud and stock price manipulation charges related to a 2015 merger. South Korean prosecutors are seeking a five-year jail term for Lee, who has denied any wrongdoing. A ruling is expected in January 2022.

• Optus, an Australian telco owned by Singtel, has paid AUD 36,000 in customer compensation following a nationwide network outage that affected millions of customers, including hospitals and government departments. The outage was caused by a failed defence system, and Optus admitted to having no crisis plan in place. The CEO will face a Senate hearing to address the company’s handling of the outage and its compensation offer.

• The global data storage market is projected to reach $791.52 billion by 2030, while the data center automation market is expected to reach $16.5 billion by the same year. The United Kingdom data center market is projected to reach $13.95 billion by 2028, driven by various factors including the adoption of data centers in different industries and the rise of 5G technology. The Saudi Arabia data center market is expected to grow rapidly at a rate of 13.5% from 2024 to 2028, fueled by the adoption of cloud, big data, and IoT technology services. The Vietnam data center market is expected to grow steadily at a CAGR of 18.3% from 2024 to 2028, driven by increased investment in IT infrastructure and the adoption of new technologies. The Germany data center market is also expected to grow steadily due to increased demand for cloud computing and local investments.

• Israeli private detective Aviram Azari has been sentenced to 6-2/3 years in prison for orchestrating global hacking campaigns against various targets, including climate change activists and critics of Wirecard. Azari admitted to hiring hackers and was paid over $4.8 million for his involvement in the hacking ring that targeted hedge funds, short sellers, and journalists.

• Elon Musk has been replaced by John Kerry as a speaker at the APEC summit session on artificial intelligence due to a scheduling conflict. However, in another report, Musk has been removed as a speaker from the 2023 APEC CEO Summit after making controversial comments about Jewish communities promoting hatred against whites. He was originally scheduled to co-host a session on AI with Salesforce CEO Marc Benioff.

• The FBI warns organizations about Scattered Spider, a hacking group responsible for breaching American organizations and stealing data for extortion.

• Dun & Bradstreet Holdings reported positive revenue growth in Q3 and is focusing on AI initiatives for future growth. NICE Ltd. reported strong Q3 2023 results, with total revenue of $601 million, driven by outstanding performance in cloud revenue, which grew 22% to $403 million. NICE also announced the acquisition of LiveVox. The company expects full-year earnings in the range of $8.58 to $8.78 per share, with revenue in the range of $2.36 billion to $2.38 billion.

• OpenAI plans to establish an educational applications team to explore the use of its AI chatbot, ChatGPT, in classrooms. Despite initial concerns about cheating, teachers have recognized the benefits of incorporating ChatGPT into their curriculum. OpenAI aims to help educators navigate the tool and has already partnered with education groups.

• Shares of Palo Alto Networks dropped as the company lowered its billings outlook due to customer demands for flexible payment terms. However, analysts remain optimistic about the strong demand for cybersecurity.

• Juniper Networks stock falls 3.07% but outperforms Cisco, VMware, and Fortinet. Fortinet stock slides 1.25% but outperforms competitors.

• Amazon’s prototype Kuiper satellites for its internet network have achieved a 100% success rate, paving the way for mass production and deployment in 2024.

• A federal judge denies X Corp.’s request to modify or terminate a consent order with the FTC regarding user data handling. Elon Musk’s attempt to void the FTC consent order is also rejected.

MEDIA

• Sean ”Diddy” Combs, also known as Puff Daddy, is facing a federal lawsuit from his former partner, R&B singer Cassie Ventura. Cassie accuses Combs of physical and mental abuse, including rape, sexual slavery, and beatings, over their ten-year relationship. Combs denies the allegations and claims that Cassie has been demanding $30 million from him.

• Warner Music Group (WMG) saw a 9% increase in streaming revenue, with paid subscriptions rising by 10%. The company is looking to change the payment structure to pay artists more per stream for higher-quality, popular content. Dolby Laboratories reported Q4 2023 earnings of $291 million, up 4% YoY, but expects flat revenue for fiscal year 2024.

• A judge has temporarily lifted the gag order in former President Donald Trump’s civil fraud trial, allowing him and his lawyers to comment freely until the appeals court hears arguments. The gag order was imposed after Trump made false comments about the judge’s law clerk. Trump’s lawyers have challenged the order, claiming it is an abuse of power.

