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Welcome to Read Sunday☕️

Welcome to Read Sunday☕️

Written by William Lemanske

William Lemanske
May 12, 2024 • Estimated Reading Time: 16 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.

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Market Recap

This Week’s Headlines

Economy & World News

Jim Simons, a renowned mathematician and the founder of the highly successful quantitative hedge fund Renaissance Technologies, has passed away. His foundation announced his death on its website. Simons was a pioneer in using mathematical models and algorithms for investment decisions, achieving a remarkable track record with his flagship Medallion Fund. Between 1988 and 2018, the fund recorded annual returns of 66%, rivaling investment giants like Warren Buffett and George Soros, as detailed in Gregory Zuckerman’s book, “The Man Who Solved the Market.” (CNBC)
Private equity investors may soon be able to own up to 30% of NFL teams, with individual buyout firms potentially acquiring up to 10% per team. These discussions are part of ongoing confidential deliberations, reviewed by a special NFL committee examining league ownership rules. Although a final decision has not been made, the committee will present their findings at the NFL meetings in Nashville, starting May 20, following a briefing and delayed vote in March. (BBN)
TikTok has filed a lawsuit against the U.S. government challenging a law that mandates its Chinese parent company, ByteDance, to sell the app or face a national ban. President Biden signed this legislation in April, allowing ByteDance nine months to secure a buyer for TikTok, with the possibility of a three-month extension if a deal is underway. The lawsuit raises issues about balancing First Amendment rights with national security concerns. (CNBC)
Bob and Ellen Thompson, nonagenarians from Michigan who made their fortune in the asphalt-paving industry, are donating $121 million to enhance a scholarship program at Bowling Green State University. After selling their successful business in 1999 for over $420 million, they generously shared more than $125 million with their employees. The couple has also established several scholarships in Michigan and Ohio schools over the years. (CRAIN)
The Bank of England announced on Thursday that it would maintain its current interest rates, a move anticipated by many as part of its strategy to control inflation through restrictive monetary policy. However, the bank cautioned that a rate cut in June is not guaranteed. The Monetary Policy Committee's decision to hold rates was supported by a 7-2 vote, with two members dissenting in favor of a cut, an increase from just one in the previous meeting. (NBC)
Ascension Hospital is currently managing a significant cyber-attack affecting its network of 140 hospitals across 19 states, including 14 in Michigan. The attack, which began yesterday, has disrupted clinical operations, prompting patient diversions and a return to paper records. According to an ER doctor in southeast Michigan, systems are expected to be down for two weeks, necessitating manual overrides of medication dispensing machines. Ascension has launched an immediate investigation and remediation efforts, although the source of the attack remains unknown. (WXYZ)
Last week, the number of Americans applying for new unemployment benefits climbed to its highest point in over eight months, signaling a cooling labor market. This data from the Labor Department's weekly jobless claims report adds to recent evidence of economic slowdown, including April’s report showing the smallest job growth in six months and March's job openings falling to a three-year low. (REU)
Speaker Mike Johnson successfully countered a removal attempt led by Representative Marjorie Taylor Greene and other GOP hard-liners, with a significant number of Democrats joining most Republicans to defeat the motion. The resolution to end the ousting effort passed decisively with a vote of 359 to 43, and seven members voting "present." This rare bipartisan support marks a notable shift, as members of the minority party typically do not support the opposing party’s speaker. This contrasts sharply with the last Republican speaker, Kevin McCarthy, whose removal was facilitated by Democratic votes last fall. (NYT)
The US Securities and Exchange Commission (SEC) is investigating Boeing Co. for potentially misleading statements about safety practices after a panel blew off a 737 Max 9, causing significant damage during a January flight. The probe focuses on whether Boeing's communications violated SEC rules by misleading investors, related to the incident that occurred on an Alaska Airlines flight on January 5. The details of the investigation, shared by sources wishing to remain anonymous, examine statements made before and after the event. (BBN)
The Senate has passed a bill to reauthorize federal aviation programs for five years, adding new safety measures and consumer protections amid current air travel disruptions. Awaiting House approval, the bill allocates over $105 billion to the FAA and $738 million to the NTSB for improvements in airport modernization and safety. It also includes provisions to boost air traffic controller hiring, ensure airlines' refund obligations, provide fee-free family seating, and strengthen protections for passengers with disabilities. (NYT)
The U.K. economy has exited a recession with a 0.6% GDP increase in the first quarter, surpassing the 0.4% growth expected by economists. The country had experienced a mild recession in the latter half of 2023, driven by ongoing inflation pressures. Typically, a recession is defined by two consecutive quarters of economic decline. For the first quarter of 2024, the U.K.'s production sector grew by 0.8%, although construction declined by 0.9%. Additionally, monthly data shows the economy expanded by 0.4% in March, building on a 0.2% increase in February. (CNBC)
The Biden administration is gearing up to increase tariffs on clean-energy products from China, including electric vehicles, critical minerals, solar goods, and batteries. These tariffs are expected to be announced on Tuesday and are part of a review process initiated to reassess tariffs imposed by former President Donald Trump on around $300 billion worth of Chinese goods. (WSJ)

