— Goldman Bearish on U.S. Stocks in Coming Weeks; Alphabet Earnings Beat Expectations, Shares Surge; BYD Overtakes Volkswagen in Sales; Private Equity Firms Bid for Bundesliga; First Republic to Sell $100 Billion in Assets; Microsoft Earnings Exceed Forecasts; Pret Coffee Chain Raises Subscription Fee
1. Goldman Bearish on U.S. Stocks in Coming Weeks
Goldman Sachs’ Scott Rubner revealed that quantitative trading funds collectively bought $170 billion in stocks last month, pushing their exposure to the highest level since early 2022.
Rubner, who has studied capital flows for over 20 years, warned that this means such firms are likely to become sellers in the coming weeks.
In a letter to clients, Rubner stated he is “strategically” bearish on the market because large buyers have already exhausted their ammunition.
Quant funds and other large institutional buyers are nearly out of firepower, suggesting that U.S. equity prices may become unstable in the weeks ahead.
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2. Alphabet Earnings Beat Expectations, Shares Surge
Alphabet, Google’s parent company, reported Q1 revenue of $58.07 billion today, exceeding analyst forecasts. Despite growing competition from Microsoft and OpenAI in recent years, Alphabet’s search engine advertising revenue remained strong.
In Q1, Alphabet posted $15 billion in net profit, beating expectations. The company also announced a $70 billion stock repurchase program.
After market close, Alphabet shares rose 5.9%.
YouTube, Alphabet’s video platform, generated $6.69 billion in ad revenue, also above expectations but below the same period last year.
Google’s core search service is already mature with limited growth potential, so the company is placing significant focus on developing its cloud business. Though smaller than Microsoft’s and Amazon’s, this segment still brought in $191 million in profit.
In January, the company laid off 12,000 employees as part of efforts to cut costs and protect margins.
So far this year, Alphabet shares have risen 17.7%, and the CEO noted that the economic environment remains highly challenging.
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3. BYD Overtakes Volkswagen in Sales
According to Bloomberg’s latest automotive industry data, EV maker BYD sold 440,000 vehicles in China during Q1, surpassing Volkswagen AG for the first time. Last month, BYD Chairman Wang Chuanfu stated the company aimed to overtake Volkswagen by the end of 2023.
Since 2008, Volkswagen has been China’s top-selling car brand. In Q1, it sold 427,000 vehicles—slightly fewer than BYD—with electric vehicles accounting for just 6% of its total.
This trend highlights the waning influence of well-known foreign brands and the rapid rise of Chinese electric vehicle makers.
Volkswagen CEO Oliver Blume, attending this month’s Shanghai Auto Show, admitted that BYD is formidable, but stated that ultimately, sales are not the most important metric, and Volkswagen’s goal is to be the best international brand in China.
Over the past 15 years, BYD’s growth has been rapid, and its market share now ranks first for the first time.
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4. Private Equity Firms Bid for Bundesliga
Sources revealed that three major private equity firms—CVC, Blackstone, and EQT—are participating in the bidding process for a stake in Germany’s Bundesliga. Other bidders include KKR and Advent International.
The Bundesliga is planning to sell a 12.5% stake, and the winning buyer would obtain domestic and international broadcasting rights for a period of 20 to 30 years.
The Bundesliga’s organizing body, Deutsche Fussball Liga, held a meeting today and will evaluate all submitted bids.
Blackstone has invested a total of €17 billion in Germany and also has experience managing sports media rights.
The Bundesliga has underperformed compared to the English Premier League in recent years, with revenue falling 7% over the past four years.
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5. First Republic to Sell $100 Billion in Assets
Sources said First Republic Bank plans to sell between $50 billion and $100 billion in assets, including long-term residential mortgage loans and securities, in an effort to reduce the bank’s asset-liability mismatch.
Potential buyers include large U.S. banks, and purchasers may receive warrants and preferred equity as incentives.
Yesterday, First Republic’s Q1 earnings report showed revenue far below expectations, and its high-net-worth wealth management business may also be significantly impacted.
On Tuesday, First Republic’s stock price plunged 50% in a single day.
As of March 31, First Republic held $233 billion in assets.
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6. Microsoft Earnings Exceed Forecasts
In the quarter ending March, software giant Microsoft posted a 7% increase in revenue to $52.9 billion, with its Intelligent Cloud segment generating $22.1 billion—up 16% year-over-year and beating expectations.
Azure, Microsoft’s public cloud platform, saw 31% year-over-year revenue growth, also exceeding forecasts.
Net profit rose 9% to $18.3 billion, far above the expected $16.6 billion. The strong performance pushed Microsoft shares up 4% after hours.
In addition, Microsoft has partnered with startup OpenAI to develop ChatGPT artificial intelligence technology and has provided strategic investment to support the collaboration.
However, revenue from PCs and Xbox consoles declined 9% year-over-year to $13.3 billion, though it still exceeded expectations.
LinkedIn and Office software subscription revenue rose 11% to $17.5 billion.
Q1 was expected to be the weakest earnings season for U.S. companies, but Microsoft’s results have alleviated many investor concerns.
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7. Pret Coffee Chain Raises Subscription Fee
Coffee chain Pret A Manger announced today that starting in June, its subscription service “Club Pret” will raise its monthly fee by 20% to £30. Members will still be entitled to up to five coffees or hot drinks per day.
In addition, Pret announced that members will now receive a 10% discount on food and cold drinks.
CEO Pano Christou said that labor and beverage ingredient inflation remains persistent, and to maintain margins, the company must raise prices.
Of the £5 price hike, £2 will cover ingredient inflation, £2 will go to staff wages, and £2 will address energy cost inflation.
Statistics show that 35% of Pret customers are paid subscribers. Across Pret’s 439 global stores, the subscription service is used 1.25 million times per week—an 11% increase year-over-year.
With rising coffee, labor, and energy costs, Pret’s subscription remains a good value despite the price hike.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.