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Welcome to Read Sunday☕️

Welcome to Read Sunday☕️

Written by William Lemanske

William Lemanske
April 14, 2024 • Estimated Reading Time: 11 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.

Market Recap

This Week’s Headlines

Economy & World News

Fitch downgraded its outlook on China's sovereign credit rating to negative on Wednesday, attributing the change to risks in public finances amid increasing economic uncertainty. This adjustment, which follows a similar action by Moody's in December, reflects concerns as China attempts to transition to new growth models while boosting its sluggish post-COVID recovery with fiscal and monetary initiatives. (REU)
The Biden administration has introduced a regulation requiring over 200 chemical plants in the U.S. to reduce emissions of toxic pollutants. This effort, led by the Environmental Protection Agency, targets the reduction of ethylene oxide and chloroprene, chemicals used in medical device sterilization and rubber production, respectively. Both are classified as likely carcinogens, particularly affecting the health in Louisiana's industrial "Cancer Alley." This is the first update to pollution standards for chemical plants in nearly 20 years. (NYT)
For the first time, the NCAA women’s basketball tournament final outdrew the men’s in viewership, spotlighting player Caitlin Clark's rise and the sport's growing popularity. Despite this, the financial disparity remains stark: the women’s tournament earned $6.5 million for TV rights, compared to $873 million for the men’s. A new deal next season will boost the women’s earnings to $65 million annually, but this is still far less than the men’s. (WSJ)
In 2023, ByteDance Ltd. saw a significant 60% increase in profit, surpassing the growth of its online rivals Tencent Holdings Ltd. and Alibaba Group Holding Ltd., even amidst economic challenges. Earnings before interest, tax, depreciation, and amortization for the TikTok owner jumped to over $40 billion, up from $25 billion the previous year, according to sources familiar with the matter. The company's sales also increased, rising from $80 billion to nearly $120 billion. (BBN)
Russian oil is trading at about $75 a barrel, significantly above the Group of Seven's $60 cap intended to limit funding for Moscow's actions in Ukraine. This price, reported by Argus Media, suggests widespread non-compliance with the cap. U.S. officials believe the rise is due to complex geopolitical dynamics. The cap requires western transporters of Russian oil to certify that the oil costs $60 or less per barrel, or they are prohibited from providing their services. (BBN)
The 10-year Treasury yield rose above 4.5% on Wednesday, influenced by higher-than-expected March inflation data, signaling potential prolonged high interest rates by the Federal Reserve. The 10-year yield increased by over 18 basis points to 4.548%, while the 2-year yield climbed 22 basis points to 4.969%. Yields rise as bond prices drop, with one basis point equal to 0.01%. (CNBC)
March's consumer price index rose by 3.5%, driven by higher shelter and energy costs. This uptick, which exceeded expectations, prompted traders to delay the expected Federal Reserve rate cut to September, according to CME Group. (CNBC)
The producer price index (PPI) increased by 0.2% this month, below the expected 0.3%. Over the past year, the PPI rose 2.1%, the highest annual increase since April 2023, suggesting potential inflation pressures. Meanwhile, initial jobless claims fell to 211,000, below the forecasted 217,000, indicating a robust job market. (CNBC)
The European Central Bank (ECB) kept interest rates stable for the fifth consecutive meeting but indicated potential rate cuts if inflation nears its 2% target. President Lagarde highlighted that the ECB's actions are not directly mirrored by those in the U.S., responding to speculations about the Federal Reserve's response to recent high U.S. inflation. (CNBC)
Iran launched its first direct attack on Israel from Iranian territory, firing cruise missiles, ballistic missiles, and over 100 drones. The attack, a response to a recent strike on an Iranian site in Damascus, saw most projectiles intercepted by Israeli, American, and allied defenses. In Israel, air-raid sirens and explosions occurred, with minimal damage reported and one child seriously injured. Following the attack, President Biden reaffirmed the U.S.'s commitment to Israel's security, and the U.S. military had previously repositioned resources in anticipation. (WSJ)