• The Oakland Athletics have received unanimous approval from Major League Baseball owners to relocate to Las Vegas. The move is set to be completed in 2028, with the Athletics becoming the second team in over 50 years to shift cities. However, the relocation is facing opposition from a Nevada teachers union and legal challenges regarding the construction of a new stadium.

• A mistrial has been declared in the federal civil rights trial of former Louisville police officer Brett Hankison for the killing of Breonna Taylor. The jury failed to reach a verdict on the charges against Hankison, who is the only officer involved in the raid to face state charges. This is the second time Hankison has avoided a conviction in relation to the case. The two other officers involved in the shooting have not been charged. Prosecutors will now decide whether to retry Hankison.

• Karol G won Best Album at the Latin Grammys held in Seville, Spain. Bizarrap and Shakira also received awards, with Bizarrap winning Song of the Year and Best Pop Song. Natalia Lafourcade added to her record-breaking list of awards, and flamenco performances were a highlight of the show.

• Fortune Media IP Limited, owner of the trademark FORTUNE, may receive compensation for links to products and services on their website.

• ”Killers of the Flower Moon,” a film directed by Martin Scorsese and starring Leonardo DiCaprio, is embraced by the Osage people despite its traumatic portrayal of 1920s murders of American Indians in Oklahoma. The film aims to tell the truth and includes input from the Osage people.

• Director Ridley Scott and actor Joaquin Phoenix have reunited after over two decades to work on the upcoming Napoleon Bonaparte biopic ”Napoleon,” which premiered in London.

• The University of Florida’s chapter of Students for Justice in Palestine (SJP) has filed a lawsuit against Florida Governor Ron DeSantis and the state university system, claiming that an order to deactivate the group violates their First Amendment rights. The American Civil Liberties Union (ACLU) has also filed a federal lawsuit against DeSantis and education officials, arguing that the order violates free speech rights. The lawsuits come amid tensions over the Israel-Hamas conflict on college campuses.

• The U.S. Supreme Court has declined Florida’s request to enforce a ban on drag shows, stating that it violated First Amendment rights. The law was blocked by a lower court, and the Supreme Court voted 6-3 against Florida’s appeal. The challenge to the law will continue in lower courts.

• The Hunger Games prequel, The Ballad of Songbirds & Snakes, is projected to earn around $5.75M-$6M in Thursday night previews. The film has a lower budget and features a new cast. Despite mixed reviews, fans are excited for the franchise’s return, while some critics have criticized the lead actor’s performance. The film explores the origin of Coriolanus Snow and has a theme of human nature and fascination with villains. It has received lukewarm reviews, with a 63% rating on Rotten Tomatoes, and is expected to have a lower box office revenue than previous films.

• The Washington Post sparks debate by publishing graphic images of mass shooting aftermaths, highlighting the need for gun control measures.

CONSUMER

• Tomei Consolidated Berhad and Golden Pharos Berhad have both shown a growing return on capital employed (ROCE) of 16% over the past five years, surpassing industry averages. Shin Yang Group Berhad has seen a significant 416% increase in its ROCE. However, General Mills, Bodycote, Amazon.com, B&G Foods, Excelerate Energy, Gates Industrial, and Akamai Technologies have either experienced flat or decreasing ROCE, indicating limited growth potential and concerns about future prospects.

• Buckle’s 3Q profit declines to $51.8 million, with sales falling 8.7% to $303.5 million due to lower consumer spending. Williams-Sonoma, Inc. reports strong Q3 earnings, beating expectations with a record operating margin of 17% and earnings per share of $3.66. Despite a challenging economic backdrop, the company’s unique proposition and focus on customer service drove results. However, Williams-Sonoma’s stock drops 1.2% after missing revenue expectations due to “ongoing consumer hesitancy.”

• UK retail sales in October experienced an unexpected decline, with retail volumes dropping by 0.3% compared to the previous month and 2.7% compared to the same month last year. The slump is attributed to factors such as high interest rates, bad weather, and the cost of living crisis. Retailers are concerned about the impact on consumer spending during the crucial festive season.

• Retailers are gearing up for Black Friday 2023, with early promotions and discounts on various products. Major retailers like Amazon, Best Buy, and Walmart are offering significant savings. Analysts are divided on whether spending will increase or decrease, with rising prices and earlier Christmas shopping being factors. Shoppers are advised to research and look for genuine deals.

• Amazon plans to increase its exports from India to $20 billion by 2025 by onboarding more small sellers onto its platform.

