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Welcome to Read Sunday☕️

Welcome to Read Sunday☕️

Written by William Lemanske

William Lemanske
May 05, 2024 • Estimated Reading Time: 15 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.

Take a look at my investment firm, Peridot, and don't hesitate to get in touch if you'd like to find out more about our latest fund, THE Fund I.

- WL

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Market Recap

This Week’s Headlines

Economy & World News

On Monday, the yen reached 160.03 against the dollar, its highest since 1990, but later retreated to around 156 amid speculation of Japanese intervention. By Wednesday, it surged over 2% to trade near 153, possibly due to further intervention, suggested by market analysts. Bank of America Global Research estimates the initial intervention may have ranged from 5 trillion to 6 trillion yen ($32.7 billion to $39.2 billion) based on Bank of Japan data. (CNBC)
European Central Bank policymaker Pablo Hernandez de Cos stated on Wednesday that the ECB is becoming more optimistic about achieving the euro zone's 2% inflation target by mid-2025, despite expecting some volatility in the coming months. While annual inflation remained at 2.4% last month, elevated services costs pose a challenge for achieving disinflation. This raises concerns that further rate cuts might need to be postponed. (REU)
The U.S. Department of the Treasury announced on Tuesday that Series I bonds, a nearly risk-free and inflation-protected asset, will yield 4.28% until October 2024. This rate represents a decrease from the previous 5.27% yield offered since November. While short-term investors may find more competitive options for cash, experts suggest that the fixed rate could still be appealing to long-term investors. (CNBC)
The Biden Administration intends to reclassify marijuana as a Schedule III substance, placing it in the same category as Tylenol with codeine, anabolic steroids, and testosterone, according to four sources familiar with the decision, as reported by NBC News. Marijuana has been categorized as a Schedule I substance for over 50 years, alongside heroin and methamphetamines. Following this news, stocks associated with cannabis experienced a surge, despite an overall downturn in the market. (CNBC)
In March, U.S. job openings fell to a three-year low, while fewer people quit their jobs, suggesting a easing labor market. This could support the Federal Reserve's fight against inflation. However, a measure of prices paid by manufacturers for raw materials rose sharply in April due to increased commodity prices. (REU)
Federal Reserve officials opted to keep interest rates unchanged and expressed concern about persistent inflation, suggesting that high borrowing costs may persist for longer. The Fed held rates steady at 5.3 percent, maintaining them at levels not seen in over two decades since July. Jerome H. Powell, the Fed chair, noted that inflation readings had surpassed expectations, emphasizing the need for "greater confidence" in inflation's decline before considering rate reductions. (NYT)
Japan appears to have conducted its second currency intervention this week, as indicated by current account figures from the central bank. This move reflects the government's heightened efforts to support the yen. Tokyo's recent intervention in the market is estimated to be around ¥3.5 trillion ($22.5 billion), based on a comparison of Bank of Japan accounts and forecasts from money brokers. (BBN)
Brazil's Minister of Mines and Energy, Alexandre Silveira, has called on Petrobras to increase natural gas supplies and lower prices to support the nation's industry. He emphasized the need for Petrobras to accelerate efforts to reduce gas reinjection into oil reservoirs and invest in new gas pipelines to enhance domestic supplies. (BBN)
China launched the Chang’e 6 spacecraft from the Wenchang Space Launch Site, marking the first mission to collect samples from the far side of the moon. The launch attracted national excitement and transformed the fishing village of Longlou into a bustling tourist spot, with crowds gathering to witness the event. (NBC)

Public Markets

Glass Lewis recommends six of Ancora's picks for Norfolk Southern's board, a blow to CEO Alan Shaw. Ancora also gains support from labor groups, aiming to remove Shaw and seven directors blamed for stock underperformance and fallout from a 2023 derailment. (CNBC)
A federal judge in New Jersey rejected challenges from Johnson & Johnson and Bristol Myers Squibb to the Biden administration's Medicare drug-price negotiations, affirming the program's constitutionality. This is a significant win for the White House and weakens the pharmaceutical industry's strategy of seeking split decisions across lower courts. (CNBC)
Bob Bakish is stepping down as CEO of Paramount Global, to be replaced by three executives forming the "Office of the CEO." This change comes amidst ongoing merger discussions with Skydance. (CNBC)
Glencore's major shareholders, including former CEO Ivan Glasenberg, the Qatar Investment Authority, and BlackRock Inc., are pushing for the company to retain its coal assets, casting doubt on the proposed spinoff. (BBN)
Microsoft revealed plans to invest US$1.7 billion over the next four years in new cloud and AI infrastructure in Indonesia. This investment also includes AI skilling opportunities for 840,000 individuals and support for the country's expanding developer community. It marks the largest single investment Microsoft has made in its 29-year history in Indonesia. These efforts align with the Indonesian government's Golden Indonesia 2045 Vision, which seeks to elevate the nation into a global economic leader. (MSFT)
Moosejaw's founders, the Wolfe brothers, along with actor Edward Norton, have collaborated to establish Zeck, a Detroit-based tech startup focused on redefining board meetings through its cloud-based software platform. The company recently secured a $7.5 million investment in its latest funding round, led by Salesforce Ventures, the investment division of Salesforce. (CRAINS)
Walmart is shutting down its Walmart Health initiative, leading to the closure of all 51 doctor-staffed health clinics in Arkansas, Florida, Georgia, Illinois, and Texas. Additionally, the company is discontinuing its virtual care option. However, Walmart pharmacies and vision centers will remain unaffected. Patients with scheduled appointments will still be seen, with Walmart assisting in directing them to alternative high-quality providers within their insurance networks to ensure ongoing care. (CNBC)
Binance founder Changpeng "CZ" Zhao was sentenced to four months in prison for violating anti-money laundering laws. Despite this, his $43 billion fortune remains intact, and his influence on Binance persists through his connections and family ties within the company. (BBN)
Cocoa prices experienced a significant decline this week, attributed to dwindling liquidity and volatile trading as buyers resist high costs. Prices fell by nearly 29% over the past week, reaching levels last seen in mid-March. On Friday, New York futures briefly dropped to $6,990 a metric ton, marking a 4% decrease before partially rebounding. Currently, they are trading at $7,560 a ton. (WSJ)
Viking commenced trading on the New York Stock Exchange on Wednesday under the ticker "VIK," opening at $26.15. The company's IPO aligns with a robust resurgence in cruise bookings. (CNBC)
Johnson & Johnson announced its intention to settle nearly all of the thousands of lawsuits in the U.S. alleging that its talc-based products caused ovarian cancer, agreeing to pay $6.5 billion. The settlement plan involves resolving the lawsuits through a third bankruptcy filing of a subsidiary company, LTL Management. However, J&J clarified that the remaining pending lawsuits related to mesothelioma, a rare cancer, will be addressed separately outside of the new settlement plan. (CNBC)
Pfizer is reportedly working on an online platform for patients to directly order medications, including the anti-Covid drug Paxlovid and a migraine nasal spray. This move represents a growing trend among drugmakers to bypass industry middlemen and sell products directly to consumers. The platform, set to launch later this year, will connect US customers with independent telehealth consultants who can prescribe the medications. A drug-dispensing partner will then fill and ship the prescriptions to the patients. (FT)
Apple Inc. has unveiled the largest buyback ever in the United States, with its board approving an additional $110 billion in share repurchases. This move surpasses Apple's own previous record for the largest buyback value announced in the US, set in 2018 when the company authorized $100 billion in share repurchases, according to data from market research firm Birinyi Associates going back to 1999. (BBN)

