August
Lenders & fund managers continue to see Alphabet & most other major AI related companies as creditworthy.
However, bond buyers are demanding higher yields on the continuing flood of bonds AI-involved companies are issuing to fund what is projected to be trillion-dollar investment.
“Some large bond buyers are warning that the market is showing signs of indigestion,” Reuters noted.
Goldman Sachs is buying Neos, a provider of active exchange-traded funds (ETFs), for as much as $2.3 billion. With the purchase, Goldman will manage about $80 billion in active ETFs, placing it among the eight largest of the funds’ operators.
Elon Musk’s trillion-dollar payday has emboldened other corporate boards to increase pay for their own chief executives, according to a report by the American Federation of Labor & Congress of Industrial Organizations (AFL-CIO).
The average CEO salary shot up 21% last year.
To sell its latest round of 30-year treasury bonds last week, the U.S. treasury had to offer the highest interest rate since 2001.
The $25b auction commanded yields as high as 5.22%, the treasury reported, the highest since a 5.52% rate in August 2001.
Trump signed a proclamation imposing new tariffs of 15% on imports of solar energy panels & their components, effective 4 Dec this year.
The declaration also sets minimum prices on imported solar-energy-related products & supplies.
The tariff’s purpose is to reshore the U.S.
More than a third of the value of the Standard & Poor’s 500 index is tied up in AI-related stocks, the FT noted. However, the problem of acute concentration is not limited to stocks, Nuveen global strategist Laura Cooper wrote in a 30 July analysis.
The same focus on AI now encompasses the credit market, infrastructure-related businesses such as utilities, & real estate as well as equities, she pointed out.
In the first six months of this year, emerging nations enrolled in China’s Belt & Road Initiative (BRI) signed deals with Beijing for $11.8b worth of clean-energy construction projects & $8.3b in investments in the sector, according to research by Australia’s Univ of Queensland.
The interest rate the U.S. government paid on its 30-year bond edged up 0.14 of a percentage point to about 5.25%, its highest in 19 years.
The rate rose after the U.S. Federal Reserve decided to hold interest rates where they are despite inflation that continues to strengthen.
Xiaomi, one of China’s leading cell phone manufacturers, went into the electric vehicle (EV) business two years ago. Now it expects to become one of Europe’s five top-selling premium brands by 2030.
Post
On 18 Aug, investors dumped government bonds amid heightened fears that inflation will continue to rise, government deficits are out of control & a flood of AI-related bond issues are diluting bond values.
As bond prices dive, yields rose to draw investors back into the market.
Aug 26
On 18 August, the U.S. national debt officially reached $40.05 trillion after the Treasury Department reported borrowing $432.3 in July to pay its bills. It was the largest monthly shortfall in over five years.
Federal revenue is projected to fall about $1.2t short of expenses.
Loan defaults among some private credit funds managed by Ares Management, Blackstone, Blue Owl Capital, & Golub Capital are worsening & have reached their highest levels since 2021, according to the companies’ public filings reviewed by The Wall Street Journal.
Investors once again are shrugging off concerns that AI will wipe out the software industry & that AI-related stocks are overvalued & buying back into tech shares, the FT reported.
The S&P 500 index ended 13 Aug with its 47th record close of the year & has gained about 4%.
Procter & Gamble is to pay $3.8b in cash to take over Thorne, which purveys an array of nutritional supplements. P&G has put a focus on expanding its health division in recent years. Since COVID, consumers have placed a stronger emphasis on preserving their well-being, FT noted.
U.S. treasury bought Japanese yen to prop up the yen’s value, the move was made as much out of self-interest as to help an ally’s economy, MarketWatch reported.
The cheaper yen was making Japan’s exports to the U.S. less expensive, potentially undercutting American competitors.
Commercial space industry is CHINA’S latest high-tech push. 600 companies are offering launch services, satellite design, & other functions bringing space services into the country’s Belt & Road Initiative, which fosters economic & political ties between China & emerging nations.
U.S. regulators are alarmed by what they call “circular ownership” & a lack of transparency in financial structures increasingly used by private equity firms such as Apollo Global Management & KKR.
The concerns were raised in a report to life insurance companies that are raising their investments in private equity’s securitized debt deals. The insurers are looking to boost returns on the annuities they have sold to clients, the Financial Times said.
Companies listed on the Standard & Poor’s 500 are on track to report second-quarter earnings–net profits after all expenses are paid–47.4% higher than a year earlier, making it the most robust quarter in 5 years, data service FactSet reported. Some companies still to post results.