WSJ : The $27 Trillion Treasury Market Is Only Getting Bigger

The $27 Trillion Treasury Market Is Only Getting Bigger
More debt, different buyers and increased regulation pose challenges

The world’s largest, most-important financial market is growing by leaps and bounds. On Wall Street, that is making people nervous.

Annual issuance of U.S. Treasurys has exploded, nearly doubling since the pandemic began. The government sold a record $23 trillion worth in 2023. And few think the spree is going to slow soon, given the widespread expectation that government spending will continue to rise regardless of who wins November’s elections.

Rapid growth in markets from tech stocks to mortgage bonds has ended badly in the past. Treasurys are considered the safest and easiest-to-trade securities on Wall Street, and many worry that any instability there could rapidly spread.

The market’s growth isn’t the only thing troubling investors: Some are also concerned about new rules that are changing the way the trading works. That could help alleviate strains but also create unforeseen consequences, such as the cash shortages in 2019 and 2020 that snarled trading and boosted interest rates.

“None of these regulations solves the mounting pile of Treasury debt,” said Steven Kelly, associate director of research at the Yale Program on Financial Stability.


The mounting pile
When the government doesn’t take in enough from taxes to fund its spending, the Treasury Department issues bonds to fill the gap. The agency raised a net $2.4 trillion last year to finance the deficit, taking into account what it had to sell to repay holders of maturing debt.
The Treasury market has grown more than 60% to $27 trillion since the end of 2019. It is roughly sixfold larger than before the 2008-09 financial crisis.

“Running a nearly $2 trillion deficit during a peacetime economic expansion—that’s a lot of bonds for the market to absorb,” said Stephen Miran, an adjunct fellow at the conservative Manhattan Institute and a former Treasury Department senior adviser who assisted with the Covid-19 response.

The Congressional Budget Office anticipates government spending that continues to climb in the coming years, with an aging population raising the cost of programs such as Social Security and Medicare. Rising interest costs could also boost issuance.

Mounting bond sales sparked market turmoil last fall, prompting the Treasury to shift toward selling more short-term debt. The amount of bills—those with maturities of one year or shorter—has risen to 22.4% of debt outstanding, above the recommended 20% limit set by the borrowing committee that advises the government.

Since then, demand has been more than adequate. Investors still aren’t requiring extra compensation to hold longer-term Treasurys. The so-called term premium is actually negative.

One reason demand for Treasurys remains solid: fewer alternatives. Many companies issued long-term bonds when the pandemic sent rates near zero, then slowed borrowing when the Fed started raising them. The market for mortgage-backed securities is nearly frozen, with few Americans moving in the most expensive housing market in decades.

Different buyers
Banks have pared their buying of Treasurys for years, constrained by postcrisis regulations that are poised to get even more restrictive. Hedge funds, money-market funds and foreign investors are now America’s primary financiers.

Money-market funds are enjoying record inflows and scooping up short-term Treasurys in bulk. But they are mandated to only invest in bills.

The Information : Benchmark to Lead Investment in AI Video Startup HeyGen at $44

Benchmark to Lead Investment in AI Video Startup HeyGen at $440 Million Valuation

HeyGen, a three-year-old startup that uses artificial intelligence to generate avatars and voices for videos, is raising $60 million at a pre-investment valuation of $440 million, six times higher than the startup’s valuation four months ago, according to a person with direct knowledge of the round. Benchmark, the early-stage venture capital firm that bet early on Snap and Uber, is leading the round, which has not yet closed, the person said.

The startup’s ties to China have put it at odds with U.S. officials, who are increasingly concerned with Chinese investment in American technology. HeyGen, originally named Surreal, was founded in China during the coronavirus pandemic but is now headquartered in Los Angeles. Its early funding came from Chinese investors such as HongShan, previously known as Sequoia Capital China, and ZhenFund.

The Takeaway
• Longtime Benchmark general partner Peter Fenton is leading the deal
• The deals values startup at about 22 times its forward revenue
• HeyGen has tried to distance itself from its Chinese investors

HongShan’s investment in HeyGen raises concerns about a Chinese entity having “influence over a U.S.-based company developing technology with significant national security implications” due to the possibility of fake texts or videos, said a recent report by the House of Representatives’ Select Committee on the Chinese Communist Party. HeyGen’s customers include Salesforce, Nvidia and Amazon, according to its website.

