Week 1.07 - 7.07: Paramount-Skydance Merger, Tesla's Sales Dip, Nike Troubles and More...
Weekly Financial Digest
Key Stats of the Week
๐ต $8B - Investment by the Ellison family and RedBird Capital Partners in the combined entity of Paramount and Skydance.
๐ 5% - Decrease in Tesla's electric vehicle sales last quarter compared to the previous year.
๐ 696,000 - Number of cars General Motors sold in the US in its best sales quarter since 2020.
๐ฟ 13% - Increase in Google's carbon emissions last year due to data center expansion and AI energy use.
๐ 20% - Drop in Nike's stock price following weak sales numbers.
๐ 41% - Stake Lufthansa is acquiring in ITA, Italy's national airline, to expand its reach.
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Chart Of The Week
The US government's debt (blue line) has been growing faster than its borrowing limit (red line) since 1996. When the blue line goes into the red area, it means the government is spending more than it's allowed to.
Here are the key insights from this chart:
The US owes a lot of money - about $35 trillion in 2024.
The government keeps raising its credit limit to borrow more.
Lately, the government's spending has been going over its limit more often.
Big jumps in debt happened after the 2008 financial crisis and the 2020 pandemic.
What this means for your money:
โ When the government borrows more, it might raise interest rates. This could hurt your bond investments.
โ Expect some market roller coasters when politicians argue about raising the debt ceiling.
โ All this debt might make the US dollar weaker, which could be good for your international investments.
โ The government might change its spending or taxes to deal with debt - which could shake up different parts of the market.
The big picture: Keep an eye on debt ceiling news for short-term market moves. But also think about how this growing debt might change the economy and where you should invest in the long run.
Weekly Sector Performance
๐ค M&A Roundup
๐ฌ Entertainment: Paramount agrees to merge with Skydance, marking the end of the Redstone era. The Ellison family and RedBird Capital Partners will invest $8 billion in the combined entity.
๐ฅค Beverages: Danish brewer Carlsberg is set to acquire UK soft-drinks maker Britvic, known for Robinsons, in a ยฃ3.3 billion deal after two earlier bids were rejected.
๐ Real Estate: Elliott-owned Avant Homes has made an all-share approach to FTSE 250 housebuilder Crest Nicholson, which had previously rebuffed an offer from rival Bellway.
๐ฆ Banking: BBVA investors have approved a โฌ10 billion share issue to support the bank's hostile bid for Sabadell, giving the chair Carlos Torres the go-ahead for the offer.
๐ฎ Gaming: Swedish buyout firm EQT has struck a ยฃ2.2 billion deal to acquire Irish video gaming group Keywords Studios, highlighting the attraction of London's stock market.
๐ฝ๏ธ Dining: The Hawksmoor restaurant chain, owned by Graphite Capital, is up for sale in a deal that could value the group at about ยฃ100 million as it seeks to expand outside the UK.
Boeing buys Spirit AeroSystems
Boeing is buying back Spirit AeroSystems for $8.3 billion to fix quality issues and smooth out production.
This move could boost Boeing's reputation and stock price if they manage to improve plane quality - but it's a bit of a gamble since they're taking on a struggling company.
One should keep an eye on how this plays out for Boeing's bottom line.
European inflation
Inflation in Europe dipped slightly to 2.5%.
It shows that central banks' efforts to control prices are working, but slowly.
This means interest rates might stay high for a while, which could affect stock prices and make it pricier for companies to borrow money.
Keep this in mind when looking at European stocks or companies with big European operations.
Teslaโs EV Sales
Tesla sold 444,000 electric cars last quarter, down 5% from last year, as competition heats up, especially from Chinese companies like BYD.
While Tesla is still the top EV seller, it's losing ground.
Investors should watch closely to see if Tesla can keep its lead or if rivals will catch up - which could shake up the EV market.
Apple and OpenAI
An Apple executive is joining OpenAI's board - showing Apple wants to be part of the AI revolution.
This move could lead to new AI products from Apple and potentially boost its stock price.
However, Apple is playing catch-up with other tech giants in AI, so watch how this partnership develops and affects the tech landscape.
General Motors' sales
General Motors had its best sales quarter since 2020 - moving 696,000 cars in the US as the economy improves and people buy more vehicles.
GM's overall sales are strong, but their EV sales are still a small piece of the pie.
It will be important to keep an eye on whether GM can grow its EV business faster to stay competitive in the changing auto market.
Meta's ad model in Europe
The EU is questioning Meta's "pay or consent" ad model in Europe, thinking it might not follow new rules.
If Meta has to change how it makes money in Europe, it could hurt its profits there.
Letโs watch how this plays out, as it could affect Meta's stock and set a precedent for other tech companies operating in Europe.
Japan's stock market
Japan's Topix stock index hit a new all-time high.
See it as a signal that Japanese companies are becoming more profitable and attractive to investors.
This could mean Japan is a hot spot for investment right now, with potential for more growth ahead in Japanese stocks.
It might be worth looking into Japanese companies or funds for your portfolio.
Google's carbon emissions
Google's carbon emissions grew 13% last year as its data centers expand and AI uses more energy.
This might put pressure on Google to clean up its act, which could cost money and affect profits.
It will be interesting to see how Google balances growth with environmental concerns - as it could impact their stock and the broader tech sector.
ITER fusion project delay
The ITER fusion energy project is delayed again until 2034 - proof of how tough it is to make fusion energy work.
This delay could create opportunities for private fusion companies to beat governments to the punch.
โMight be smart to look out for emerging players in the energy tech space that might disrupt the market.
Nike's weak earnings
Nike's stock price dropped 20% after weak sales numbers, as newer brands become more popular.
Nike needs to regain its cool factor to compete.
One needs to keep an eye on whether Nike can turn things around - or if newer brands might be better investment bets in the athletic wear market.
Walgreens struggles
Walgreens' stock price tumbled after lowering profit forecasts.
Mainly signs of tough competition and high costs.
The company needs to find new ways to make money in the changing pharmacy landscape.
Lufthansa buys into Italian airline
Lufthansa is buying 41% of ITA, Italy's national airline, to expand its reach in Europe and to other continents.
This could make Lufthansa a stronger player in air travel if the deal works out well.
Stocks
๐WINNERS:
Taiwan Semiconductor Manufacturing (TSM, +7.20%)
Southern Copper Corporation (SCCO, +8.25%)
Apple (AAPL, 5.72%)
Advanced MicroDevices (AMD, +7.79%)
Tesla Inc (TSLA, +27.40%)
๐LOSERS:
Danaher Corp (DHR, -4.47%)
HCA Healthcare Inc (HCA, -4.03%)
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