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Welcome to Read Sunday☕️

Welcome to Read Sunday☕️

Written by William Lemanske

William Lemanske
June 09, 2024 • Estimated Reading Time: 13 minutes

Welcome to Read Sunday, your essential source for a concise and impactful weekly Business & Finance recap. Dive into the pivotal market highlights from the week, distilled for your convenience, and stay tuned for the thought-provoking editor's piece that rounds off your Sunday with insightful perspectives.

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Market Recap

This Week’s Headlines

Economy & World News

OPEC+ has decided to extend their official crude output cuts into 2025 and will continue two other sets of supply curbs over different periods, including a subset led by Saudi Arabia and Russia which agreed to prolong nearly 1.7 million barrels per day of cuts set to expire this year and another 2.2 million barrels per day until the end of the third quarter. This decision was reported in a statement translated by Google and released by the Saudi Press Agency. (CNBC)
A protégé of her mentor Andrés Manuel López Obrador (AMLO), Claudia Sheinbaum, former Mexico City mayor known as the "ice lady," is set to succeed him as president, continuing his policies with the support of his ruling Morena party. (CNBC)
A senior U.S. border official reported to Reuters that the number of migrants caught illegally crossing the U.S.-Mexico border decreased by about 20% on Friday, with approximately 3,100 arrests. This drop suggests that a new restrictive policy by the Biden administration may be deterring some illegal immigration. (REU)
Indian Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) won 240 seats in Parliament, falling short of the 272 needed for an outright majority in the 543-seat lower house. As a result, India's main stock indexes, the Nifty 50 and BSE Sensex, dropped by 8% on Tuesday amid concerns that the BJP might not secure a majority. (CNBC)
In April, U.S. job openings dropped to the lowest level in over three years, falling to 8.06 million from a revised 8.36 million the previous month, according to the Bureau of Labor Statistics' JOLTS report. This decline, which was below all economist estimates surveyed by Bloomberg, also reduced the ratio of job vacancies to unemployed workers to its lowest point in nearly three years, signaling a gradual slowdown in the labor market. (BBN)
An FDA advisory panel on Tuesday rejected the use of MDMA, also known as ecstasy or molly, for treating post-traumatic stress disorder, marking a significant setback for proponents of psychedelic therapy. Despite being the first time FDA advisers have considered a Schedule I psychedelic for medical use, concerns about data inconsistencies, poor study design, and allegations of misconduct by Lykos Pharmaceuticals led to negative votes on both the treatment's efficacy and safety. This decision halts what could have been the first new PTSD treatment in over two decades. (NBC)
ADP reported that in May, companies added 152,000 jobs, a figure that is not only below the 188,000 jobs reported for April (after revisions) but also falls short of the Dow Jones consensus estimate of 175,000. The majority of these new positions were in the services sector, with only a marginal contribution of 3,000 jobs from goods producers. Leading sectors included trade, transportation, and utilities with 55,000 new jobs, followed by education and health services at 46,000, and construction with 32,000 new hires. (CNBC)
A federal appeals court has invalidated the SEC's rules mandating that hedge funds and private equity firms disclose quarterly fees and expenses to investors. The US 5th Circuit Court of Appeals in New Orleans ruled that the SEC overreached its authority with these regulations. The court sided with industry groups who contended that the rules were unnecessary for the "highly sophisticated" investors involved in private funds, with Judge Kurt D. Engelhardt stating that the SEC "exceeded its statutory authority" in adopting the rule. (BBN)
The European Central Bank (ECB) decided to lower its key interest rate to 3.75% from the record high of 4%, a change that has been anticipated despite ongoing inflationary pressures within the eurozone. This adjustment comes after the key rate remained at 4% since September 2023, with the ECB stating that the current economic conditions and inflation dynamics now warrant a moderation in monetary policy after maintaining restrictive measures for nine months. (CNBC)
In May, nonfarm payrolls saw a significant increase, adding 272,000 jobs, up from 165,000 in April and surpassing the Dow Jones consensus estimate of 190,000. Despite the strong job growth, the unemployment rate rose to 4%, marking the first time it has exceeded that level since January 2022. The sectors of health care, government, and leisure and hospitality continued to lead in job gains, aligning with recent trends. Additionally, average hourly earnings exceeded expectations, rising 0.4% for the month and 4.1% year-over-year. (CNBC)

