Marriott | August 21st, 2024

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GOOD MORNING

Here's everything you need to know today: Warren Buffett is really cleaning out his Bank of America closet. Over the past three trading days, Berkshire Hathaway has offloaded 13.9 million shares, pocketing a cool $550.7 million. This brings Berkshire’s stake down to 11.9%, just barely above the 10% threshold that forces Buffett to spill the beans on his moves within two business days (even The Oracle has to play by the rules).

And if BofA CEO Brian Moynihan looks even frownier than usual, that might be because Buffett’s been on a selling spree of BriMo’s stock since mid-July. Uncle Warren is clearly not as smitten as he was back in 2011 when he threw the bank a $5 billion lifeline during the financial crisis. Fast forward to 2024, and instead of cuddling a fat stack of BofA shares, he’s cuddling T-bills, like, $130 billion worth of them.

So, what’s up with all this dumping? Is Buffett trying to tell us something, or is he just making room in his portfolio for even more T-bills? Either way, it looks like his love affair with BofA and BriMo is officially on the rocks.

Let’s Dive Into More Details Below…

BREAKING NEWS
Now's your moment to stock up on sugar if you’re one of those over-confident homebakers who watches way too much British television. Sugar prices just hit the skids, sinking to their lowest level since the great pandemic pantry raid of 2022.

Sugar’s crash is the direct result of Brazil suddenly deciding to go full Willy Wonka, cranking out sugar like they’re hosting the world’s biggest bake sale. The global sugar high that had traders buzzing is now very over, leaving the market with a pretty gnarly hangover.

WHAT HAPPENED
Not too long ago, sugar was the golden child of the commodities market. Prices pushed 26 cents per pound back in October 2023, which was sweet (What? You hate a good pun?) thanks to some rather convenient weather disasters in India and Thailand. With those sugar-producing powerhouses sidelined, the market got jittery about shortages. Throw in some supply chain drama and a weak U.S. dollar, and sugar futures were looking like the best thing since, well, sugar, baby.

But then, Brazil. O, Brasil. Instead of playing along and letting prices ride high, Brazil’s sugar producers went their own way. Instead of merely keeping up with production, they threw back a few caipirinhas and turned the dial up to 11. We’re talking a record-shattering 41.9 million tons of sugar this year, up from 38.8 million tons last year. That’s an extra 3.1 million tons of sugar flooding the market. It makes us wonder if Brazil’s Big Sugar is in cahoots with Eli Lilly to give the world diabetes (We joke… we think).

The result? Prices nosedived. Sugar futures on ICE Futures U.S. dropped to 23.18 cents per pound, down 11% from last year’s sugar rush. The traders who were high-fiving and making terrible “Gimme that sugar” jokes are now left wondering what the hell just happened.

CONTINUE READING ➔

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BREAKING NEWS
There has been a word fluttering around the streets of Wall Street lately that many, if they aren't hip to crypto and blockchain, may sound made up. The word in question is "tokenization," a relatively easy play with compounding in linguistics, but far from easy to understand.

Famed CEO Larry Fink of BlackRock has been touting tokenization for years, stating that it is "the next generation for markets," envisioning a future where financial systems are built on fungible and non-fungible tokens exchanged through decentralized financial services.

Which is why infamous asset management company State Street announcing a partnership with Taurus, a Swiss digital asset infrastructure provider, to enhance their digital asset services, including the tokenization of real-world assets, should be nothing short of expected at this point as more and more big names quietly enter this space.

WHAT HAPPENED
Mind you, State Street in Boston, Massachusetts, is no small player either. As of June 30, 2024, State Street Corporation had $4.4 trillion in AUM and $44.3 trillion in assets under custody and/or administration. This was a 16% increase in AUM from the previous quarter due to a strong rally in equity markets. Their AUM has increased significantly over the past few years, peaking at $4.14 trillion in 2021.

They were founded in 1792 and are the second-oldest continually operating bank in the United States, so any question regarding their strategy or foresight regarding where finance is going in the next five to ten years is almost immediately mute. And for a company that big to ignore other big players like Blackrock, Goldman Sachs, and Coinbase Asset Management (who has direct ties to the U.S. Marshals Service) not making any move into the crypto, blockchain, and tokenization almost feels like giving up before even trying.

That and they would be going against a clear trend as you can see in our chart above (data from Statista Research). Digital real estate is expected to become the largest type of tokenized asset in 2030, taking up nearly one-third of the overall market. This is according to a forecast made in 2023, which assumes that real-world asset (RWA) tokenization will take up less than one percent of the entire RWA market.

So, what does State Street and Taurus's partnership look like, one focused on advancing State Street's capabilities in tokenization and digital custody? For one, Taurus is most likely beaming, considering it was founded in 2018 and is not even ten years old.

Their custody platform, Taurus-PROTECT (not the most creative, but we'll let it slide this time), is designed to meet banking-grade security standards and is used by a variety of financial institutions, including systemic banks and crypto-banks like Credit Suisse, Deutsche Bank, Arab Bank Switzerland and Pictet Group to name drop a few. Regarding tokenization, their Taurus-CAPITAL platform enables tokenized securities to be created and managed across various asset classes, seamlessly integrating with existing financial systems.

