Balance Sheet Showdown

Good Morning Everyone! Here is the interest rate you will earn on your bank deposit: 

- Wells Fargo: 0.15%

- Citibank: 0.05%

- Chase: 0.01%

Meanwhile, you can earn 5% on money market fund.

Do what you will with this information.

…and Elon agrees - It’s time to take your money out of a savings account and put it in a money market fund.

Market

Prices as of 4pm 5/7/23

Macro

Biden and McCarthy Talk Debt Ceiling as Clock is Ticking To Default,.

• Biden and top Republican lawmakers will declare their positions face to face today on raising the $31.4T U.S. debt ceiling, with an unprecedented default looming in three weeks if Congress does not act.

• Economists warn a lengthy default could send the U.S. economy into a deep recession with soaring unemployment, while destabilizing the global financial system that's built on U.S. bonds.

• The US has never defaulted on its obligations, and this ceiling issue usually comes and goes, but any drawn-out conclusion could have the market pricing in a doomsday scenario.

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With CPI Print Tomorrow, Firms Favouring Price Over Volumes.

• Companies from automakers to hoteliers keep on sacrificing sales volume – sometimes by design, sometimes by necessity – in favor of higher prices, a dynamic that will test the Federal Reserve’s efforts to rein in inflation. We’re also seeing this microcosm present itself through a boom in the luxury goods market.

• “Price over volume” was adopted by certain industries at the height of the pandemic, when supplies and labor were both hard to come by. Changing company/human behaviours can make policy changes intended to stamp out inflation more uncertain.

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China Imports Show Signs Of Global Slowing.

• Chinese imports plunged and export growth slowed in April as the recovery waned, raising concerns about the country’s ability to boost the global economy.

• Overseas shipments expanded 8.5% from a year earlier to $295B, the customs administration said Tuesday in Beijing — slowing from the double-digit gain in March.

• Imports, dropped 7.9% to $205B, much worse than the median projection of a 0.2% decline. That left a trade surplus of $90B for the month. 

Stocks

Lucid posts a wider loss as demand concerns linger, says it has enough cash to last into 2024. “We are on track to produce over 10,000 vehicles in 2023, with companywide initiatives ongoing that will enable Lucid to pivot to higher volumes as market conditions allow,” CEO Peter Rawlinson said on Monday.

• Loss per share: 43 cents

• Revenue: $149.4 million vs. $209.9 million expected.

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Tyson Foods Fell most since 2008 After Cutting Sales Outlook

• The company said it now sees revenue of $53 billion to $54 billion this year, below the prior forecast of $55 billion to $57 billion.

• The company said it’s still facing higher prices for feed and livestock but can’t pass the extra costs to consumers because of waning demand. Its average sale price dropped 10.3% for pork and 5.4% for beef last quarter.

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After the market close, Palantir Technologies put up a stellar quarter. They expect to be profitable every quarter this year and described demand for its new artificial intelligence products as “without precedent.” Shares soared 20%+ in extended trading.

• Adjusted income from operations is expected to be $506M - $556M in 2023. vs. consensus of $496.5M.

• Revenue for the first quarter was $525M, up 18% YoY vs. street at $506M.

Energy

Aramco’s Profit Slides as Oil Boom Cools:

• Saudi state oil giant Aramco on Tuesday reported a 19% drop in its first-quarter earnings, recording net income of $31.9B down from $39.5B the previous year amid falling oil prices.

• Oil prices are at lower levels in recent months amid fears that a slowing global economy would crimp demand and due to a gusher of cheaper Russian crude supplies.

Earnings

Yesterday’s highlights:

Paypal PYPL: EPS of $1.17 vs. estimates of $1.10, Revenue rose to $7.04 billion from $6.48 billion, whereas the FactSet consensus was for $6.98 billion.

• Shares of PayPal were down nearly 6% in after-hours trading Monday.

• PayPal logs earnings beat, but stock falls as margin talk underwhelms.

• While the beat on the quarter and guidance on revenue growth were constructive, initial focus from investors is around the continued impact of outsized unbranded processing growth on margin/gross-profit growth.

What we’re watching today:

Duke Energy DUK

Airbnb ABNB

Petrobras Brasileiro PBR

Air Products & Chemicals APD

Occidental Petroleum OXY

Transdigm Group TDG

Apollo Global Management APO

Electronic Arts EA

Globalfoundries GFS

Coupang CPNG

Ecopetrol EC

Waters WAT

Axon Enterprise AXON

Fox FOX

Royalty Pharma RPRX

Warner Music Group Corp WMG

Fresenius Medical Care FMS

WYNN Resorts WYNN

Bentley Systems BSY

Akamai Tech AKAM

Exact Sciences EXAS

Top Headlines

• Buffett: Occidental Begins Buying Back Warren Buffett’s $10 Billion in Preferred Stock

• Zoltan Out: Pozsar, Strategist Who Correctly Foresaw Repo Markets Turmoil, Exits Credit Suisse

• T-Bills: Bill Gross Advises Buying T-Bills to Bet Debt-Ceiling Issues Will Be Resolved

• China Reopening: China Opening Revives Wealth Pipeline to Hong Kong Finance Hub

• Fed: Federal Reserve warns of credit crunch risk after US bank turmoil

• SBF: Indicted FTX founder Sam Bankman-Fried urges court to toss charges

• Twitter: Twitter to remove idle accounts, archive them

• Fight Night: WWE fans are worried about the UFC merger, but they love the drama, too

Crypto

Prices as of 4pm 5/7/23

Bankruptcy: U.S. Crypto Exchange Bittrex Files for Bankruptcy in Delaware

Ripple Effects: First Mover Asia: Binance Congestion Chaos Weighs Heavy on Bitcoin

Regulation: Blockchain Association Calls for Revisions to SEC Custody Rule

Canada: Canada Becomes Latest Country to Pursue Digital Dollar Conversation

More Binance: Binance Shuffles Billions of Bitcoin—And Rushes to Reassure Customers

Deals

• China: Chinese investment in Europe falls as watchdogs increase scrutiny

• Buffett: Buffett/capital allocation: Berkshire’s cash earns big interest while deal hunt continues

• TD Walk: TD’s transaction practices drew regulator scrutiny on nixed deal

• No UK IPOs: ‘A very problematic market’: As Arm shuns London, tech investors question UK as an IPO destination

• HK IPOs: Hong Kong’s IPO market still waiting to rebound after biggest one so far flopped

Meme Of The Day