To mollify potential political critics, HeyGen says its customer terms and conditions forbid the use of its technology for political campaigning or lobbying purposes, the person said. And in November last year, when it raised funds in a round led by VC firm Conviction, a representative of HongShan relinquished the Chinese firm’s seat on HeyGen’s board of directors, the person said.

HeyGen is generating more than $20 million in annualized revenue, or last month’s revenue multiplied by 12, up from $3 million in July and $1 million a year ago, the person with direct knowledge of its finances said. That kind of growth stands out among generative AI startups, many of which have been struggling to make money despite raising lots of capital. And its new valuation of about 22 times its forward revenue is relatively low compared to the valuation multiples of many other generative AI startups. (See our Generative AI Database.) At the same time, the startup has relied in part on AI voice technology from another startup, New York-based ElevenLabs, according to a person with knowledge of the matter.

Longtime Benchmark general partner Peter Fenton and Victor Lazarte, the firm’s newest general partner, are leading the new funding deal, the person said. HeyGen CEO Joshua Xu and Fenton, known for his early investments in Twitter and Yelp, did not respond to a request for comment.

Xu, a former software engineer at Snap, and Wayne Liang, who briefly worked as a product designer at TikTok-parent ByteDance, founded HeyGen in late 2020. It has around 40 employees, according to LinkedIn.

HeyGen differentiates itself from rivals such as Pika Labs and Genmo by targeting business customers such as marketers and salespeople. It faces competition from other business-focused video startups such as Synthesia and Runway.

WSJ : This Startup Promised to Help Fashion Go Green. Brands Didn’t Want to Pay

This Startup Promised to Help Fashion Go Green. Brands Didn’t Want to Pay for It.
Many clothing brands say environmentally friendly materials are key to their future, but uptake has been sluggish

When a Swedish startup launched a new material made from recycled textiles in late 2022, the fashion industry hailed it as a game changer in its efforts to lessen its environmental impact.

Last month, the company, Renewcell, filed for bankruptcy. While some big retailers, including H&M and Zara, were enthusiastic backers, not enough brands committed to buying its material. Having misjudged how quickly the fashion industry would switch to more sustainable sourcing, the company was left with a costly factory running far below capacity.

The plight of Renewcell illustrates the fashion industry’s hesitancy in adopting new materials that may be better for the environment but typically cost more, at least in the short term. It is also another sign of how some companies are putting less emphasis on green initiatives amid a more challenging economic climate.

“There’s a disconnect” between some companies’ stated sustainability ambitions and what they actually do, said Tricia Carey, Renewcell’s chief commercial officer. “Fashion brands have the intention,” Carey said, “but many are lacking the road map to make it happen.”

Making clothes uses a large and growing amount of the planet’s resources. More than 100 billion garments are produced annually and that number is set to rise by one-third by 2030, according to the Ellen MacArthur Foundation, a nonprofit. It says the average garment is worn only 10 times before being discarded, often ending up in the trash. The fashion industry is responsible for as much as 8% of global greenhouse-gas emissions, according to the United Nations Alliance for Sustainable Fashion.

H&M was the first retailer to launch products containing Renewcell’s Circulose material. PHOTO: H&M
Fashion brands have come under growing pressure from consumers and regulators to reduce their environmental impact, posing a dilemma for an industry hardwired to keep increasing sales by churning out more clothes.

To burnish their green credentials, brands have encouraged consumers to repair, recycle or sell old clothes rather than throw them away. They have also invested in so-called next-generation materials that promise to use fewer resources and, in some cases, have the potential to be recycled again and again.

Inditex, the parent company of Zara, says it wants a quarter of the fiber it uses to be made from next-generation materials by 2030. To foster new materials, the company has worked with more than 300 startups, also including Renewcell, through a Sustainability Innovation Hub that it set up four years ago.

H&M says it wants recycled fibers to constitute half of the material it uses by 2030. The company has invested in more than 25 sustainability startups, including Renewcell.

So far, the uptake of greener material has been sluggish. Recycled materials made up 7.9% of global fiber production in 2022, down from 8.5% the year before, according to the Textile Exchange, a nonprofit that advocates the adoption of more environmentally friendly materials. Much of that came from recycled plastic bottles, with less than 1% of all fiber coming from recycled textiles.

That’s despite next-generation materials attracting more than $3 billion of investment over the past decade, according to the Material Innovation Initiative, with dozens of new-textile companies launched during that time.