Real Estate

WeWork and its main backers, including SoftBank, have struck a new restructuring deal to pull the workspace provider out of bankruptcy. Senior lenders will provide around $450 million in financing in exchange for equity. SoftBank and other debt holders may also swap debt for stock after bankruptcy. (BBN)
Organizers of the 2024 NFL Draft in Detroit anticipate the event's economic impact to surpass initial projections. While an official report won't be available until June, Visit Detroit's President Claude Molinari stated that the draft significantly boosted local businesses. Initial projections ranged from $150 million to $175 million, but Molinari expects the impact to exceed these figures. According to East Lansing-based Anderson Economic Group LLC, the net economic impact is forecasted to surpass $165 million, with a direct economic impact of $100,146,418 on Detroit, including estimated attendee expenditures totaling $37,746,418. (CRAINS)

Mergers & Acquisitions

L'Occitane International's chairman and controlling shareholder, Reinold Geiger, plans to privatize the company, giving it an equity value of 6 billion euros ($6.4 billion). The deal will value the remaining shares at up to HK$13.91 billion ($1.78 billion), as stated in a filing to the Hong Kong Stock Exchange on Monday. (REU)
Lear Corporation is acquiring WIP Industrial Automation, a Spanish systems integrator known for advanced automation solutions. The deal, subject to regulatory approvals, is expected to finalize by Q3 2024. WIP brings 25 years of experience and expertise in robotics and AI-based computer vision, enhancing Lear's manufacturing capabilities and efficiency amidst current economic challenges. (LEAR)
Apollo and Sony have formally expressed interest in acquiring Paramount through a $26 billion takeover, as conveyed in a letter to the Paramount board. A special committee from Skydance consortium might receive a recommendation on the next steps from Paramount as early as Thursday. Certain Paramount investors advocate for engaging with Apollo and Sony instead of pursuing the Skydance deal, as it offers a premium to all common shareholders. (CNBC)
SES has announced a $3.1 billion acquisition of Intelsat S.A., a move set to establish a significant European presence but prompting investor worries about debt. The deal involves SES purchasing 100% of Intelsat Holdings S.a.r.l equity. This consolidation reflects a trend among European satellite firms aiming to enhance competitiveness against competitors like Elon Musk's Starlink and Amazon's Project Kuiper. (REU)
PG&E is close to finalizing a deal to sell a significant stake in its power plant fleet to investment firm KKR. The move comes as PG&E aims to secure funding for wildfire prevention efforts. The utility plans to transfer its hydroelectric system and other facilities into a subsidiary called Pacific Generation, intending to sell 49.9% of it to KKR, a major infrastructure investor. (WSJ)
Exxon Mobil is on track to finalize its $60 billion megadeal for Pioneer Natural Resources after reaching an agreement with antitrust enforcers. This agreement involves not adding former Pioneer CEO Scott Sheffield to its board, according to sources familiar with the matter. The Federal Trade Commission is expected to allege this week that Sheffield engaged in collusive activity potentially impacting oil prices, including exchanging numerous messages with representatives of the Organization of the Petroleum Exporting Countries (OPEC) about market dynamics. Notably, there are no allegations of wrongdoing by Exxon in this matter. (WSJ)
Sony Pictures and private-equity firm Apollo Global Management have jointly submitted an all-cash offer of $26 billion for Paramount Global, marking the latest development in a complex deal saga. The offer, signed by Sony Pictures Chief Executive Tony Vinciquerra and Aaron Sobel from Apollo, is the starting point for negotiations and is nonbinding. Paramount had been in exclusive merger discussions with Skydance Media, but some shareholders objected to the deal, alleging favorable treatment for controlling shareholder Shari Redstone's stake in National Amusements, which controls Paramount. (WSJ)