Public Markets

Ahead of an initial public offering, hedge fund manager Bill Ackman sold a 10% stake in Pershing Square for $1.05 billion, valuing the company at over $10 billion. The stake was purchased by investors including Arch Capital Group Ltd., BTG Pactual, and ICONIQ Investment Management, among others, marking the first time the company has welcomed outside investors since its inception over 20 years ago. (BBN)
ETrade is reportedly considering banning Keith Gill, a prominent figure in the meme-stock movement, from its platform due to concerns about potential stock manipulation following his recent transactions in GameStop options. Gill, who helped fuel a resurgence in meme-stock activity, has shared screenshots showing his ETrade account with GameStop shares and options valued at $140 million, boasting total gains of $85.5 million. (WSJ)
Elon Musk directed Nvidia to prioritize processor shipments to his companies X and xAI, putting them ahead of Tesla. This decision delayed Tesla's receipt of over $500 million in processors by months. (CNBC)
A coalition led by BlackRock and Citadel Securities is set to launch the Texas Stock Exchange, a new national stock exchange aimed at challenging the regulatory environment of the New York Stock Exchange and Nasdaq. With around $120 million raised from various investors, the exchange plans to register with the Securities and Exchange Commission later this year, according to CEO James Lee in The Wall Street Journal. Trading is expected to start in 2025, with the first listing anticipated in 2026. (WSJ)
Boeing's Starliner, a human-grade space capsule designed for astronaut transport to the International Space Station, began development in 2014 after Boeing secured a $4.2 billion contract with NASA under the agency's Commercial Crew Program. NASA also awarded SpaceX a $2.6 billion contract to develop its Crew Dragon capsule. Caleb Henry, director of research at Quilty Space, emphasized that the Commercial Crew Program marked a shift from NASA's reliance on its own engineering to involving the private sector in spacecraft development. (CNBC)
Anat Ashkenazi has been appointed as the new chief financial officer of Alphabet, stepping into the role after over twenty years at Eli Lilly. She will replace Ruth Porat in July, who will transition to a new position as president and chief investment officer of Google. This change comes as Google's finance unit undergoes restructuring to allocate more resources to advancing in the AI technology race. (CNBC)

Real Estate

Bedrock Manufacturing Co., the parent company of Shinola Detroit, has appointed Steve Katzman as its new CEO, replacing Awenate Cobbina, who will now focus on expanding the company's hotel and hospitality operations. This shift comes as Bedrock Manufacturing, under the leadership of Cobbina, actively pursues expansions of their hospitality business, which currently includes one Shinola Hotel in Detroit operated by Sage Hospitality. (CRAIN)
The former CFO of the Detroit Riverfront Conservancy, William A. Smith, has been charged with bank and wire fraud for allegedly embezzling $40 million from the nonprofit organization. U.S. Attorney Dawn Ison announced the charges, which carry a potential 20-year prison sentence, stating that Smith used the funds for personal expenses and transfers to a company he co-founded over several years. (CRAIN)
Dan Gilbert's Bedrock LLC has expanded its real estate holdings by acquiring the Millender Center, located on Jefferson Avenue across from the Renaissance Center in downtown Detroit. The purchase price for this property has not been disclosed. (CRAIN)

Mergers & Acquisitions

Canadian AI startup Cohere has successfully raised $450 million in funding, with contributions from returning investors like Nvidia and Salesforce Ventures, as well as new investors such as Cisco and Canadian pension fund PSP Investments. This funding marks the completion of the first tranche of Cohere's extensive fundraising efforts, and the company continues to seek additional funds at a $5 billion valuation. (REU)
Cisco launched a $1 billion fund on Tuesday to invest in artificial intelligence startups, joining other major tech companies in backing small AI firms. Through its investment arm, Cisco has committed nearly $200 million of this fund to companies including Cohere, Mistral AI, and Scale AI. Notably, Scale AI has a valuation of nearly $14 billion, while Cohere and Mistral, both developers of foundational AI models, are each seeking to raise funds at a $5 billion valuation. (REU)
Apollo Global Management will purchase a 49% equity stake in a joint venture with Intel, relating to the new $11 billion manufacturing facility in Leixlip, Ireland. This facility, known as Fab 34, represents Intel's first high-volume production site employing the Intel 4 manufacturing process and extreme ultraviolet lithography machines. (REU)
Vanguard and NXP Semiconductors announced a joint venture, VisionPower Semiconductor Manufacturing Company, with Vanguard holding a 60% stake and NXP 40%. Construction of the new semiconductor plant is set to begin in the second half of 2024, with the first wafers expected to be shipped to customers in 2027. This venture follows Vanguard's 2019 investment in Singapore and is part of a broader industry trend to diversify semiconductor supply chains. (CNBC)
The NBA is navigating its first TV negotiations in ten years amidst challenges faced by its main broadcast partners. Warner Bros. Discovery, parent of TNT, is dealing with over $40 billion in debt, and ESPN's parent Disney is contending with a Wall Street activist due to its declining stock, making both hesitant to meet the NBA's desired rate. However, the NBA had proactively engaged with alternative partners Amazon and NBC, who were quick to show interest. As negotiations continue during the NBA Finals between the Boston Celtics and Dallas Mavericks, the league is nearing agreements with NBC, ESPN, and Amazon that could generate approximately $76 billion in media revenue over the next 11 years, according to sources close to the talks. (WSJ)
Arctos Partners LP, a Dallas-based firm managing approximately $7 billion in funds with stakes in teams like the Los Angeles Dodgers and the Golden State Warriors, has introduced a new financial index for North American sports franchises. Named the Ross-Arctos Sports Franchise Index, it is developed in collaboration with the Stephen M. Ross School of Business at the University of Michigan. This index is derived from over 400 transactions involving team stakes across major leagues including MLB, NBA, NFL, and NHL, dating back to 1960. This initiative aims to bring a more structured and scientific approach to the growing field of sports investing. (CRAIN)