GraniteShares | August 28th, 2024

Today's insights are provided by GraniteShares. Learn more about their 2X leveraged long (NVDL) and short (NVD) Exchange-Traded Funds before Nvidia's earnings report.

Learn More Here ➔

GOOD MORNING

Here's everything you need to know today: Hindenburg Research has a new bullseye: Super Micro Computer Inc. The infamous short seller dropped a bombshell report on Tuesday, sending Super Micro’s stock skidding 2.7%. The accusations include a laundry list of accounting red flags, shady related-party transactions, and enough corporate drama to make Shonda Rhimes jealous.

The stock closed at $547.38, and let’s not sugarcoat it; Super Micro’s August has been absolutely brutal. Shares are down 21.7% this month alone, making it the worst month since the stock tanked 36.4% in October 2018. The last thing it needed was the attention of the short-selling version of Billy the Kid.

Hindenburg’s latest salvo? Among other things, it’s alleging that Super Micro rehired the same execs involved in the company’s 2018 accounting scandal (a.k.a. the one that got them temporarily booted from Nasdaq). Hindenburg also suggests that this shows Super Micro hasn’t learned a thing from its past and raises serious questions about its current financial health and leadership. Considering Hindenburg’s track record (Nikola, Clover Health, Carl Icahn), Super Micro’s C-suite might want to scrap those Labor Day weekend plans.

Let’s Dive Into More Details Below…

BREAKING NEWS
When someone says “Private equity owns everything,” they’re being hyperbolic, but also, they’re not.

PE money is coursing through the veins of just about every business sector around the globe, and professional sports are no exception. Despite some initial hesitation from leagues, PE has been snapping up pieces of NBA teams, Premier League clubs, and MLB franchises with the kind of ease that only comes when you have, like, most of the money in the world. But PE has been locked out of one prize target in sports: the NFL. The league, a famously moral fortress of American tradition (this is sarcasm) and the most lucrative sports property around, has long kept private equity at bay… until today.

WHAT HAPPENED
In a move that feels more inevitable than news-y, NFL owners are finally set to give PE the green light to buy up to 10% of their teams. Pro football is the last domino to fall in PE’s campaign to dominate sports. The NFL has long insisted that team owners be real people, not faceless corporate entities (it prefers that faceless corporate entities just be advertisers and sponsors), holding the line against the tidal wave of institutional money. But now, the ever-rising valuations of its franchises have pretty much priced out anyone other than PE, so even the NFL can no longer resist the lure of those deep, deep pockets.

The new policy, expected to be approved through a vote by owners on Tuesday, comes with a set of restrictive terms. PE firms will get no governance rights, no preferred-equity deals, and a requirement to hold stakes for at least six years. But PE firms like Arctos Sports Partners, Ares Management, Sixth Street, and a consortium featuring Blackstone, Carlyle, CVC, and Dynasty Equity are more than willing to play by these rules after years of circling the NFL to get their piece of the most lucrative pie in sports.

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Want to Profit from Nvidia’s Upcoming Earnings Report?

With $NVDA up nearly 160% this year and climbing 25% from its recent August lows, our research team is excited to present two investment opportunities focused on Nvidia's ($NVDA) recent performance and volatility.

As their earnings announcement approaches, you can now invest in NVDA with GraniteShares leveraged ETFs.

• The GraniteShares $NVDL ETF aims for daily investment results of 2X (200%) the daily percentage change of $NVDA.

• The short ETF, $NVD, targets daily investment results of -2X (-200%) the stock.

Whether you’re bullish or bearish on NVDA, the Moby research team and GraniteShares have you covered, offering you strategies to trade either side.

BREAKING NEWS
It looks like Justin Trudeau, Canada’s 23rd Prime Minister, is borrowing a page from Biden and Trump’s playbook. This week, Canada announced a 100% tariff on Chinese-made electric vehicles, effective October 1, 2024.

Back in May, President Biden slapped a 100% tariff on Chinese EVs as part of a broader $18 billion Section 301 tariff package. Not to be outdone, former President Trump recently hinted at a 20% universal tariff, with a 60% hit on Chinese imports if he returns to office.

As Trudeau gears up for re-election by October 2025, his move to boost Canada’s EV industry with hefty tariffs raises questions. Is this a smart strategy, or could it backfire by increasing consumer costs and alienating voters?

WHAT HAPPENED
Canada’s recent move to impose a 100% tariff on Chinese-made electric vehicles (EVs) is a clear “matching” of the U.S. tariffs introduced in May, which were aimed at countering what the U.S. described as unfair advantages from Chinese subsidies. Prime Minister Justin Trudeau also announced a 25% tariff on Chinese steel and aluminum, signaling a broader strategy to protect domestic industries and reduce reliance on Chinese imports, especially in the EV sector.

But it’s not just the U.S. and Canada playing this game. In July 2024, the European Union also upped the stakes, slapping tariffs ranging from 17.4% to 37.6% on Chinese EVs—less aggressive than North America’s approach, but still a significant pushback against what the Chinese Communist Party (CCP) and state media had hoped for after talks in June. The G7 has also voiced strong support for the U.S. stance, further solidifying this united front.

The push for these tariffs seems to stem from U.S. National Security Advisor Jake Sullivan, who visited Nova Scotia to nudge Trudeau and other Canadian officials toward a coordinated response. Sullivan emphasized two main concerns: economic policy and national security. He argued that China’s substantial subsidies distort competition, making a united, protectionist stance essential. For Canada, aligning with the U.S. while protecting its nascent EV industry is strategic, giving local manufacturers the breathing room needed to develop and scale before being overrun by subsidized Chinese imports. This move buys time for Canada’s EV sector to strengthen, ensuring it remains competitive in an increasingly crowded global market.