Public Markets

The US will provide Taiwan Semiconductor Manufacturing Co. (TSMC) with $6.6 billion in grants and up to $5 billion in loans to support the construction of three chip-making plants in Arizona. This effort is part of President Biden’s initiative to boost domestic tech production. The investment will enhance TSMC’s role as a key supplier for companies like Apple and Nvidia. TSMC's stock rose 3.7% after the announcement. (BBN)
Google unveiled a new version of its data center artificial intelligence chips, known as tensor processing units (TPUs), and introduced an ARM-based central processor on Tuesday. These developments are significant as Google's TPUs represent one of the few credible alternatives to Nvidia's advanced AI chips. However, these TPUs are exclusively available through Google's Cloud Platform and are not available for direct purchase by developers. (REU)
Apple Inc. doubled its iPhone production in India last fiscal year, reaching $14 billion as it seeks to diversify manufacturing beyond China. The company now produces approximately 14% of its flagship devices in India, equivalent to about one in every seven iPhones, according to sources familiar with the situation who chose to remain anonymous. (BBN)
Adobe Inc. is developing an AI text-to-video generator, offering $120 to its network for videos of daily activities and emotions to enhance AI training. This move is part of Adobe's broader integration of generative AI into its software products like Photoshop and Illustrator. (BBN)
Apple Inc. is set to revamp its Mac lineup with new M4 processors designed to enhance artificial intelligence capabilities, aiming to boost declining computer sales. The M4, currently nearing production, will come in at least three variants and will be used across all Mac models. This update follows a 27% drop in Mac sales last fiscal year and a flat performance during the holiday period, despite the recent launch of the M3 chips, which had minimal performance improvements over their predecessors. (BBN)

Real Estate

Credit Acceptance Corp. plans to auction off a significant part of its office portfolio in Southfield next month. The sale includes the 297,000-square-foot Raleigh Officentre located at 25300-25330 Telegraph Road. The bidding will open on May 13, as reported by CoStar Group Inc., a real estate information service based in Washington, D.C. (CRAIN)
Blackstone (NYSE: BX) and Apartment Income REIT Corp. (NYSE: AIRC), also known as AIR Communities, have agreed that Blackstone Real Estate Partners X will buy all outstanding shares of AIR Communities at $39.12 each in a deal worth about $10 billion, including debt. This all-cash offer is a 25% premium over AIR Communities' share price as of April 5, 2024, and over the average share price of the past 30 days. (BX)
The Detroit Golf Club is set for a $16 million renovation of its North Course, the most significant capital project in its 120-year history, aimed at modernizing the club and securing its role as the host of Michigan's only PGA Tour event. This renovation will address critical infrastructure issues, including replacing outdated drainage and irrigation systems. The project, approved by club members, will begin after the 2025 Rocket Mortgage Classic, with a reopening planned for June 2026. Further renovations for the South Course are being considered for 2027 or 2028, pending additional member approval. (CRAIN)
The Michigan State University Board of Trustees has approved the construction of a $335 million biomedical research center in Detroit, part of a larger $3 billion development in partnership with Henry Ford Health and the Detroit Pistons. The project will also include a new hospital tower and mixed-use residential buildings. Construction is scheduled to start in mid-May, aiming for a 2027 opening. (CRAIN)

Mergers & Acquisitions

Microsoft announced a $2.9 billion investment to boost cloud computing and AI infrastructure in Japan, aiming to train over 3 million people in AI, open the first Microsoft Research Asia lab in Japan, and enhance cybersecurity with the Japanese government. This initiative, announced during Prime Minister Fumio Kishida's U.S. visit, supports Japan's efforts to fight deflation and spur economic growth through digital transformation. (MSFT)
Exxon Mobil Corp. is set to expand its Fawley refinery, the UK's largest, with a $1 billion investment aimed at boosting diesel production. This new facility, operational by early 2025, will initially produce diesel to decrease the UK's fuel imports. It may later shift to producing conventional jet fuel or sustainable aviation fuel from vegetable oils, alongside increased petrochemicals output. (BBN)