Neuralink, Elon Musk’s brain implant startup, quietly raises an additional $43M
Neuralink, the Elon Musk-founded company developing implantable chips that can read brain waves, has raised an additional $43 million in venture capital, according to a filing with the SEC.
The filing published this week shows the company increased its previous tranche, led by Peter Thiel’s Founders Fund, from $280 million to $323 million in early August. Thirty-two investors participated, according to the filing.
Neuralink hasn’t disclosed its valuation recently. But in June, Reuters reported that the company was valued at about $5 billion after privately-executed stock trades.
Founded in 2016, Neuralink has devised a sewing machine-like device capable of implanting ultra-thin threads inside the brain. The threads attach to a custom-designed chip containing electrodes that can read information from groups of neurons.
Brain-signal-reading implants are a decades-old technology. But Neuralink’s ostensible innovation lies in making the implants wireless and increasing the number of implanted electrodes.
In May, Neuralink received FDA approval for human clinical trials after having its application previously rejected, and opened up its first human trials for recruitment under an investigational device exemption by the FDA.
But Neuralink is under increasing scrutiny for what critics allege are a toxic workplace culture — and unethical research practices.
In a January 2022 article in Fortune, anonymous former employees described a “culture of blame and fear” — one in which Musk would frequently undermine management by encouraging junior employees “to email issues and complaints to him directly.” By August 2020, only three of the eight founding scientists remained at the company, the result of what a Stat News piece described as “internal conflict in which rushed timelines … clashed with the slow and incremental pace of science.”
In 2022, the Physicians Committee for Responsible Medicine (PCRM) alleged that Neuralink and UC Davis, once its research partner, had mistreated several monkeys involved with testing Neuralink hardware — subjecting them to psychological distress and chronic infections due to surgeries. Reports from both Reuters and Wired suggested testing was being rushed due to Musk’s demands for fast results, which led to complications with the installation of electrodes — including partial paralysis and brain swelling.
For nearly a year, Neuralink was under federal investigation by the U.S. Department of Agriculture (USDA) regarding animal welfare violations. The USDA eventually concluded that there was “no evidence” of animal welfare breaches in the startup’s trials other than a previous, self-reported incident from 2019 — but the PCRM disputed the results of the investigation.
in November 2023, U.S. Lawmakers ask to SEC to investigated Neuralink for omitting details about the deaths of at least a dozen animals who were surgically fitted with its implants.
The Estée Series: 3-Why it makes sense for LVMH to buy the company
The Estée Lauder Companies has come under the spotlight. Its share price has collapsed since January after a series of profit warnings, but it’s been rising steadily in the past three weeks. It is up 18 percent since Nov. 1. LVMH has denied any interest in acquiring the company, but investors are speculating that it could buy a stake or eventually make a bid. Some insiders also think an activist investor could build a position in order to put pressure on the company to nominate a new CEO and change its strategy.
Having lost two thirds of its value in the past two years, the Estée group has become an irresistibly undervalued asset for the shrewd financier and LVMH boss Bernard Arnault. Some industry insiders believe a mega transatlantic deal could be on the cards at some point. But in the short term, what is most likely is that LVMH buys a stake first and the Lauder family publicly welcomes the move, saying it shows how promising and attractive the company’s brands are.
LVMH did the same with the Tod’s Group. In 2021, it raised its stake from 3.2 percent to 10 percent. The company’s controlling family, the Della Valle, have said that if one day they were ready to sell the company, they would sell it to Arnault.
LVMH knows that it cannot go aggressive on the Lauder family. They are perceived as royalty in the United States. If it did, the group would run the risk of U.S. consumers turning against them and starting to boycott Tiffany & Co. Arnault is an intelligent man. He knows how important it is for LVMH to be well regarded in the United States.
Several fund managers told Miss Tweed earlier this month they were buying shares in the Estée company on the expectation that LVMH could buy a stake, make an offer or that an activist investor may acquire a significant holding. There is no visible evidence of LVMH buying shares in the Estée Lauder Companies. However, several industry sources believe the group could already be buying shares under the radar – like it did in Hermès 15 years ago using equity derivatives.
Last week, Miss Tweed reported several sources close to LVMH saying it was not keen to buy the Estée company because it was still struggling to digest its $16 billion acquisition of Tiffany & Co. The French group argued that it would not have enough captains to lead the ship since the acquisition of the U.S. jeweler. depleted its talent pool. Of course, many good people at the Estée company would stay, but LVMH would need to bring in a strong executive team of at least 20 people to get going, including a CEO, a few marketing maestros and regional chiefs.