CONTINUE READING ➔

BREAKING NEWS
The 2008 housing crisis, better known as the Subprime Mortgage Crisis, tanked the economy and made renting the go-to option in the U.S. During this time, the number of U.S. households grew by 7.6 million, but owner-occupied homes flatlined. Meanwhile, renter households jumped from 31.2% in 2006 to 36.6% in 2016, closing in on the 1965 high of 37.0%.

This surge in renting wasn’t by choice but by necessity. According to Harvard’s Joint Center for Housing Studies in 2011, the share of renters paying over 30% of their income on rent shot up from 41.2% in 2001 to 48.7% in 2009, thanks to stagnant wages and climbing rents.

Many who would’ve been homeowners found themselves as renters instead, driving up demand for upscale rentals. This shift, driven by subprime mortgages and predatory lending, unfortunately paved the way for even more greed, as sky-high rents lured investors. Among them was RealPage, a property management software giant now under DOJ investigation.

WHAT HAPPENED
No doubt, if you ask anyone what their biggest expense is, rent or a mortgage will be high on the list. A 2024 report from Harvard’s Joint Center for Housing Studies shows that half of U.S. renters are now cost-burdened, meaning they spend more than 30% of their income on rent and utilities. This financial strain doesn’t just squeeze wallets—it limits basic living standards, dampens economic growth, and exacerbates inequality, particularly among middle-income households.

The psychological toll is just as severe. A 2023 study by the San Francisco Federal Reserve found that rising rent costs have fueled widespread feelings of financial stress, insecurity, and hopelessness. Renters report feeling stuck, unable to save for homeownership or other long-term goals, which hinders upward mobility.

This situation is likely why Democratic pick Kamala Harris has centered her economic message on what she calls the “opportunity economy,” though skeptics wonder if she can deliver on that promise.

The rent crisis isn’t confined to a few cities—it’s everywhere. Data from the Zumper National Rent Report, Zillow, and StreetEasy show rent hikes across the board. New York leads with a staggering $4,200 average for a one-bedroom, but even cities like Jersey City, NJ ($3,330), and Boston, MA ($2,830) are feeling the pinch. Places like Arlington, VA, and San Diego, CA, traditionally more affordable, now see average rents around $2,500.

According to RedFin, the typical U.S. renter needs to earn about $54,712 annually to manage these rents, but that’s 17.3% less than the $66,120 needed to afford the median-priced apartment at $1,653 per month. Yet, only 39% of renters actually make enough to cover that.

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1. Asian Stocks Decline Amid Geopolitical Concerns and Awaiting Nvidia Earnings

Asian stock markets experienced declines as investors grappled with uncertainties around U.S. interest rates, geopolitical tensions in the Middle East, and anticipation of Nvidia's earnings report. Oil prices saw an increase due to supply concerns.

2. Eli Lilly Reduces Prices for Weight-Loss Drug Zepbound

Eli Lilly has announced a price reduction for its weight-loss drug Zepbound by offering lower-cost single-dose vials. The move aims to address supply shortages and make the drug more accessible to patients who struggle with insurance coverage.

3. Paramount-Skydance Merger Moves Forward After Bronfman Drops Bid

Edgar Bronfman Jr. withdrew his $6 billion bid for Paramount Global, clearing the way for the company's merger with Skydance. The merger is seen as a significant move in the media industry, with Skydance set to acquire a major stake.

4. Nvidia's Q2 Earnings Anticipated to Double Amid AI Demand

Nvidia is expected to report a significant increase in revenue, potentially more than doubling from the previous year, driven by strong demand for AI chips. However, investors remain cautious about whether these results will meet high expectations.

5. Super Micro Stock Falls After Hindenburg Research Accusations

Super Micro shares dropped following a report by Hindenburg Research, which accused the company of manipulating its financial reports. The allegations have raised concerns about the company's transparency and accounting practices.

6. Canada Imposes 100% Tariff on Chinese EV Imports

Canada has announced a 100% tariff on electric vehicle imports from China, citing unfair competition. The move is part of broader trade measures that also include tariffs on steel and aluminum, potentially affecting global supply chains.

7. Kroger-Albertsons Merger Faces Legal Challenge

The proposed $24.6 billion merger between Kroger and Albertsons is under scrutiny from U.S. regulators. The Federal Trade Commission is challenging the merger in court, arguing it could reduce competition and increase grocery prices.

8. Apple Appoints Kevan Parekh as New CFO

Apple has named Kevan Parekh as its next Chief Financial Officer, effective January 2025. Parekh, currently Vice President of Financial Planning and Analysis, will replace longtime CFO Luca Maestri.

9. PDD Stock Plummets After Missing Earnings Expectations

Shares of PDD Holdings, the parent company of e-commerce platform Temu, dropped nearly 29% after the company failed to meet second-quarter earnings expectations. The sharp decline highlights increasing pressure on Chinese consumer companies.

10. Bank of Montreal Reports Lower-Than-Expected Earnings

The Bank of Montreal's third-quarter earnings fell short of analysts' expectations due to increased provisions for credit losses. The bank’s transportation lending division showed significant credit deterioration.

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Today's insights are provided by GraniteShares. Learn more about their 2X leveraged long (NVDL) and short (NVD) Exchange-Traded Funds before Nvidia's earnings report.

Learn More Here ➔