• Luxury brands are focusing on China’s wealthiest consumers, VICs, due to declining spending power in the middle class and the pandemic’s impact.

• Spectrum Brands reports a slight decrease in net sales for Q4 2023 due to lower consumer demand for kitchen appliances and planned exit from non-strategic categories. However, there is an increase in net income and Adjusted EBITDA. The company expects a decline in sales for fiscal year 2024.

• The Children’s Place reported Q3 earnings below expectations due to higher distribution and labor costs, but saw strong digital performance.

• BJ’s Wholesale Club reported steady Q3 performance with a 2.8% increase in net sales and 6.6% increase in membership fee income. However, the company lowered its sales guidance for the fiscal year, causing stock decline. Comparable club sales were flat due to changes in consumer behavior. The company’s stock fell as it missed on same-store sales and lowered its full-year outlook.

• Shoe Carnival’s Q3 2023 sales were $319.9 million, down 6.4% YoY, with disappointing seasonal sales. EPS was $0.80. Payless ShoeSource’s parent company reported a Q3 loss of $114.3 million, causing a 14% drop in shoe stocks. Shoe Carnival’s shares fell 6.3% after reporting a sales decline in Q3 and lowering its outlook for 2023.

REAL ESTATE

• Homebuilders in the US are facing challenges such as declining confidence and slashing prices due to higher mortgage rates and concerns about housing affordability. Despite a slight increase in single-family housing starts in October, builder confidence remains low. However, recent data suggests improving conditions for home construction in the coming months, with moderating consumer price growth and lower mortgage rates potentially leading to an improved outlook for the industry.

• Mortgage interest rates in the US have fallen for the third consecutive week, reaching their lowest level since late September. The average 30-year fixed-rate mortgage rate is now 7.44%, down from 7.50% the previous week. This drop in rates is attributed to receding inflationary pressures and expectations of Federal Reserve rate cuts in 2024. The decrease in rates has led to an increase in mortgage loan applications, indicating a warming market.

• Downing Street rejects right-wing Conservatives’ proposal to override international law and deport asylum seekers to Rwanda. Former deputy prime minister Damian Green criticizes the proposal as “unconservative” and “dictatorial.” Opposition parties and some Conservative members vow to block emergency legislation allowing deportation flights. Legal experts doubt the government’s plan will succeed.

• Beazer Homes USA Inc had a strong fiscal year 2023, with $150 million in net income and increased community count. They expect growth to continue in fiscal year 2024. The company also reported strong Q4 earnings, with new home orders rising 43% year-over-year, resulting in a 4% rise in their stock.

• Analysts argue that China’s efforts to ease the cash crunch for struggling property developers should be accompanied by stronger fiscal and monetary policies. The extended slump in property sales and home prices has raised concerns about contagion in the broader financial sector. Direct interventions alone may not be sufficient to cushion the economic impact, and Beijing should consider increasing fiscal spending and further loosening monetary policy. The central bank and financial regulators have pledged to provide financing support for the property sector and address local government debt risks. The decline in China’s property market, with falling new-home prices and a debt crisis among developers, has been a significant drag on the economy, exacerbating existing challenges such as deflation and high youth unemployment.

TRAVEL

• US holiday airfares have dropped by over 13% compared to last year, with prices 5% lower than pre-pandemic levels. Thanksgiving roundtrip airfares average at $266, down 10% from last year.

ECONOMIC

• Chinese President Xi Jinping assured American executives, including Elon Musk, Tim Cook, and Ray Dalio, that China “will not fight a cold war or a hot war with anyone.” Xi emphasized the need for China and the United States to work together and rejected the view of China as a threat. He also expressed hopes of sending more giant pandas to U.S. zoos as a symbol of friendship.

• Caterpillar Inc. stock fell 1.15% on Thursday, while Robert Half Inc., C.H. Robinson Worldwide Inc., Jack Henry & Associates Inc., Raymond James Financial Inc., Western Union Co., ResMed Inc., Hormel Foods Corp., WestRock Co., Ralph Lauren Corp. Cl A, FMC Corp., BorgWarner Inc., Nucor Corp., D.R. Horton Inc., Hess Corp., General Motors Co., ConocoPhillips, Archer Daniels Midland Co., Allegion PLC, Aptiv PLC, Zoom Video Communications Inc., Philip Morris International Inc., and Regeneron Pharmaceuticals Inc. also experienced stock declines. However, General Motors workers have ratified the labor deal with the United Auto Workers union, making them the first to approve the agreement among Detroit Three automakers.