LVMH does not want investors to know that it’s actually ready to take on the U.S. beauty giant now worth $44 billion on the stock market, up from $41 billion two weeks ago. “It’s clearly a major undervalued asset for Bernard Arnault,” one senior industry source said about LVMH’s CEO and controlling shareholder. “I am sure that Arnault is on this… and money is not a problem.”
PERFECT STORM
For LVMH, it’s the perfect storm. Investors lost faith in management after the company missed expectations several times this year and in 2022. The controlling Lauder family is divided over who should lead the group, making it an ideal target for Arnault, a past master at exploiting rifts within families. That’s how he got control of many prestigious brands including Guerlain and Hennessy.
Leonard Lauder, the 90-year-old patriarch, son of Estée, officially retired from the board at the annual shareholder meeting on Nov. 17. He remains the guardian of the family spirit and a highly respected and authoritative figure who turned the Estée Lauder Companies into a global multinational with an impressive portfolio of brands including M.A.C., La Mer, Jo Malone London and Tom Ford.
Like his niece Jane Lauder, 50, the second-biggest family shareholder after him, Leonard thinks it’s time for CEO Fabrizio Freda to go after nearly 15 years, during which he has pocketed several hundreds of millions of dollars, sources close to the company have said. The Lauder family needs to find a replacement, but no descendant of Estée has been selected yet to lead the company in the 21st century. There’s also a father-and-son rivalry going on as well. Leonard’s son William, 63, who is executive chairman, stands opposed to his father’s view and wants Freda to stay for now.
At the AGM, William reiterated “to the board, our stockholders and our employees that we remain steadfast in our commitment to the long-term continuity of the Estée Lauder Companies as a family-controlled enterprise, because we see the enormous and exciting potential of this business.”
REMEMBER THE HERMÈS HANDBAG WAR
If the Lauder family were willing to sell – which they are currently not – LVMH would surely make a move, industry insiders predict. And if they don’t want to sell, Arnault may find a way to get them to change their mind. He is a fine strategist. Let’s remember how LVMH took the Hermès family by surprise, announcing in 2010 that it had built up a 17 percent stake in the French luxury brand, which it would later increase to 23 percent. That year, Jean-Louis Dumas, the man who built Hermès into a global empire and designed the strategy still implemented today, passed away. Dumas was a visionary and the man who kept the Hermès family together. His disappearance made the Dumas, Guerrand and Puech controlling families – all descendants of Emile Hermès – vulnerable, and Arnault tried to take advantage of their grief and soul-searching.
Ultimately, Arnault did not win what the media dubbed the “handbag war.” He had to let go when Hermès family members united and created a controlling structure that made it impossible for any of them to sell their shares for two decades. When LVMH tried to buy Hermès – which it always denied – many Hermès family members, including people who were in banking and other sectors, joined the maker of the prized Kelly and Birkin handbags to defend it. At the AGM of the Estée group, Gary Lauder, 61, Leonard’s youngest son, a venture capitalist who has never been involved much with the company, joined the board. He may prove useful to help the family defend itself against Arnault if need be. The Lauder family have a 35 percent stake in the company but 84 percent of voting rights. Therefore, in theory, nothing can happen without their approval.
“LVMH are certainly not going to map out their plans, they don’t want anybody to know,” a senior industry source said. There is a strong rationale behind such a deal. For LVMH, it would boost its presence in North America, where its brands Dior, Guerlain and Givenchy could be stronger. Also, LVMH has suffered from a drop in wine and spirit sales in that region. “Diversification is the name of the game and beauty is a good bet,” the industry source said.
LVMH would bring Estée its marketing might and its ability to organize hard-hitting, high-profile events and ad campaigns with celebrities and influencers that get consumers’ attention and help its brands gain market share. The two groups could mutualize their distribution networks – fundamental to success in the beauty business. Together, they would represent a strong rival to L’Oréal, particularly in North America, where the French group would be dwarfed by this newly born behemoth.
WHAT ABOUT TOM FORD?
