Morning Reads
- China’s Fading Recovery Reveals Deeper Economic Struggles
- Dimon Confronts New China Reality in First Visit Since Covid
- A China Crypto Pioneer Warns Hong Kong May Cool on Digital Assets Longer Term
- Winklevoss Twins Attempt Pivot After Gemini Loses Money and Employees
- Turkish Lira Sinks, Stocks Gain as Investors Bet on Policy Shift
- Why Are Food Prices So High in Europe?
- Companies Push Prices Higher, Protecting Profits but Adding to Inflation
- Following Setbacks, Climate Activists Rethink Their Approach
- Debt-Limit Deal Faces Final Test in Congress to Avert US Default
- Can the ‘California Effect’ Survive in a Hyperpartisan America?
- American Cities Are Starting to Thrive Again. Just Not Near Office Buildings
- Stay Alive Until 2025: How America’s Property Barons Plan To Survive The Commercial Real Estate Crisis
- More High-School Grads Forgo College in Hot Labor Market
- Company Insiders Made Billions Before SPAC Bust
- Nvidia To Join $1 Trillion Club As AI Chip Leader Unveils Expanded Lineup
- Too Rich for Cathie Wood, Nvidia Shares Stretch Valuation Limits
- Deutsche Bank Is on an M&A Hiring Spree
- Why Microsoft’s $75 Billion Bid for Activision Blizzard Hinges on Call of Duty
- Toyota, Daimler Strike Deal to Combine Japanese Truck Operations
- Air New Zealand to Weigh Passengers Before They Board the Airplane
Todays Open Interest Change
PREMIUM
Prepper
Investors are bracing for a week of political wrangling in Washington after President Biden and House Speaker Kevin McCarthy inked a deal on the debt limit. Both sides now have to muster enough votes to win Congressional approval, despite some opposition from the likes of the Republican Freedom Caucus and progressives in the Democratic Party. While enough bipartisan support is expected to be eventually garnered, the measure could still run into some procedural obstacles, as the clock ticks down to avoid a catastrophic default by June 5.
Legislative text: The agreement lifts the current $31.4T deal ceiling into 2025, meaning the limit on government borrowing would be extended until after the next presidential election. Non-defense spending will be capped at current levels for the next fiscal year, and only rise by 1% in 2025. Congress would also need to approve 12 annual spending bills or risk facing a snapback to spending limits from the previous year.
Other changes that were central to the compromise included limiting some food stamp provisions to encourage recipients to find jobs. The agreement also halts some funds to hire new IRS agents, claws back billions of dollars in unspent COVID relief, and would speed up big energy projects through permitting reform. In addition, a pause on student-loan repayments will come to an end in August, though Biden's student loan forgiveness plan will end up being decided by the Supreme Court.
Go deeper: U.S. stock index futures advanced following the release of the bill, with SA Investing Group Leader ANG Traders forecasting new market highs, though Mott Capital Management sees the potential for a deal draining a massive amount of liquidity from the market. The measure will be taken up this afternoon by the House Rules Committee, which will determine the framework for considering the legislation before a vote takes place in the House on Wednesday. If approved, a decision in the Senate would follow, and could happen by the weekend. (17 comments)
Building on a meteoric rally, shares of Nvidia (NASDAQ:NVDA) are up another 3.5% in premarket trade, putting the stock over $400 to start the week. It also puts the company above a $1T valuation if the gains will hold, as the stock market darling rides a wave of investor exuberance surrounding artificial intelligence. The chipmaker has responded in kind by refreshing its PR feed, publishing seven separate press releases over the last 24 hours. Among them were a slew of products and services tied to artificial intelligence, like an AI supercomputer platform called DGX GH200, that's expected to be used by initial customers like Google (GOOGL), Meta (META) and Microsoft (MSFT). Will the rally go on? SA analysts like Vlad Deshkovich and JR Research hash it out in two new articles Long-Term Growth Gets Priced In and Don't Wait Till Everyone Starts Selling. (12 comments)
Tensions are reportedly rising between the world's biggest oil producers, as Russia continues to pump huge volumes of cheaper crude oil into the market and undermine Saudi efforts to boost prices. Last week, the Kingdom's energy minister issued a warning to oil speculators, signaling to the market that a further production cut was possible, but Moscow's deputy prime minister soon contradicted him by expressing doubts about further reductions. Remember that the two OPEC+ heavyweights entered an oil price war in 2020 over proposed crude production cuts, which sent prices crashing. However, don't count out a resolution, with the ties and relationship able to survive difficult dynamics like Russia's invasion of Ukraine. (161 comments)
Meet the newest candidate looking to identify as an ESG stock: Philip Morris (NYSE:PM). CEO Jacek Olczak believes that efforts - like pushing away from cigarettes towards devices like its IQOS heated tobacco stick - could set up the tobacco group for inclusion in one of the fastest-growing segments of the investment management industry. In fact, vapor-based nicotine alternatives accounted for about a third of Philip Morris' revenues in 2022, though others see an ESG classification as an inherent contradiction. Compounding the problem is that there's no standard framework that defines "environmental, social and governance," despite developments in areas like Europe, where many asset managers and pension funds have sold off tobacco stocks in response to ESG mandates. (7 comments)
Today's Markets
In Asia, Japan +0.3%. Hong Kong +0.2%. China +0.1%. India +0.2%.
In Europe, at midday, London -0.6%. Paris -0.4%. Frankfurt +0.5%.
Futures at 6:30, Dow +0.2%. S&P +0.6%. Nasdaq +1.1%. Crude -1.2% to $71.80. Gold +1.5% to $1973.70. Bitcoin +0.1% to $27,893.
Ten-year Treasury Yield -10 bps to 3.72%
Today's Economic Calendar
9:00 S&P CoreLogic Case-Shiller Home Price Index
9:00 FHFA House Price Index
10:00 Consumer Confidence
10:30 Dallas Fed Manufacturing Survey
1:00 PM Fed's Barkin Speech
Companies reporting earnings today »
What else is happening...
Debt ceiling deal would speed up Mountain Valley Pipeline (ETRN).
REITs continue downward trajectory even as other major indices gain.
Paramount (PARA): Potential merger arbitrage with downside protection.
Concerns over COVID lockdowns in China may be overstated.
Why 2023 is turning into the year of the healthcare spinoff.
Drug pricing watchdog raises alarm over upcoming liver disease meds.
Next set of COVID boosters to target new Omicron variants.
Disgraced Theranos founder Elizabeth Holmes reports to prison.
ZIM (ZIM): A buy-high-sell-low investment strategy isn't viable.
Rolls-Royce (OTCPK:RYCEY) eyes cutting thousands of jobs in turnaround.