Founded in 2012, Renewcell became the first chemical textile-to-textile recycler to start producing material on a commercial scale.

Its material is called Circulose, which is produced by treating old textiles with chemicals to create a cellulose pulp. This is dried into sheets, which fiber producers can then dissolve to produce viscose and other materials that are used to make clothes. Unlike mechanically recycled fibers, which fray and ultimately disintegrate, Renewcell’s chemical process breaks old textiles down to the level of individual molecules from which strong, new fibers are made. These can be recycled indefinitely via the same process.

With many fashion companies pledging to invest in new textiles to be more sustainable, Renewcell bet on strong demand for its material.

The company raised $158 million, mostly through a 2020 listing in Stockholm, and invested $125 million to convert an old paper mill in eastern Sweden into a Circulose factory capable of producing 60,000 metric tons a year.

Renewcell also outlined plans for two additional factories that would increase its output sixfold by 2030.

Besides Inditex and H&M, Calvin Klein and Tommy Hilfiger owner PVH committed to buying significant quantities of fiber made from Circulose.

But Renewcell hit a brick wall in talks with other big brands. In meetings, brand executives would often express excitement and agree to pilot projects, only to balk at placing commercial-scale orders, said Carey.

Jolts to the economy, such as Russia’s invasion of Ukraine, and shaky consumer confidence had made brands risk averse.

Would-be customers fixated on how fiber made from Circulose cost 20% to 45% more than the virgin fibers they typically bought, as well as uncertainty about integrating a new material into their supply chains, Carey said. Fiber typically accounts for about 5% of the retail price of a finished garment.

Renewcell needed its factory to reach full output quickly to become commercially viable, but it achieved only 30% capacity last year as anticipated orders failed to materialize.

By October, the company was running out of cash, and in January it laid off a quarter of its 130 staff. It filed for bankruptcy in February after failing to secure fresh investment.

Renewcell is now seeking a buyer to repay its debts and restart production.

The company’s predicament is a grim sign for a clothing industry that claims to want to transform itself, said Claire Bergkamp, managing director of the Textile Exchange.

“My hope is this will be a wake-up call for the industry,” she said.

Unless fashion companies commit to paying higher prices for new, greener materials, other fiber startups could also struggle, Bergkamp added.

While the transition from gasoline cars to electric vehicles has benefited from billions of dollars in subsidies, the move to new textiles has received practically no government support, making startups reliant on private funding.

That has left some big clothing companies, notably H&M and Inditex, shouldering a relatively large share of the burden of supporting new-material startups.

H&M invested in Renewcell in 2017 and was the first retailer to launch products containing Circulose. It currently sells around three dozen products containing the material.

The retailer wanted to invest more but decided not to commit more cash in recent weeks because of the lack of support from other companies, said H&M Chief Executive Daniel Ervér.

Earlier this month, H&M announced a new investment in Syre, a startup developing a polyester-fabric recycling process, and pledged to buy $600 million worth of its material over seven years—assuming it achieves commercial production.

Demand for recycled polyester is already established, with material made from recycled bottles already commonly used to make clothes. But textile-to-textile recycled polyester is similar to Circulose in that the technology is untested at scale.

To drive a shift to next-generation materials, other companies need to invest and commit to buying new textiles at scale, Ervér said.

“H&M alone cannot provide the scale that is required,” Ervér said. “The industry needs to commit.”

Renewcell’s plight illustrates the fashion industry’s hesitancy in adopting new materials. PHOTO: HENRIK BODIN/RENEWCELL

FT : EU must wean itself off Russian nuclear fuel, Belgian prime minister says

EU must wean itself off Russian nuclear fuel, Belgian prime minister says
Alexander De Croo urges bloc not to replace one energy dependency for another

The EU must wean itself off Russian nuclear fuel “as fast as possible”, Belgian’s prime minister has said, to stop a renaissance in Europe’s interest for the low-carbon energy inflating Moscow’s war chest.

Alexander De Croo told the Financial Times that Belgium had taken a “180 degree” turn in its attitude to nuclear power, prompted in part by the bloc’s laws aimed at curbing carbon emissions across Europe.

Pressure to meet those targets and a rush to move away from Russian gas has prompted renewed interest in nuclear power in Belgium and other European countries. But with Russia’s enriched uranium making up 30 per cent of EU supply in 2022, there was a risk that the bloc could swap one dependency for another.