Public Markets

Nvidia Corp. is investing in UK startup Wayve Technologies Ltd., participating in a $1.05 billion funding round aimed at advancing autonomous-driving technology. Led by SoftBank Group Corp. and supported by Microsoft Corp., this funding marks one of the largest for a European AI company and emphasizes strong investor interest in AI and the self-driving car sector. (BBN)
Amazon will invest $9 billion to expand its cloud services in Singapore through 2028, responding to the rising demand for artificial intelligence computing in Asia. This investment by Amazon Web Services adds to the $8.5 billion previously spent on cloud infrastructure in the city-state. (WSJ)
Apple, marked by a red down-pointing triangle indicating a 0.69% decrease, is developing a specialized chip for AI software in data-center servers, under the project code-named ACDC. This initiative extends Apple's expertise from consumer devices to servers. The timing for the release of this chip is still uncertain, but Apple may introduce new AI products at its Worldwide Developer Conference in June. (WSJ)
In April, Tesla sold 62,167 China-made electric vehicles, an 18% decline from the previous year, underperforming in a surging market, according to China Passenger Car Association data. Shares fell 3.8% due to concerns about decreasing demand and intensifying competition from Chinese rivals. These vehicles, accounting for over half of Tesla's global deliveries last year, are also exported to various markets including Europe. More detailed data will be released later this week. (REU)
OpenAI is reportedly developing a web search feature for ChatGPT that could directly compete with Google and the AI search startup Perplexity. According to a source familiar with the project, this feature will enable users to ask questions and receive answers that include details from the web, complete with citations to sources like Wikipedia entries and blog posts. The feature may also incorporate images alongside written responses when relevant, such as a diagram illustrating how to change a doorknob. (BBN)
In March, Apple's iPhone shipments in China saw a 12% increase, rising to 3.75 million units from 3.35 million the previous year. This growth followed price reductions by Apple and its retailers. The data, released by the China Academy of Information and Communications Technology (CAICT), a research firm affiliated with the Chinese government, also highlighted a general 12% increase in shipments of foreign-branded phones in China. (REU)
Google DeepMind has introduced an updated version of AlphaFold, an AI tool designed for predicting protein structures, which could significantly advance biological research and generate substantial commercial value. According to Demis Hassabis, CEO of DeepMind and its spinoff Isomorphic Labs, this AI system has the potential to transform medicine and create enormous economic benefits. In an interview with Bloomberg Television, Hassabis expressed hopes for Isomorphic Labs to become a multi-hundred billion dollar business, while also providing immense societal and humanitarian benefits. (BBN)
Novavax Inc. shares surged by up to 146% after signing a $1.2 billion licensing agreement with Sanofi for a combined Covid-19 and flu vaccine. The deal includes $500 million upfront to Novavax and up to $700 million in milestone payments, along with tiered royalties on vaccine sales. Sanofi also acquired a 5% equity stake in Novavax. Despite the jump, the stock price of $10.30 still trails its early 2021 high of about $320. (BBN)
Apple Inc. is nearing a deal with OpenAI to integrate the startup's technology into the iPhone, as part of its larger initiative to incorporate artificial intelligence capabilities into its devices. Sources familiar with the matter reveal that negotiations between the two parties are in the final stages, with plans to utilize ChatGPT features in Apple's upcoming iOS 18 operating system for the iPhone. Additionally, Apple has engaged in discussions with Alphabet Inc.'s Google regarding the possibility of licensing the Gemini chatbot, although no agreement has been reached yet. (BBN)