If LVMH made a bid, it’s likely that anti-trust regulators would force LVMH to sell parts of the Estée group, which it may want to do anyway as it may not want to take on all of the Estée group’s brands. It would be interesting to see how things would pan out for Tom Ford, the Estée company’s biggest success story. It owns the Tom Ford name, but the fashion brand business has been acquired by Italy’s Zegna Group. What would happen to that relationship if LVMH took over? This would be an interesting aspect of the deal if one was to come to the table.
Also, the Tom Ford brand has a perpetual license with Italian eyewear maker Marcolin. LVMH could strike a deal with Marcolin so that it continues to manufacture Tom Ford eyewear or buy the Italian company.
Marcolin’s private equity shareholder PAI Partners would no doubt be in favor of an LVMH bid. It’s been trying to find a buyer for Marcolin for years. The time has come to move on and sell its controlling stake. Last year, PAI Partners tried to sell Marcolin to U.S. eyewear company Marchon but the deal was scuppered by the announcement that the Tom Ford brand was being put up for sale, creating uncertainty about Marcolin’s future income, as Miss Tweed reported in July 2022.
The Tom Ford license represents more than half of Marcolin’s revenue. After the Estée Lauder Companies bought Tom Ford for $2.8 billion in November last year, Marcolin bought the Tom Ford eyewear business for €250 million this year. That means they own this business now. PAI Partners declined to comment.
LVMH knows it needs to tread carefully if it wants to buy the Estée Lauder Companies. Diplomacy will be key. LVMH and the Estée Lauder Companies declined to comment for this report.
Claridge’s, Louis Vuitton Unveil a Tree Made from Trunks
The towering sculpture is framed by two huge wardrobe trunks stacked on top of each other.
ONE TREE, MANY TRUNKS: Claridge’s has unveiled its Christmas tree, a sculpture made from Louis Vuitton wardrobe trunks that stands 17 feet tall in the hotel’s lobby.
The tree is composed of 15 chrome, repurposed trunks of varying heights that have been stacked to create the silhouette of a traditional Christmas tree, and styled to reflect the hotel’s Art Deco architecture.
The sculpture has been set inside two huge trunks stacked on top of each other. Each one is adorned with vintage Claridge’s travel stickers and an oversized Louis Vuitton luggage tag.
At the top of the tree is a model of Asnières, the Louis Vuitton family home and atelier in a northern suburb of Paris. Scattered across the silvery trunks and amid the snowy landscape of the tree there are 21 figurines, including one of Father Christmas.
Claridge’s general manager Paul Jackson said “Christmas is the most magical time for us here at the hotel, and we look forward to welcoming guests and seeing visitors immerse themselves in Louis Vuitton’s world.”
The hotel and the brand have much in common. Both were founded in 1854, and had strong ties to Empress Eugénie, wife of Napoleon III. Monsieur Louis Vuitton was the personal “layetier” to the Empress, the man responsible for creating her arsenal of luggage, and packing the bags.
The French royal made Claridge’s her winter residence, and she received so many visits from Queen Victoria that the hotel came to be known as the “annex” to Buckingham Palace.
This is the 13th year that Claridge’s has invited a top fashion house or designer to reinterpret the tree in its own distinctive style.
Last year, Jimmy Choo’s creative director Sandra Choi designed the festive tree, which she called The Diamond, a nod to the brand’s twinkling accessories.
In 2021, the hotel invited Dior’s Kim Jones to design the tree, and he paid tribute to craftsmanship and couture.
Share sale set to test financial impact of OpenAI’s leadership turmoil
Key investors bullish of hitting $86bn valuation despite company’s chaotic power struggle
An upcoming sale of shares in OpenAI is set to test how much the past week’s leadership chaos has cost the company and its backers, though big investors are bullish about securing a high valuation.
The employee stock sale, which had been planned before the sacking last week of chief executive Sam Altman and expected to value the company at $86bn, will continue as planned, according to two investors with direct knowledge of the matter.
It will be the first test of investor appetite in OpenAI following a battle between Altman and the board that brought to light issues at the company, such as complex governance arrangements in which a not-for-profit board oversees a for-profit company.
Venture groups such as Josh Kushner’s Thrive Capital, Sequoia Capital and Khosla Ventures, were among those that pushed for Altman’s reinstatement, as they sought to protect their existing stakes in OpenAI.
Investors remain confident that a new share sale can still treble the $29bn valuation placed on OpenAI when Microsoft committed to invest $10bn in the company at the start of this year.