“Changing supply chains especially for nuclear is complicated but we need to do it as fast as possible . . . we need to disconnect from Russian nuclear fuel but you need to make sure you can still produce zero emission electricity,” he said.

Belgium decided in December to extend the lifetime of two nuclear reactors that had been scheduled to be closed in 2025. They will now run until 2035 although De Croo said he personally thought their lifetime should be extended by 20 years.

The enthusiasm of the Belgian premier was echoed by leaders from more than 30 countries at the first International Atomic Energy Agency nuclear summit that took place in Brussels on Thursday.

A senior EU official said the nuclear summit was a “reflection of a shift that is happening and it is quite remarkable”.

The renaissance of the once ostracised industry started last year at the UN’s COP 28 climate summit, when 25 countries including Canada, the UK and the US signed a pledge to triple nuclear power by 2050. That marked a comeback after years in the doldrums for atomic energy plans following the 2011 Fukushima meltdown in Japan.

Han Gyu Joo, president of the Korea Atomic Energy Research Institute, said that much of the emphasis at the Brussels summit had been on energy security, adding he’d been surprised to see it hosted by Belgium.

Seth Grae, chair of American Nuclear Society’s International Council, said the difficulty of finding alternatives for Russian enriched uranium was in part due to a lack of investors. “Enrichment capacity is a multibillion-dollar cost . . . we need guaranteed offtake from governments.”

But IAEA director-general Rafael Grossi dismissed pressure for countries to accelerate a move away from Russian fuel.

“Let’s make sure this is not about using nuclear energy as a political pawn,” Grossi told a news conference. “I would warn against this point of good nuclear against bad nuclear, it’s not conducive to what we need to have in the global energy market.”

Hungarian Prime Minister Viktor Orbán, who is EU’s most Russia-friendly leader, name-checked France and Austria, who are working on Hungary’s nuclear plant expansion plans piloted by Russian constructor Rosatom.

“We are happy to note that regardless of geopolitical difficulties a wide range of international, professional and scientific co-operation still exists in the field of nuclear energy,” Orbán said.

Austria, Luxembourg and Germany have been opposed to any EU money going towards nuclear energy fearing that it will take much-needed funding from renewables, although the new government in Luxembourg has recently signalled that it may shift position.

An EU diplomat said that EU funding for nuclear power would be a “Christmas present” to France, home to Europe’s biggest fleet of 56 reactors.

“Each nuclear project spans decades and incurs exorbitant costs, posing a risk of market distortion when EU funds are directed towards such expensive endeavours,” Leonore Gewessler, the Austrian climate minister, told the FT.

De Croo said the summit was not a gathering of “nuclear fanboys”.

“[It] was quite nuanced,” he said, noting that with a history of budget overruns and a looming skills shortage “the industry has quite some promises to deliver on”.

FT : Thiel, Bezos and Zuckerberg join parade of insiders selling tech stocks

Thiel, Bezos and Zuckerberg join parade of insiders selling tech stocks
Bosses sell hundreds of millions of dollars in company shares this quarter in sign that markets may be peaking

Peter Thiel, Jeff Bezos and Mark Zuckerberg are leading a parade of corporate insiders who have sold hundreds of millions of dollars of their companies’ shares this quarter, in a signal that recent stock market exuberance could be peaking.

As markets hit record highs, the ratio of corporate insider selling to insider buying is at the highest level since the first quarter of 2021, according to Verity LLC, which tracks insider trading disclosures.

Stock sales at the beginning of a calendar year are normal, with pent up demand in early 2024 being exacerbated by shareholders avoiding sales last year because of depressed company valuations.

But analysts still said this season’s spree has been surprising and an indicator that a recent tech bull run, fuelled by excitement over the rise of generative artificial intelligence, is about to wane.

“If they think that we’re at the top and so they’re getting out, that’s a rather stark signal to everyone else,” said Charles Elson, a legal veteran and chair of corporate governance at the University of Delaware.


Many of the biggest sales this quarter have come from technology executives. Thiel, co-founder of data analytics group Palantir, sold $175mn this month, according to regulatory disclosures, his biggest sale since offloading $504.8mn of the company’s stock in February 2021.

Amazon founder Bezos sold 50mn shares worth $8.5bn in the ecommerce group in February. Andy Jassy, Amazon’s chief executive, sold $21.1mn of stock this year, compared to $23.6mn in 2023 and 2022 combined.

