—— U.S. Retail Sales Rise; Home Depot Cuts Full-Year Outlook; Aramco to Sell Billions in Shares; U.S. Households Struggle with Credit Card Repayments; Morgan Stanley to Lay Off 7% of Asia IB Staff; Goldman Exec Jumps Ship Two Weeks After Promotion; Michael Burry Ups Alibaba and JD Stakes
1. U.S. Retail Sales Rise
The U.S. Department of Commerce reported today that total retail sales in April rose 0.4% month-over-month. Excluding autos and gasoline, sales were up 0.6%, indicating that consumer spending remains resilient.
Out of 13 retail categories tracked in April, 7 saw increases, with notable growth in auto dealers, outlet stores, and online retailers.
The data suggests that low unemployment and steady wage growth are supporting consumer spending and demand for goods.
Sales of sporting goods, hobby stores, large appliances, and electronics declined.
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2. Home Depot Cuts Full-Year Outlook
U.S. home improvement giant Home Depot reported Q1 revenue fell more than expected and projected that full-year same-store sales could decline by as much as 5%, citing falling lumber prices, adverse weather, and waning renovation demand due to economic slowdown.
During the pandemic, government stimulus boosted homebuying and renovations, but current demand has fallen more than anticipated.
CFO Richard McPhail said that while revenue rose 43% over the past three years, 2023 will be a year of moderation and normalization, as consumers reduce non-essential spending due to fiscal tightening and stricter lending conditions.
This morning, Home Depot shares fell as much as 5.4%.
The surge in homebuying and renovations has faded, leading to weaker demand for Home Depot’s products.
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3. Aramco to Sell Billions in Shares
Sources say oil giant Saudi Aramco is in talks with several financial advisors regarding a follow-on stock offering.
In January 2021, Crown Prince Mohammed bin Salman said the Saudi government planned to sell more Aramco shares in the future, with proceeds going to the sovereign wealth fund.
The Saudi government currently holds about 90% of Aramco, with another 8% owned by the sovereign fund. A 1% sale could raise $20 billion, helping Saudi Arabia diversify its economy beyond oil.
Aramco’s massive valuation means a 1% stake could generate $20 billion in proceeds.
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4. U.S. Households Struggle with Credit Card Repayments
A report released Monday by the New York Fed showed that U.S. household debt rose by $148 billion in Q1 to $17.05 trillion—$2.9 trillion more than before the pandemic.
Typically, consumers use more credit card debt during the holiday season and repay it early the next year. But in Q1 this year, that pattern did not occur—indicating continued reliance on credit cards for everyday expenses.
Credit card debt remained flat at $986 billion from the previous quarter.
Meanwhile, the delinquency rate held at a historically low 2.6%, but the share of loans over 30 days past due increased.
Credit card debt didn’t decline in Q1, suggesting consumers are struggling to repay balances.
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5. Morgan Stanley to Lay Off 7% of Asia IB Staff
Sources say investment bank Morgan Stanley plans to lay off 7% of its investment banking staff in the Asia-Pacific region, mainly due to U.S.–China tensions and economic headwinds impacting capital markets.
The firm is expected to begin notifying affected employees this week, with more than 40 people in capital markets likely impacted.
Morgan Stanley plans to lay off 3,000 employees globally by the end of the quarter.
Few companies have pursued IPOs or M&A this year due to geopolitical and economic uncertainties.
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6. Goldman Exec Jumps Ship Two Weeks After Promotion
Sources revealed that Troy Broderick, who was appointed COO of Goldman Sachs’ M&A division earlier this month, has left after just two weeks to join boutique investment bank Perella Weinberg Partners.
Last November, Russ Hutchinson also left Goldman five months after being promoted to the same role—he will soon become CFO of Ally Financial.
The back-to-back departures highlight Goldman’s challenges in retaining senior talent.
Broderick joined Goldman in 2010 and worked on major deals including Disney and 21st Century Fox.
Wall Street’s talent wars remain intense—Evercore also poached two Goldman bankers this month.
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7. Michael Burry Ups Alibaba and JD Stakes
Michael Burry, the famed investor behind the “Big Short,” recently increased his holdings in Chinese e-commerce giants JD.com and Alibaba.
The two stocks now represent 20% of Scion Asset Management’s equity portfolio.
After China lifted its COVID restrictions at the end of 2022, Burry began buying both companies and continued adding to his positions over the past two quarters. His stakes in JD and Alibaba are now worth $11 million and $10 million, respectively.
According to Goldman Sachs’ Prime Services, global hedge fund exposure to Chinese stocks fell from 13.3% in January to 10.5%.
Known for short-selling, Burry is now betting on Alibaba and JD as beneficiaries of China’s reopening.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.