Summer of the Finance Bro

NVDA is the equivalent of 6’5”, blue eyes, trust fund this year… BBG is out with a piece on how the co’s sales growth is so high that even Wall Street can’t keep up. Cue the Guetta song… 

Target is partnering with Shopify to expand its marketplace for third-party merchants. They didn’t invest like Walmart and Amazon over the years, so now Shopify vendors can apply to sell their products on Target’s. Basically, it expands the product selection. Allows for data sharing. Moves away from its prior invite-only selection.

China is telling Germany….hey, we’ll lower our existing tariffs on large engine cars if the EZ drops its planned EV levies on Chinese imports. Right now, Xi collects a 15% fee. And he subsidizes companies. But he’s threatening to unleash a 25% fee on large EZ cars…so BMW and Mercedes are trying to retool their game theory strategies…

First, Traders are blocking out the Fed, betting on a higher long-term rates and shifting up the neutral rate, which could limit gains in UST, per BBG. (Apollo notes this is likely driven by upward pressures on inflation and rates from deglobalization, the energy transition, more restrictions on immigration, more defense spending, and higher levels of government debt….to name a few things). Second, US investors know that things are hot, especially multiples for the big tech names, per the survey from BBG. 

Per DB: "Sharp increase in equity positioning to near the top of the band. Last week we noted that after four months of going sideways in a tight range, equity positioning had ratcheted higher, approaching but not quite at the top of the long-run band. It has gone sideways this week and remains elevated (z score 0.84, 95th percentile). While positioning is only a little above the level implied by earnings growth, the recent increase has occurred when macro data has been surprising modestly to the downside, unlike in April when data surprises were strongly positive."

Reuters is reporting that US prosecutors recommended to the DOJ that Boeing be criminally charged. We’ll see how many random mishaps have to occur before this clown show forces responsibility on leaders.

Consumers are keeping more cash in their wallets.

Investors seem to be numb….and not watching these charts. In the LTM, 26% of stocks outperformed the index.

Basically, Canadian pensions were successful investing in real estate…until they weren’t. Now they’re hurting. And trying to unwind their challenges. They had brought investments in-house, and now they are thinking of outsourcing. Plus, they have to figure out whether this asset class is going to return what it did before, when WFH wasn’t a “thing.” And they’re learning that real estate is an illiquid asset.

The ruling Conservatives in the UL lost 1/3 of their voters since Jan. This betting scandal (FT) is going to make things worse. And this is happening when BBG is reporting that the economy is still having a hard time, with increasing unemployment and inflation.