Zuckerberg, Meta’s chief executive, has sold millions of dollars of the company’s shares for years. But he has increased selling this year as its stock hit all-time highs. In early February, he sold 291,000 shares for $135mn, his first sale of that size since November 2021. He still has 13.5 per cent of the company’s outstanding shares, which makes him its largest shareholder.

“We do view [corporate insider share sales] as a negative data point that investors should be aware of,” said Ben Silverman, Verity’s vice-president of research.

He added that within the technology sector specifically, “we are also seeing a number of the big [company] names in this space with insider selling that is not typical”.

“Clearly there’s an appetite for liquidity generation right now,” Silverman said. “Some of that is some pent-up demand following relatively quiet insider selling in 2022 and 2023, and certainly one impetus is [stock] market performance.”

In one notable case, Snowflake’s Frank Slootman sold $69.2mn in early February, weeks before he announced he would step down as CEO. The database software company’s shares are down about 29 per cent since the day he announced his retirement. Slootman was not a founder of Snowflake but was brought in 2019 to take it public.

“Insider sales by high-level execs of large amounts of stock are never a good sign, it’s quite simple,” said Elson from the University of Delaware. “It means they have found a better place to deploy their assets than the businesses they’re running.”

Amazon declined to comment. Meta, Palantir and Snowflake did not respond to requests for comment.

>>> Barron’s Weekend Summary

Barron’s Weekend Summary: Medicare Advantage is facing increasing concerns due to higher costs and lower profits

Cover:
-Medicare Advantage, the insurance plans that manage Medicare coverage for over 30 million people, is facing increasing concerns due to higher costs and lower profits. Big players like Humana are reporting falling stocks and this could translate to potential ancillary benefit cuts and denials of service. Other pressures include dropping Advantage plans due to low payments and administrative issues. The federal government is scrutinizing Advantage plans for increasing costs and marketing practices that may be misleading consumers. As cost pressures rise in the Medicare market, consumers face complex decisions over which plan to choose, potentially impacting their finances and health. Over half of the eligible Medicare population is enrolled in Advantage, which provides Part A hospital coverage, Part B outpatient coverage, and extras not offered by traditional Medicare.

Interview:
-Suzanne Franks a money manager at First Eagle Investments, has spent her career studying and buying small-cap stocks, about which there has been plenty of chatter on Wall Street. The inflection point hasn’t come yet, though. The iShares Russell 2000 exchange-traded fund is roughly flat year to date, after rallying late last year on rate-cut expectations, while the S&P 500 index has gained almost 9% in 2024. Franks and her team used the volatility as an opportunity to scoop up bargains. Franks graduated from the University of Chicago Booth School of Business. She founded an independent research firm focused on event-driven investment opportunities, and later spent a decade as part of a small-cap team at Royce Investment Partners. In 2021, the team moved to First Eagle, where she is currently an associate portfolio manager on the $1.8 billion First Eagle Small Cap Opportunity fund, which returned 15% over the past year. Barron’s spoke with Franks by phone in late January and again on March 19 to learn why small companies could finally get a closer look from investors, and which small-caps she favors.

Tech Trader:
-Artificial intelligence has transformed memory chip producer Micron Technology into a thriving growth stock, with the stock currently trading at an all-time high and up 29% year to date. Micron has always been a challenging company to value due to its cutting-edge semiconductor technology, which applies to both DRAM and NAND memory chips used in various electronic devices. However, the memory chip business has complex dynamics, requiring vast and expensive production capacity and extensive R&D. Despite having only a handful of competitors, Micron has experienced a post-Covid downswing, with revenue down 49% to $15.5B in the August 2023 fiscal year. The company's main change is that running artificial intelligence software requires massive amounts of memory, which has led to a decrease in demand and pricing.

