1. U.S. Inflation Slows for Fourth Consecutive Month
2. Mars Approved for Largest Buyout Loan of the Year
3. Early Nvidia Investors Launch AI Fund
4. Intel Sells All Arm Shares
5. Apple Opens Tap-to-Pay Technology
6. “Big Short” Main Character Halves Stock Holdings
7. BlackRock Believes Market Is Overly Optimistic
1. U.S. Inflation Slows for Fourth Consecutive Month
The U.S. Bureau of Labor Statistics released data today showing that in July, U.S. core CPI rose 3.2% year-on-year — still the smallest increase since early 2021. Compared to June, core CPI increased by 0.2%.
Overall CPI rose 2.9% year-on-year, with 90% of the increase coming from rising housing costs.
With the economic slowdown, inflation has eased across the board. Combined with the softening job market, the Federal Reserve is expected to start cutting interest rates next month, though the scale of the cut remains unclear.
LPL Financial’s chief economist believes today’s CPI data is positive for both the Fed and investors, as the Fed now has enough evidence to begin cutting rates.
New August employment data will be released before the September meeting.
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2. Mars Approved for Largest Buyout Loan of the Year
Snack giant Mars has agreed to acquire Kellanova, parent company of Pringles, for $36 billion.
Mars has already secured a $29 billion short-term bridge loan for the acquisition, which it plans to later replace with lower-interest, longer-term corporate bonds. JPMorgan and Citigroup will handle the debt underwriting.
The high-grade bond market has been very quiet recently. The last loan issuance of this scale was in February this year, when Owens Corning acquired Masonite.
The deal is expected to close in the first half of 2025, giving Mars plenty of time to refinance.
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3. Early Nvidia Investors Launch AI Fund
Maverick Capital, one of Nvidia’s early shareholders, will launch a new fund dedicated to investing in mid- to late-stage private AI infrastructure companies.
Maverick currently manages $7.4 billion in assets and will commit its own capital to the new fund starting July 1. Investors can participate in a second round of fundraising before the end of the year.
More than 20 years ago, Maverick invested in Nvidia and continues to be bullish on AI’s future. Founder Lee Ainslie believes the AI boom is not comparable to the internet bubble of 1999.
Lee believes we are still in the early stages of AI development, and that AI will continue to see significant improvements year after year.
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4. Intel Sells All Arm Shares
Regulatory filings submitted by Intel on Tuesday show that the company has sold all 1.18 million shares it held in Arm, at an average price of $124.34, generating total proceeds of $147 million.
Today, Intel can no longer maintain its position in the industry it once dominated. Earlier this month, the company also reported its worst earnings report in 56 years.
In an effort to rebound, Intel announced it would lay off 15,000 employees and cut other costs.
In Q2, Intel reported a net loss of $120 million.
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5. Apple Opens Tap-to-Pay Technology
Apple announced today that it will open its NFC contactless payment technology to third-party developers in countries such as the U.S. and the UK.
Currently, only Apple’s own applications have access to the NFC chip. Apple Pay and Apple Wallet are both built on this technology. When consumers make contactless payments via credit card, Apple earns a small processing fee.
Previously, Apple claimed it did not want to open up NFC access in order to protect user privacy — a stance that faced pushback from EU antitrust regulators.
In June this year, Apple reached a consensus with the EU and agreed to open the NFC chip technology. Developers must sign a commercial agreement with Apple, protect user privacy, and pay technology fees.
Last quarter, Apple’s financial services revenue likely grew by double digits and reached a record high.
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6. “Big Short” Main Character Halves Stock Holdings
Michael Burry, who famously predicted the 2008 subprime mortgage crisis, increased his Alibaba holdings by 30,000 shares in Q2, raising the investment from $9 million to $11.2 million. Shift4 Payments was his second-largest position, valued at $7.3 million.
Burry exited positions in HCA Healthcare, Citigroup, Block, Cigna, and Advance Auto Parts, and reduced holdings in JD.com and RealReal.
Compared to the previous quarter, Burry’s firm now holds stocks in just 10 companies, with total portfolio value down nearly 50% to $52 million.
In Q2, Burry bought shares of Olaplex and BioAtla.
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7. BlackRock Believes Market Is Overly Optimistic
Gargi Chaudhuri, Chief Investment Strategist at BlackRock, said in an interview with Bloomberg that she believes current market pricing overestimates the benefits of Federal Reserve rate cuts.
She noted that inflation data has made only slight progress and the macroeconomic environment hasn’t significantly improved. Markets are too optimistic.
Gargi currently prefers investing in bonds and believes the Fed will only cut rates 2 to 3 times this year, while the market has priced in 4 cuts.
Mizuho analyst Steven Ricchiuto also believes inflation risks still remain.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.