“Clearly this almost destroyed a lot of value in the short term, it’s hard to say what happens next,” said Vinod Khosla, an early investor in OpenAI. “Valuation is a function of investor perceptions. The company is the same or better off than it was last Thursday.”
But analysts have suggested that OpenAI will be hit by the week’s events, with rival groups such as Google and Amazon representing strong and stable challengers in the race to offer generative artificial intelligence services to businesses and consumers.
“It hurt their valuation — we all know that. It’s just a mess,” said Anat Alon-Beck, associate professor in corporate law and governance at Case Western Reserve University School of Law. “I don’t think their valuation is going to go up without them now taking the proper measures.”
The $86bn valuation was mooted last month when OpenAI was the most feted Silicon Valley’s start-up and the dominant force in an AI boom which was kicked off by the launch of the company’s chatbot ChatGPT a year ago.
The four directors who sacked Altman were OpenAI co-founder Ilya Sutskever, technology entrepreneur Tasha McCauley, Helen Toner from the Center for Security and Emerging Technology at Georgetown University, and Quora’s chief executive Adam D’Angelo.
Three directors lost their positions when Altman returned, but D’Angelo remained on the new board, overseeing the transition. That was “not good”, said Alon-Beck, referring to the failure to replace all of them.
The outgoing directors also secured other concessions that will hang over the company, including an independent investigation into the events of the past week, as well as assurances that Altman would not rejoin the board.
Still, Altman’s return as chief executive has provided some relief for investors and could pave the way for a simpler corporate structure with a clearer focus on driving returns, rather than the board’s purpose of creating AI that “benefits all of humanity”, according to two investors in the company.
Microsoft, which holds a significant minority stake in the company, is also hoping for governance changes that could give it a say in how the company is run.
Kushner, whose Thrive Capital had planned to lead the employee stock sale, said: “The resilience and strength we have seen from the entire OpenAI team in the past few days has been extraordinary, and we consider it a true honour to be their partners now and in the future.”
Weekend Papers Summary
FINANCIAL TIMES
-Hamas has delayed the release of hostages in Gaza due to insufficient aid delivery. The group freed 24 captives in a deal with Israel, which included paused offensive, release of Palestinians in Israeli prisons, and increased aid. Hamas' military wing has reportedly complained to Qatar and Egypt about the insufficient aid delivery.
-Palestinians have returned to their shattered neighborhoods after 48 days of Israeli bombardment, seeking food and fuel. The truce agreement includes provisions for increased humanitarian supplies.
-Russia launched its largest drone attack on Kiev, wounding five people and leaving nearly 200 buildings without power. The attack, which began at 2:30am local time and lasted over six hours, involved Shahed kamikaze drones that changed course to confuse and evade Ukrainian air forces, according to Ukraine's air force.
-Chris Christie is avoiding pressure to withdraw from the 2024 White House race and narrow the field of candidates challenging Donald Trump for the Republican presidential nomination. Despite struggling in national polling, Christie is aiming to participate in the Alabama debate in December. His supporters believe he offers a clear contrast to Trump, performs well in New Hampshire, and is strong on foreign policy during international turmoil.
-Nigeria's Aliko Dangote, the richest person in Africa, is set to launch a $20B oil refinery outside Lagos, potentially transforming Africa's largest economy. The facility, which could start producing diesel, kerosene, and jet fuel, could be operational by next month, provided sufficient crude oil is secured and the plant works as planned. Dangote believes the refinery could reach 650,000 barrels a day by 2024.
-The Israeli shekel has become the world's top performing currency this month, driven by billions of dollars of central bank purchases since the Hamas war. The currency has risen by around 8% in November to 3.74 shekels per dollar, reversing a fall of nearly 6% in the first 20 days of the conflict. The rebound indicates confidence in the war's containment, the Israeli government's strong balance sheet, and foreign financial inflows.
-Israel has escalated a diplomatic dispute with Spain and Belgium after accusing the EU countries of supporting terrorism in response to their prime ministers' criticism of its Gaza bombardment. The Israeli and Spanish foreign ministers exchanged harsh words and summoned each other's ambassadors for reprimands. Spain's Prime Minister Pedro Sánchez and Belgian counterpart Alexander De Croo continued a visit to the Middle East, while Israel's Foreign Minister Eli Cohen condemned the false claims of Spain and Belgium, which support terrorism.