The Trader:
-Big Tech stocks like Nvidia, Microsoft, Meta Platforms, Tesla, and Amazon.com have outperformed the market, with the S&P 500 up 2.3% this week. The Federal Reserve's steady rate forecast for three rate cuts in 2024 helped keep the 10-year Treasury yield down to 4.22%. Investors were also excited about artificial intelligence, with Nvidia announcing its new Blackwell chip and Micron Technology's revenue benefiting from its AI business. Broadcom announced a new customer, believed to be ByteDance, and the iShares Semiconductor exchange-traded fund rose nearly 3%. This indicates that investors are looking to buy each minor dip, a vote of confidence in these stocks. Momentum stocks, which have consistently risen without high volatility, should push the S&P 500 higher, as their correlation to the index has been positive in the past couple of months.
-The S&P 500 has become more expensive than the Stoxx Europe 600, trading at 20.7 times the per-share earnings its component companies are expected to bring in over the coming 12 months. The gains are driven by expectations that the economy will continue to grow, bringing higher corporate profits. Investors are betting the Federal Reserve will beat inflation without steering the economy into a recession and can soon begin to lower interest rates. However, current equity valuations are likely too expensive, as the 11 rate increases the Fed has rolled out since March 2022 make bonds more appealing investments. The yield on 10-year Treasury debt is now about 4.29%, while the earnings S&P 500 companies are expected to generate over the coming year amount to about 4.8% of the index price.

Features:
-Boeing CFO Brian West has shattered Wall Street's free cash flow expectations for 2024, but shares rose 3.5%. The company's plans to hit $10B in annual free cash flow by 2025 or 2026 are still intact, but they need to invest in a new medium-size aircraft. The debate about Boeing's next single-aisle jet has raged since 2015, when the company considered replacing the 757 jet. Current CEO Dave Calhoun killed off the idea in November 2022, stating that he didn't want to fill a gap in a product line. He wanted to wait until engine, manufacturing, and materials technologies imply that level of gain before spending the money. Boeing has a significant hole in its product line that needs plugging, as the A321neo has taken a lion's share of the market for single-aisle planes that carry more than 200 passengers. The A321neo can fit up to 244 people, while the 757 could carry 290 passengers in certain configurations.
-Digital World Acquisition Corp. has approved a merger with Trump's Truth Social media platform, resulting in nearly $3B in paper gains. Trump owns 60% of Trump Media & Technology Group, which runs Truth Social. The deal has caused legal drama between Trump and ARC Global Investments II, a firm that would own about 10.8M shares. With the deal approved, Trump would control 78.75M shares of the new combined company, trading under the ticker symbol DJT on Nasdaq. The timing of Trump's access to the proceeds is unclear. The deal has seen Digital World stock surge 111% this year.

Europe:
-The Swiss National Bank has unexpectedly cut its interest rate, marking the first major economy to lower rates since the Covid-19 pandemic. This move highlights the side effect of monetary policy, as raising interest rates strengthens a currency by making investments more attractive, while lowering rates weakens it. The SNB's unexpected cut led to the Swiss franc falling almost 2% against the dollar and almost 1% against the euro, the currency used by the country's most important trading partners. The franc's drop makes Switzerland an example for other countries considering a jolt in economic activity, as long as inflation rates continue to fall.

Emerging Markets:
-Bondholders are supporting Javier Milei's radical reforms as Argentina's president wraps up his first 100 days. Benchmark 2030 bonds have risen to 50 cents on the dollar, while Argentine legislators are less enthused. The Senate voted down Milei's Decree of Necessity and Urgency 42-25, and the Chamber of Deputies is likely to follow suit, killing the president's Plan A for overhauling the country's economy. Investors applaud Milei's unilateral actions, such as slashing fuel subsidies and reducing the peso's official exchange rate. Argentina reached a primary budget surplus in January and February for the first time since 2011, and inflation has halved to a 13% monthly rate. However, lawmakers are focused on poverty, which has soared from 40% to 60% in Argentina since last autumn.

Commodities:
-Anglo American, a leading global mining company, has seen its stock drop by 24% over the past year, trailing larger peers like Glencore and BHP Group. The company faces operational problems and tough conditions in key markets, including diamonds, which led to a disappointing multiyear production outlook. However, Anglo American's future looks bright, with metals prices improving and the company vowing to cut costs, improve operations, and review its businesses, including a capital-intensive fertilizer project in the UK. CEO Duncan Wanblad has stated that nothing is off the table, and a potential sale of the $30B company could be a viable option.

Streetwise:
-Zillow.com, a website where homeowners can check their house's Zestimate, has a business model where realtors, builders, and landlords pay to advertise listings. The company views itself as a "housing super app" with expanding services for sellers. Last year, Zillow had free cash flow of $189M on revenue of $1.95B, with revenue falling modestly on declines related to houses and mortgages, offset by sharp rental gains. Zillow's financial results are uncertain, as last year's home sales were the lowest in nearly 30 years. However, February home sales rose 9.5%, marking the first two consecutive months of gains in more than two years. The 30-year mortgage rate has drifted lower since peaking near 7.8% in October, and there's talk of interest-rate cuts later this year. Wall Street predicts a 12% revenue increase for Zillow this year, with free cash flow swelling to $320M.