• President Joe Biden signed a temporary spending bill to prevent a government shutdown, extending funding until early 2024. The bill does not include additional aid for Israel and Ukraine. Congress still needs to address President Biden’s request for emergency national security aid.

• Cigna Group stock underperformed, while UnitedHealth Group and Elevance Health saw gains. Amazon.com Inc. stock underperformed compared to Apple, Microsoft, and Alphabet. Intuit Inc. underperformed compared to competitors. Alphabet Inc. has outperformed the market. Intel stock rose after an upgrade from Mizuho. Carnival Corp. stock rose and outperformed competitors. Cencora Inc. stock rose and outperformed the market. Ocugen Inc. stock fell, breaking a winning streak. Carrier Global Corp. stock rose, outperforming the market. Starbucks Corp. stock rose, outperforming competitors. McDonald’s Corp. stock rose, outperforming the market. Walt Disney Co. stock rose, outperforming the market.

• Far-right candidate Javier Milei’s campaign promotes conspiracy theories, raising concerns of potential violence and challenge to democratic norms in Argentina’s upcoming presidential election.

• Spanish Prime Minister Pedro Sánchez has been re-elected after securing support through an amnesty bill for Catalan separatists. This move has sparked controversy and reignited the secession issue in Catalonia, leading to protests and criticism. Sánchez’s government may face stability problems, but it is difficult to topple a Spanish government through a parliamentary maneuver. He also has the option of calling a snap election if needed.

• China is expected to keep its key lending rates unchanged at its monthly fixing, with the one-year LPR at 3.45% and the five-year rate at 4.20%. China’s central bank has also asked some lenders to cap interest rates on interbank debt instruments to keep borrowing costs low.

• Investors sold $1 billion in US Treasuries, marking the first outflow since February. Foreign ownership of Treasuries also dropped.

• The US Treasury will auction $15 billion in 9-year 8-month TIPS, $26 billion in 1-year 11-month FRNs, $68 billion in 6-month bills, $75 billion in 3-month bills, and $16 billion in 20-year bonds. Settlement dates vary.

• The London Stock Exchange Group (LSEG) intends to launch a £1 billion share buyback in 2024 and aims for mid-to-high single-digit annual revenue growth. This move comes as LSEG focuses on becoming an AI-driven data company and boosts its data and analytics revenues through its partnership with Microsoft. LSEG also plans to implement new divisional reporting and leverage its franchises for seamless workflows.

CRYPTO

• The SEC has delayed its decision on HashDex’s bitcoin futures ETF application, while BlackRock has filed for an Ethereum ETF. The approval of a crypto ETF could lead to a market rally, but caution is advised due to the potential for a price drop. Bitcoin has surged on expectations of ETF approval, and Coinbase believes it could attract the US wealth management industry. Pantera Capital predicts that bitcoin ETFs would boost prices further and expects approval by January 10.

• The SEC has implemented rules to enhance governance at clearing agencies by requiring independent directors and addressing conflicts of interest.

• CoinShares has obtained an option to acquire Valkyrie Investments’ ETF unit, including pending regulatory approval, to expand its presence in the US market.

• JPMorgan Chase’s stablecoin, JPM Coin, is being utilized by big corporate clients like Siemens, Cargill, and FedEx for its programmable money capabilities. Companies are using blockchain for tasks such as cash sweeps, margin calls, and shipping payments, leading to improved resource allocation. The investment sector is also adopting programmable money, with JPMorgan Chase, Apollo, and Superstate launching tokenized funds and initiatives.

HEALTH

• Pharmaceutical company Eli Lilly is investing $2.5 billion to construct its first manufacturing plant in Germany, located in Alzey. The facility will produce diabetes drugs and injection pens, including the off-label weight loss drug Mounjaro. This move is aimed at meeting the increasing demand for diabetes and obesity therapies and reducing dependency on global supply chains.

• Walgreens has announced that most of its stores and pharmacies will be closed on Thanksgiving Day, giving employees time off and addressing labor shortages. However, the 700 Walgreens 24-hour locations will remain open on the holiday. The decision comes amid concerns over poor work conditions and understaffing.

• Rite Aid, which is bankrupt, has filed a lawsuit against the US Department of Justice to stop a lawsuit accusing the pharmacy chain of illegally filling opioid prescriptions.