-Ireland's Taoiseach (ie: head of government, prime minister), Leo Varadkar, has pledged to introduce tougher legislation to combat far-right groups responsible for inciting riots in Dublin following a knife attack. Around 500 people and riot police clashed on Thursday night, with rumours that the attacker was an immigrant. Varadkar described the rioting as "shameful" and promised to accelerate hate crime legislation already before the Dáil parliament to modernize incitement to hatred legislation for the social media age. He also promised to toughen legislation to use CCTV footage to apprehend the perpetrators.
-Geert Wilders's attempt to form a government in the Netherlands has been halted by the liberal VVD party's leader, Dilan Yesilgöz, who stated she would not form a coalition with Wilders. However, the outgoing justice minister could support a centre-right cabinet from outside, without clarifying whether Wilders' anti-Islam Freedom party could be considered centre-right. Wilders' Freedom party came first in the parliamentary elections, but needs the support of at least two other parties to form a majority in the lower house.
-US online shopping reached record highs on Thanksgiving Day, with shoppers spending over $5.5B online, an all-time high. Black Friday sales are expected to reach $9.6B, a 6% increase from last year. The festive shopping mood is also evident on the ground, with stores reporting heavy foot traffic.
-Prime Minister Narendra Modi's Bharatiya Janata party is preparing for national polls next year by battling a revived opposition in five state elections in November. The polls will be held in Rajasthan, Madhya Pradesh, Chhattisgarh, Telangana, and Mizoram, with results due on December 3. The elections aim to strengthen the BJP's political dominance and counter the Indian National Congress.
-The European Commission approved Italy's spending plans and reforms for its €194B share of the EU post-pandemic recovery fund, boosting Prime Minister Giorgia Meloni's government. This agreement allows Brussels to approve Italy's next €16.5B tranche, which officials hope to receive by the end of the year. Italy is the largest beneficiary of the €800B recovery fund.
-India's rapid development of a digital payments system and online banking has led to financial inclusion. However, law enforcement agencies struggle to keep up, and regulators are working to improve financial literacy. In 2021, over 60% of cybercrime cases were frauds, with nearly half of frauds involving Rs100,000 or more classified as "card/internet" by the Reserve Bank of India.
NEW YORK TIMES
-Hamas said it has delayed 2nd hostage release, citing problems with aid delivery. The group’s armed wing claimed Israel was not adhering to the terms of an agreement for releasing hostages.
-Israelis welcome some hostages home. The return of 13 Israeli hostages out of more than 200 provided a glimmer of hope for a nation still traumatized by the Hamas assault of October 7.
-Gaza civilians, under Israeli barrage, are being killed at historic pace. In less than two months, more than twice as many women and children have been reported killed in Gaza than in Ukraine after two years of war.
-Derek Chauvin is said to have been stabbed in federal prison. Mr. Chauvin, a former Minneapolis police officer who was convicted of murdering George Floyd during a 2020 arrest, was serving a sentence of more than 20 years.
-Who would Donald Trump choose as his running mate? While voting has yet to begin for the GOP primary, the former president has casually weighed the pros and cons of some contenders.
-Gov. Ron DeSantis faces critical decision on cruise ships in Key West. A campaign donor to DeSantis wants to expand cruise ship operations in Key West, where voters have tried to restrict them.
-Despite bans, disabled women are still being sterilized in Europe. Governments have declared the practice a human rights violation. But they have made exceptions that are divisive among parents, doctors and social workers.
-Behind Mike Johnson’s rise is a GOP "consumed by the Far Right." After their party was decimated in 2008, mainstream Republicans believed they could harness rising far-right forces. Instead, they were overrun by them.
-Hollywood is being forced to make some difficult decisions on guns. Real guns or replicas? Blank fire or special effects? The killing of a cinematographer on a film set has some in the industry rethinking their approach to firearms.
-Donors give over €300,000 for immigrant who intervened in Dublin stabbing. A Brazilian man stopped a stabbing that prompted one of the worst anti-immigrant riots in recent history.
NY POST
-US Joint Chiefs of Staff Chairman Gen. Charles Q. Brown has expressed concerns about Israel's war in Gaza, stating that it would be a large order to eliminate the terrorist organization. This has caused controversy among elected officials, who argue that it is inappropriate for the general to discuss such divisions in public. Rep. Mike Gallagher suggests that if General Brown is concerned about the time it may take for Israel to complete the mission, he should advise the president to drop his push for a ceasefire and focus on ensuring Israel has the necessary lethal aid.