>>> Weekend Papers Summary

Weekend Papers Summary

FINANCIAL TIMES
-At least 60 people died and over 100 were injured in a terrorist attack on a concert venue in Moscow, where a band called Picnic was due to perform. The attack, which took place at the Crocus City Hall, was the largest loss of life in a terrorist attack in Russia in at least a decade and recalled the Islamist insurgencies that marked the first decade of President Vladimir Putin's rule. Russia's Investigative Committee reported that over 60 people died in the attack, and a search is ongoing for the attackers. The Kremlin has heard reports from the heads of four Russian security agencies on the investigation.
-Microsoft has hired two founders of Inflection, a US-based AI start-up, and many of its 70 employees to oversee Microsoft AI. The move follows Microsoft's $13B investment in OpenAI and a partnership with France's Mistral. Microsoft's hiring spree demonstrates its intent to ally with ambitious AI start-ups and command the market. The company's hyperactivity and investor hype about AI have helped it re-emerge as the world's most valuable public company, with a market value of $3.1T, more than all companies listed on London's FTSE 100 index combined.
-Donald Trump's social media business, Trump Media & Technology Group, will be publicly listed on the NASDAQ exchange next week, potentially generating a $3B windfall for him. The decision comes as Trump faces mounting legal bills ahead of the most expensive election campaign in US history. He has been struggling to raise nearly $500M to prevent assets from being seized. Trump is subject to a lock-up agreement that prevents him from selling his shares for six months, but may use his stake as collateral to borrow money.
-US senators reached a late agreement to avoid a partial government shutdown over a $1.2T spending bill, preventing a budget stand-off that could lead to the closure of non-essential federal agencies. The Senate majority leader, Chuck Schumer, announced the deal before midnight. The White House welcomed the progress, stating it had stopped shutdown preparations due to confidence in Congress passing the necessary appropriations. However, the House approved the spending bill with broad bipartisan support, triggering backlash from Republican allies who objected to the compromise.
-Iceland is aiming to prioritize food security over financial gain, planting corn, and curbing bitcoin miners as the country seeks self-sufficiency in a hostile world. Prime Minister Katrín Jakobsdóttir believes recent protests by European farmers and disruptions in trade have led to a need to reduce reliance on imports. She also plans to reallocate precious renewable electricity from data centers to housing and other industries, prioritizing the energy needs of Iceland's 375,000 citizens.
-Russia and China vetoed a US resolution calling for an immediate ceasefire in Gaza at the UN Security Council, blocking Washington's attempt to distance itself from Israel's Hamas war. Moscow and Beijing's decision reveals the US's diplomatic difficulties at the UN, where it traditionally uses its Security Council veto rights to protect Israel. Moscow's ambassador to the UN, Vassilily Nebenzia, criticized the initiative as "hypocritical" and an instrument for Washington's Middle East policy.
-Germany and France have reached a "breakthrough" on plans for a joint tank, marking a sign of mending Franco-German ties. The talks took place in Berlin, amid tensions between French President Emmanuel Macron and German chancellor Olaf Scholz over weapons deliveries to Kyiv and funding for European defense. Scholz has opposed Macron's idea of issuing euro bonds to fund arms makers in Europe and the French president's suggestion to send ground troops to fight in Ukraine. The talks showed that both countries are in the same boat and know their desired direction. The breakthrough is seen as an expression of the significance, strength, and opportunities of Franco-German co-operation and friendship.
-Marjorie Taylor Greene, a hardline Republican congresswoman and close ally of Donald Trump, has launched a bid to remove Mike Johnson as Speaker of the House of Representatives amid chaos in the party's slim majority. Greene said Johnson had filed a motion to vacate as a warning about her push to remove him from office. Greene's move was triggered by a House vote to approve a budget for the federal government until the end of the fiscal year in September. Greene and other Republicans have criticized the compromise with Democrats, arguing it would entrench high spending levels.
-UN secretary-general António Guterres confirmed that all seven members of Haiti's transitional presidential council have been nominated, announcing the appointment of a temporary government to replace Prime Minister Ariel Henry and arranging elections. Meanwhile, police have claimed a rare success in their war against gangs, killing Ernst Julme, head of the Delmas 95 gang. Haiti, the poorest nation in the Americas, has been grappling with worsening violence and poverty since the assassination of President Jovenel Moïse in 2021.