Real Estate

Magna International, a leading global auto parts manufacturer, is set to enhance its significant presence in Southeast Michigan. The company plans to create 363 new jobs and invest $39 million across three suburban Detroit sites. According to a state news release on Thursday, Magna will open an engineering center for lighting in Novi, an R&D center in Troy, and expand manufacturing capacity in Lyon Township. (CRAIN)
Michigan Acquisition East LLC, the new owner of the 600 tower—a 21-story, 336,000-square-foot office building next to the General Motors complex in the Renaissance Center—is seeking approval from the Planning Commission to expand the building’s potential uses. The building is located at St. Antoine Street and East Jefferson Avenue. (CRAIN)
The Fisher Body No. 21 plant, a long-standing symbol of Detroit's rise and fall, is now undergoing redevelopment. Construction has begun to revitalize the decrepit building, which has stood abandoned and overlooked I-75 and I-94 as an eyesore. The plant, located near the interchange of these major freeways, has been unoccupied since 1993. (CRAIN)
Construction has commenced on an $80 million, four-story mixed-use building in downtown Birmingham, beginning with the demolition phase. The project, developed by Ron Boji and located on East Brown Street near Old Woodward Avenue, is adjacent to the new RH store currently under construction. JPMorgan Chase & Co., based in New York City, will be the anchor tenant, occupying all 42,000 square feet of the office and commercial space on the first and second floors. This move consolidates two of its nearby Oakland County offices into one, offering wealth management and commercial banking services in the new location. (CRAIN)

Mergers & Acquisitions

Private equity firms are considering a buyout of Peloton, according to sources cited by CNBC. Discussions have focused on reducing Peloton's operating expenses to enhance the attractiveness of the deal. Recently, Peloton announced the resignation of CEO Barry McCarthy and plans to reduce its workforce by 15%, following a disappointing earnings report. (CNBC)
T-Mobile US and Verizon Communications are negotiating to acquire parts of U.S. Cellular, one of the last major regional wireless carriers. T-Mobile is close to sealing a deal for over $2 billion, which includes operations and spectrum licenses, and could finalize it by the end of the month. Meanwhile, discussions between Verizon and U.S. Cellular are ongoing and may extend longer or not result in a deal. (WSJ)
Spanish bank BBVA launched a hostile all-share takeover bid valued at 12.23 billion euros ($13.1 billion) for Sabadell. This action, announced on Thursday, came after Sabadell's board had already rejected an identical proposal earlier on Monday. The government quickly expressed opposition to the takeover. Hostile bids are uncommon in European banking and often lead to prolonged negotiations involving political and regulatory concerns about potential instability. (REU)
Norfolk Southern shareholders elected three of the seven director nominees proposed by Ancora but did not succeed in replacing incumbent CEO Alan Shaw. This outcome marks a partial victory for Ancora, concluding a campaign that garnered support from union leaders, investors, and advisors for the activist group. Although the result signals a call for change within the company, it did not fully align with the recommendations from proxy advisors on how shareholders should vote. (CNBC)