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| 1 | | Ford demonstrated its plans to grow its gas-powered and electric vehicle businesses profitably, with a 2 million EV production run rate target and an 8% EBIT margin by 2026. Ford maintained its 2023 guidance of $9B to $11B in adjusted EBIT and about $6B in adjusted free cash flow. More: - To support its growing EV production, Ford announced additional agreements for the supply of lithium goods.
- Ford intends to streamline operations, boost traditional product margins, and save costs.
- This year, the corporation anticipates a loss from its electric car business of about $3B, which earnings from its traditional fleet businesses will offset.
- Ford highlighted the value of software and subscription-based business models, using the BlueCruise hands-free driving system as an illustration.
Zoom Out: - Ford announced deals with Albermarle, Compass Minerals International, EnergySource Minerals, and Nemaska Lithium to supply lithium products to support its progressive EV plan.
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What happened: To avoid potential chaos brought on by the U.S. debt ceiling standoff, U.S. businesses scramble to borrow money in the bond market. In May 2023, highly rated corporations issued bonds totaling $112B, up from $46B in May 2022. Except for 2020, this year's May corporate issuance is at its highest level in seven years. Pfizer's $31B investment-grade bond offering in May to fund their Seagen acquisition shows a surge in acquisition financing. Why it matters: Before any market instability brought on by a hypothetical U.S. government default, businesses are hurrying to access the bond market to benefit from favorable market circumstances. Companies are accelerating their bond issuances due to broader economic worries, such as the possibility of a U.S. recession. Where to see the impact: The potential impact of a U.S. debt default is far-ranging, spanning from corporate bond issuance and spreads to global asset prices and U.S. investment-grade bond yields. Moreover, any disruption in the U.S. government's ability to make payments on Treasury bonds could trigger a domino effect in the bond market. | | | |
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| 3 | | JPMorgan Chase will increase its investments by $2B ($15.7B) in 2023, which would involve investing in technology, marketing, and employment, of which $800M will go to the consumer and community division. Despite certain risks, the bank anticipates net interest income in the mid-$70B range. More: - Following the purchase of First Republic, JPMorgan increased its 2023 estimate for net interest income from $81B to around $84B.
- At the end of March, JPMorgan's deposits stood at $2.3T, a marginal decline from the previous year.
- Jamie Dimon, the CEO, issued a warning about future interest rate increases, speculating that bond rates would reach 4.25%, 4.5%, or possibly higher.
- The bank predicts that system-wide deposits at U.S. banks will decrease as the Federal Reserve tightens monetary policy and investors look for higher rates.
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| 4 | | Meta Platforms has been fined $1.3B by European Union regulators for illegally transferring user data to the U.S., highlighting the EU's increasing enforcement of privacy rules and the risks faced by companies that break them. This underscores the need for a new data-sharing agreement between the U.S. and the EU to ensure continued data transfer. More: - The penalty against Meta exceeds the previous high-water mark set by the General Data Protection Regulation (GDPR), a $806M fine against Amazon in 2021.
- The GDPR is being enforced more aggressively by EU privacy regulators, who have also increased fines.
- Meta has been told to stop sending information on European users to the U.S. and destroy any data sent within six months.
- Insisting that the decision creates a risky precedent for data transfers between the EU and the U.S., Meta plans to appeal the verdict and requested a postponement of the suspension order's implementation.
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| 5 | | AIG is selling its reinsurance businesses, Validus Re, AlphaCat, and the Talbot Treaty reinsurance, to RenaissanceRe Holdings for $3B, freeing up $400M of capital. Additionally, it has sold Crop Risk Services and will retain Talbot Underwriting Ltd. and Western World. More: - AIG will get $2.74B in cash and $250M in common shares from RenaissanceRe in exchange for investing in RenaissanceRe's Capital Partners division, which includes managed funds from Fontana Re and DaVinci Reinsurance.
- According to AIG's CEO Peter Zaffino, the purchase simplifies the company's business model and improves its capital management approach.
- RenaissanceRe's position as a leading international property and casualty reinsurance is strengthened by the purchase, which increases the scale and broadens its sources of profitability.
- Both businesses expect to profit from the favorable market conditions and the alluring reinsurance business acquired due to the merger.
- AIG and RenaissanceRe stocks increased after the announcement.
Zoom Out: - AIG was advised by Evercore Group Llc and JPMorgan Securities Llc, while Morgan Stanley advised RenaissanceRe in the recent transaction.
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| 6 | | To satisfy the demands of AI models, Intel's Falcon Shores CPU, scheduled for delivery in 2025, will have 288GB of memory and 8-bit floating-point computing. It is a component of Intel's strategy to compete with AMD and Nvidia in the AI processor industry. More: - Intel's Ponte Vecchio experienced delays, resulting in a low market share in AI chips, though it still outweighs Nvidia's performance with Aurora's H100.
- In contrast to Nvidia, Intel is anticipated to have its new chip by 2025 with the Falcon Shores microprocessor, which will be the successor to the Ponte Vecchio processor.
- With different CPU and GPU offerings, Intel's revamped strategy enables consumers to select the ideal ratio and mix from other manufacturers.
- The chip has been modified to increase performance and competitiveness in the market for AI chips.
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| 7 | | Quick Hits: - Hack your gut health with the top founder-endorsed probiotic. Get 40% off Seed's DS-01® — code INSIDE40.*
- According to sources, Partners Group and other investors are looking to sell or float Techem GmbH, which may have a value of up to $8.6B, including debt.
- Abu Dhabi National Oil Co. has increased the size of Adnoc Logistics & Services' initial public offering by over 25% or 1.41B shares, indicating strong market demand despite weaker conditions.
- Fosun International has sold its stake in diamond-grading firm International Gemological Institute's business in three regions to Blackstone Inc. for $455M.
- At Shell's annual meeting, 20% of shareholders voted against its energy transition strategy for the second year, despite climate activists protesting.
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INSIDE BUSINESS LEADERBOARD (7 DAYS) |
 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Aaron Crutchfield | |
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