THE NEW YORK TIMES
-The Islamic State-Khorasan branch claimed responsibility for a Moscow attack that killed at least 60 people and injured 100 others. The US collected intelligence in March that ISIS-K, based in Afghanistan, had been planning an attack on Moscow. The group has been trying to increase its external attacks, but most of these plots in Europe have been thwarted, indicating diminished capabilities. ISIS-K has been fixated on Russia for the past two years, frequently criticizing President Vladimir V. Putin and accusing the Kremlin of having Muslim blood. (Note, Russian and other international sources have vehemently rejected the ISIS link to the attack as fake news).
-The Senate approved a $1.2T spending bill to fund over half of the US government, averting a shutdown by sending the legislation to President Biden just hours after a midnight deadline. The 74-to-24 vote capped an extraordinary day on Capitol Hill, which began with a bipartisan vote to speed the measure through the House. The Senate action came more than 12 hours after the House vote, after intense haggling to arrange politically charged votes on proposed changes to the legislation. The delay underscores the difficulties in spending negotiations and is a fitting coda to an excruciating set of talks to fund the government through the end of the fiscal year, Sept. 30, six months behind schedule.
-Alaska Airlines passengers who made an emergency landing after a fuselage panel blew off this year have received letters from the FBI identifying them as possible victims of a crime. The letters are a sign that a criminal investigation into Boeing, the manufacturer of the 737 Max 9 jet, is ramping up. The panel, carrying 171 passengers and six crew members, blew off at an altitude of 16,000 feet shortly after the plane left Portland, Oregon, airport in early January. The National Transportation Safety Board said the panel, known as a door plug, was missing four bolts meant to secure it in place.
-Narendra Modi, the Indian prime minister, has been attempting to transform India into a monolith dominated by his Hindu nationalist vision. While the media, legislature, and courts have been largely shaped by his will, some of India's richest states remain critical holdouts. The future of the world's largest democracy and its economic trajectory may depend on the power struggle that has ensued. Modi is expected to win a third term in the national election on April 19.
-Senator Sherrod Brown, a Democrat from Ohio, faces a tough campaign in 2024 due to a Republican Party determined to win his seat and a Democratic president hanging off him. Brown, who has won his seat in 2006, 2012, and 2018, has a strong message of fighting for Ohioans and believes he can win in a state that is a little more Republican. He has been elected Ohio's secretary of state in 1982 and has a casual confidence that he can win again in firmly red Ohio, where he is the last Democrat holding statewide office.
-Chicago voters rejected an increase to the city's transfer tax on high-value properties in a referendum, leaving unfulfilled a long-time goal of Mayor Brandon Johnson and progressive Democrats. Real estate groups warned that the new rates would have been catastrophic to the downtown office market, which was already losing value and struggling with vacancies. The vote came at an uncertain political moment in Chicago, a Democrat-dominated city where homelessness has become more visible since the pandemic and an influx of migrants has strained resources.

THE NEW YORK POST
-United Airlines has announced that US safety regulators will increase scrutiny of the airline following a series of safety incidents. The Federal Aviation Administration (FAA) will be more present in the company's operations over the next few weeks as they review work processes, manuals, and facilities. The Chicago-based airline has experienced several emergencies in the past two weeks, including an external panel missing from a United aircraft in Oregon, a fuel leak during takeoff, and a Boeing 777-200 losing a tire after takeoff from San Francisco. The incidents have prompted the airline to pause and evaluate potential changes to make it safer.
-Bentley's (part of VW Group) CEO, Adrian Hallmark, has announced that the luxury carmaker's sales slumped 11% in 2023, the first decline after four consecutive years of growth. Hallmark blamed the emotional sensitivity among wealthy customers for the decline, stating that despite customers being able to afford Bentley cars, demand was slowed down due to emotional sensitivity. Bentley will no longer have Hallmark at the helm and will move on to run rival luxury brand Aston Martin, effective October 1. Bentley also attributed the drop in sales to high-earning customers being worried about the possible gaucheness of being seen in a Bentley if friends, family, or employees are facing increased economic hardship. Customers are also sensitive to changes in interest rates, which raise their payments when they receive a quote to change the car.