-Black Friday shoppers spent a record $9.8B online, up from $9.12B the day after Thanksgiving 2022, according to Adobe Analytics. The top items were electronics like smart watches, televisions, and Bluetooth headphones, as well as Barbie Fashionistas dolls, Mini Brands toys, cordless and robot vacuums, cookware, skincare, and coffee makers. However, inflation fears and higher prices remain a concern. 72% more shoppers used "buy now, pay later" flexible payment options like Klarna and Afterpay than the previous week.
Laurent Chekroun Equity Sales
Makor Securities London Ltd. | Makor Group
E: LCHEKROUN@makor-cm.com
M: +41 79 350 71 09
O: +33 1 42 33 02 05
W: www.makor-group.com
This message has been sent by Makor Securities, London, part of Makor Group, which is authorised and regulated by the FCA (625054). This message is for professional clients and eligible counterparties only, not intended for "retail clients". The information contained in this message is confidential and is for the exclusive use of the intended recipient. If you receive this message in error please inform us and delete all copies of it. The information is not intended as an offer or solicitation to buy or sell any financial instrument. All comments and statements are to be considered the opinions of the author not the Company and are not intended to be relied upon. We cannot guarantee that this message or any attachments are virus free and accept no liability for any viruses or the consequences thereof. v20230124
Barron’s Weekend Summary: The political and financial orders, which have been underpinned by markets for decades, are under serious threat
Cover:
-The political and financial orders, which have been underpinned by markets for decades, are under serious threat due to the escalating wars in Europe and the Middle East, and the deteriorating fiscal health of the US and China. This presents an opportunity for investors to capitalize on the seismic changes that could occur after years of relative peace and prosperity. Barron's sought advice from four market watchers who took a virtual global tour of investment hot spots, including the bull market and economic liberalization in Latin America and the Middle East. The experts also noted the presence of well-positioned companies with irresistibly priced shares. The roundtable discussion took place on Zoom and in follow-up conversations. Some of the panelists’ most notable picks – especially in view of the considerable discussion of geopolitical risk as one of the main factors that investor should consider in 2024 - include BYD, Adani Enterprises, Glencore, Petrobras, TotalEnergies, Exxon Mobil, Fomento Economico Mexicano, Richemont, and Wheaton Precious Metals.
Interview:
-No interview this week
Tech Trader:
-The Nasdaq Composite has seen a 36% increase this year, but is still 12% off its record peak. The technology sector is expected to gain further ground in the short run and into 2024, with the rally likely to extend beyond the stock market's largest names. The strengthening dynamic for tech dates back to 2022, when the index fell 33% due to tightened monetary policy and Covid-19-related disruptions. In 2023, the Federal Reserve's decision to end rate increases and ease component shortages led to OpenAI's launch of ChatGPT, triggering investment by tech companies to leverage AI for consumer and enterprise applications. The Magnificent Seven of Apple, Microsoft, Google, Amazon, Nvidia, Meta Platforms, and Tesla have all rallied 107% this year, while the S&P 500 has only gained 3%.
The Trader:
-The November stock market rally has led to the S&P 500 index potentially hitting a record high by the end of the year. The S&P 500 gained 2.2% this week, while the Dow Jones Industrial Average and Nasdaq Composite rose 1.9% and 2.4% respectively. The lift came on Tuesday when October's consumer price index came in lower than expected, solidifying the Federal Reserve's belief in stopping raising interest rates. The CME FedWatch Tool shows a 28% chance of a cut in March.
-Baidu, China's AI-focused company, has gained attention as Alibaba Group Holdings faces challenges. The company's AI business includes cloud computing, driverless taxis, and a ChatGPT competitor called Ernie. Baidu launched a paid tier of Ernie and launched a chatbot for cloud enterprises to develop smart apps. Morningstar analyst Kai Wang has tapped Baidu as one of two key Chinese beneficiaries of this year's tech trend. Baidu reported earnings of 20.40 Chinese yuan ($2.86) a share on revenue of 34.5 billion yuan ($4.8 billion), beating analysts' expectations. Year-over-year, per-share profit and revenue grew 21% and 6%, respectively.
