—— 1. Tesla Factory Closures Lower Output; 2. JPMorgan CEO Praises AI; 3. T. Rowe Price Launches Retail Credit Fund; 4. Blackstone BREIT Redemptions Ease; 5. U.S. Office Real Estate Faces Steep Crash; 6. F-35 Program Costs Surge; 7. U.S. Bond Yields Hit New Highs
1. Tesla Factory Closures Lower Output
Tesla announced today that its global vehicle deliveries for the third quarter totaled 435,059 units, falling short of Wall Street’s forecast of 456,000 and below the second quarter’s 466,000. The decline was primarily due to temporary factory closures that disrupted production.
Tesla had previously signaled that production would be impacted this quarter due to upgrades to manufacturing lines needed for the new Model 3 and the upcoming Cybertruck.
Still, analysts expect Tesla’s 2023 production and sales to exceed 1.8 million vehicles, setting a new annual record.
Over the past few days, many Wall Street analysts have revised down their full-year production forecasts for Tesla.
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2. JPMorgan CEO Praises AI
JPMorgan CEO Jamie Dimon said in an interview with Bloomberg TV that thousands of the bank’s employees are now using AI tools. While AI could lead to job cuts, the innovation can significantly improve productivity and employee quality of life.
Dimon believes that with AI, employees may only need to work 3.5 days per week. He also emphasized that AI will play a crucial role in JPMorgan’s future growth.
However, Dimon cautioned that AI, while beneficial to humanity, could also be exploited by bad actors.
He added that AI could help future generations save time at work and even live longer lives.
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3. T. Rowe Price Launches Retail Credit Fund
T. Rowe Price Group and Oak Hill Advisors plan to jointly launch a private credit fund targeting U.S. retail investors, aiming to enter the fast-growing $1.5 trillion private credit market.
According to a statement seen by Bloomberg, the new fund—T. Rowe OHA Select Private Credit Fund (OCREDIT)—has secured $1.5 billion in investable capital, including $600 million in equity from T. Rowe and a group of global institutional investors. The remaining amount will be available to individual investors.
The fund will primarily provide senior secured loans to large North American companies. Oak Hill will handle loan origination and fund management, while T. Rowe will oversee capital distribution.
T. Rowe Price manages $1.4 trillion in assets and acquired Oak Hill in 2021.
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4. Blackstone BREIT Redemptions Ease
According to a letter released today by Blackstone Inc., investors withdrew $2.1 billion from its real estate investment trust (BREIT) in September, down 28% from August and the lowest monthly total since October 2022.
In September, BREIT fulfilled 29% of redemption requests, totaling approximately $625 million. To avoid forced asset sales, Blackstone has now limited redemptions for 11 consecutive months.
BREIT’s property investments include apartments, data centers, and student housing.
As of August, BREIT’s net return was 3.5% for 2023, compared to 8.4% for all of 2022.
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5. U.S. Office Real Estate Faces Steep Crash
《A new Market Live Pulse survey by Bloomberg found that two-thirds of 919 respondents believe the U.S. office market must undergo a full-blown crash before a recovery can begin.
A larger portion of respondents expect U.S. commercial real estate values to bottom out in the second half of 2024 or later.
Morgan Stanley estimates that $1.5 trillion in commercial real estate loans will mature by the end of 2025, with 25% tied to office properties—making refinancing a major challenge.
Many firms seeking to offload commercial real estate loans are struggling to find willing buyers.
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6. F-35 Program Costs Surge
According to the latest report from the Pentagon, the world’s most expensive weapons program—the F-35 fighter jet—has become even more costly.
Production and development costs have reached $438 billion, up $26 billion from last year. The cost per F-35 has risen from $166 million to $179 million.
Lockheed Martin said it has delivered 965 of the 3,000 F-35 jets ordered by the U.S. government, though some units will require retrofitting.
The program includes 2,456 production jets and 14 development aircraft.
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7. U.S. Bond Yields Hit New Highs
Today, 10-year and 30-year U.S. Treasury bonds were heavily sold. Yields on bonds ranging from 5 to 30 years all rose by more than 10 basis points.
The 10-year Treasury yield nearly hit 4.7%, its highest level since 2007, while the 30-year yield reached 4.81%, the highest since 2010.
BNY Mellon said the current cycle reflects a more resilient U.S. economy, and traders have priced in the likelihood of further Fed rate hikes.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.