Features:
-Mattel, a toy maker, has been preparing for the upcoming holiday season by focusing on traditional shopping patterns. The company sells Barbies, Hot Wheels, and American Girl dolls in the fourth quarter, which is dominated by gift buying, making up about a third of its annual revenue. The company has been preparing for months to stock inventories, coordinate with retailers, and ensure its end-of-year strategy is executed smoothly. However, the 2022 holiday season was an aberration for the economy as a whole, not just for the toy industry. Mattel CEO Ynon Kreiz sees the return to the traditional shopping pattern as a positive change. According to retail CEOs, industry analysts, and insiders, the 2023 holiday is expected to look similar to the pre-Covid years, with retail sales expected to increase between 3% and 5% compared to last year.
-Black Friday has resumed its traditional pulse this holiday season, with shoppers in Philadelphia suburbs eagerly searching for bargains. The Philadelphia Premium Outlet in Pottstown, Pennsylvania, was filled with cars waiting to be waved in by attendants. Meanwhile, web traffic to retailers in the U.S. rose 6% year over year on Thanksgiving Thursday, and Adobe estimated that consumers spent a record $5.6 billion online on Thanksgiving Day, up 5.5% year over year and nearly double the amount spent online in 2017. Hot purchases included toys and electronics, robot vacuums, tablets, workout gear, and holiday decor. Melissa Minkow, director of retail strategy at CI&T, expects this five-day period to be the peak and highlight of the season.
Europe:
-ASML, a key player in the global chip supply chain, has warned that a far-right party's electoral victory in the Netherlands could pose a risk to the company's staffing and hiring of key skilled workers. The Dutch far-right leader, Geert Wilders, has championed policies against immigration, which could impact the hiring of key skilled workers at Europe's most valuable technology firm. ASML, which is partly reliant on foreign workers, is concerned about the potential disruption if Wilders becomes the next prime minister of the Netherlands.
Emerging Markets:
-Argentina's markets have split on Javier Milei's election as the country's next president, with the country's benchmark bonds rising from 26.5 cents to 28 cents and the peso dropping from 850 to the dollar. Milei's victory speech aimed to "end decadence in Argentina" but faced challenges in his quest to achieve this. The country's desperate state, with inflation at nearly 150% annually and nearly half the population in poverty, has led to a heavily qualified endorsement. Milei's only available remedies will accelerate inflation in the short term, as he will have to cut off subsidies for fuel, electricity, and transportation, impacting consumers further.
Commodities:
-OPEC has been holding oil prices steady for the past two years. However, disunity before its next meeting has caused prices to fall, potentially weakening its influence into 2024. OPEC and its allies, OPEC+, delayed a meeting by four days due to disagreements about future production cuts. Brent crude fell 4.3% to $78.92 per barrel, while West Texas Intermediate fell 4.5% to $74.30 per barrel. OPEC+ has reduced production by about 2 million barrels a day to maintain high prices, with some members reducing production by an additional 1.7 million barrels. Saudi Arabia and Russia have cut 1.3 million barrels combined, resulting in a significant portion of the 101 million barrels consumed worldwide.
Streetwise:
-Jack Hough has noticed that agricultural stocks are down – and unjustifiably so. He uses one particular example to drive his point: CNH Industrial. CNH Industrial Chief Executive Scott Wine believes that the stock's artificially low price is creating a great opportunity for the company. CNH is currently trading at 5.9 times this year's projected earnings, making it second in the market behind Deere and AGCO. Farm-equipment makers are well-positioned for the long-term rise of precision agriculture, which uses sensors, telematics, artificial intelligence, and autonomy to make crop production more accurate and controlled. However, the agricultural economy is currently on the downswing, with the US Dept of Agriculture predicting a 23% drop in farmer incomes this year due to declining crop prices and high costs. Brazil, which overtook the US as the No. 1 corn exporter, is particularly soft on equipment purchases.
Laurent Chekroun Equity Sales
Makor Securities London Ltd. | Makor Group
E: LCHEKROUN@makor-cm.com
M: +41 79 350 71 09
O: +33 1 42 33 02 05
W: www.makor-group.com
This message has been sent by Makor Securities, London, part of Makor Group, which is authorised and regulated by the FCA (625054). This message is for professional clients and eligible counterparties only, not intended for "retail clients". The information contained in this message is confidential and is for the exclusive use of the intended recipient. If you receive this message in error please inform us and delete all copies of it. The information is not intended as an offer or solicitation to buy or sell any financial instrument. All comments and statements are to be considered the opinions of the author not the Company and are not intended to be relied upon. We cannot guarantee that this message or any attachments are virus free and accept no liability for any viruses or the consequences thereof. v20230124