This "seamlessness" reminds us of what Apple did with, say, the first generation of the iPod: an easy, retail-ready fusion of a device many people had already been "trained to use" from the Walkman and CD player but suddenly supported by present-day technology to bring 10,000 songs in your pocket. Additionally, Taurus facilitates stablecoin and digital currency transactions, optimizing settlement processes for financial institutions.

Then, there is the Taurus-EXPLORER product, which provides multi-blockchain connectivity and supports diverse digital asset transactions and smart contract interactions. To put it in simpler terms, imagine Taurus-EXPLORER as a universal translator for different types of digital money networks or blockchains. Overall, it helps people and businesses easily work with a myriad of digital coins and special digital agreements (smart contracts) across these different networks. It's like having a magic key that lets you access and use lots of different digital money systems all at once.

To further complement these services, Taurus operates these regulated marketplaces for secondary trading of tokenized assets and securities in compliance with international regulatory standards, which, as you have likely seen in governments around the world, are simply trying to keep up with this technology that won't slow down.

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BREAKING NEWS
China is the world’s manufacturing powerhouse, driving global production of everything from electrical products to textiles. As of 2023, China accounts for about 28.4% of global manufacturing output, leaving the U.S. in a distant second place with 16.6%, according to SafeGuard Global.

With such dominance, it’s no shock that China is also the largest consumer of copper, importing 70% of what it uses. To secure its future supply, China is pouring investments into copper mines, positioning itself to dominate copper production within the next five years. This move will make China the go-to source for businesses relying on this essential material.

WHAT HAPPENED
Our chart above highlights the steady rise of Chinese copper miners, with production growth projected to continue through 2028. Data shows that China’s copper output now matches the combined production of the world’s three largest non-Chinese producers. The top three Chinese companies—MMG, CMOC, and Zijin—along with other Chinese miners, are set to keep expanding their operations.

Meanwhile, the three largest non-Chinese producers—Codelco, Freeport-McMoRan, and BHP—have kept production levels stable, but without the explosive growth seen in China.

China’s copper production has grown an astounding 316% between 2010 and 2028, cementing its increasing dominance in the global market. This shift is reshaping not only China’s industry but also the global copper landscape, positioning Chinese companies as key players worldwide.

Western countries aren’t thrilled about becoming more reliant on China for copper. Wood Mackenzie, a leading global data provider for energy and natural resources, warned on CNBC that efforts to diversify away from China could delay the energy transition and drive up costs. Replacing China entirely, they say, would be “unfeasible,” requiring hundreds of billions of dollars in new processing and fabrication capacity. The demand for copper could surge 75% to 56 million tons by 2050.

Initially, Chinese miners produced just 1.2 million tonnes of copper, compared to top producer Codelco’s 1.8 million tonnes and BHP’s 1 million tonnes. However, as major international miners faced challenges, Chinese output surged. By 2023, Codelco’s production hit a 25-year low due to operational issues and delays, further solidifying China’s growing dominance in the copper industry.

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1. Asian Stocks to Rise Following Wall Street’s Winning Streak

Asian markets are expected to gain, particularly Japan's Nikkei 225, after Wall Street saw an eighth consecutive day of gains, marking the longest winning streak this year for the S&P 500. Investors are optimistic about a dovish Fed stance on interest rates, further boosting market sentiment.

2. Alaska-Hawaiian Airlines Merger Advances After DOJ Approval

The $1.9 billion merger between Alaska Airlines and Hawaiian Airlines cleared a key regulatory hurdle as the DOJ declined to block the deal. The merger now faces further scrutiny by the Department of Transportation but represents significant consolidation in the U.S. airline industry.

3. Edgar Bronfman Jr. Submits $4.3 Billion Bid for Paramount Global

Media executive Edgar Bronfman Jr. has submitted a $4.3 billion bid to acquire Paramount Global and its controlling shareholder, National Amusements. This bid positions Bronfman as a rival suitor, intensifying the competition for ownership of the entertainment giant.

4. Tesla Benefits as EU Slashes Tariffs on China-Made EVs

The European Union has reduced its proposed tariff on Tesla's China-made electric vehicles to 9%, down from 20.8%. This move comes amid broader tariffs on Chinese EV imports and is likely to give Tesla a competitive advantage in the European market.

5. Lowe’s Lowers Full-Year Guidance Amid Sluggish Home Improvement Demand

Lowe’s reduced its full-year earnings outlook, citing weakening consumer demand for home improvement projects. The company reported a drop in sales, particularly in discretionary spending categories, amid rising interest rates and a cooling housing market.

6. Gold Prices Reach Record High as Rate Cuts Loom

Gold has surged to a record $2,521.36 per ounce, driven by expectations of U.S. interest rate cuts and global economic uncertainty. Investors continue to flock to safe-haven assets as Federal Reserve Chair Jerome Powell prepares for his Jackson Hole speech.

7. Eli Lilly's Weight-Loss Drug Reduces Diabetes Risk by 94%

Eli Lilly announced that its weight-loss drug Zepbound reduced the risk of developing diabetes by 94% in a long-term clinical trial. The news sent shares of the pharmaceutical company higher, reflecting growing demand for the drug's broader health benefits.

8. Boeing Grounds 777X Fleet After Engine Component Failure

Boeing has grounded its 777X test fleet after identifying a structural failure in the engine mount of its GE9X engines. This development is expected to delay the aircraft's certification, further impacting Boeing’s timeline for delivery.

9. 7-Eleven Faces Potential Buyout from Canada’s Couche-Tard

Alimentation Couche-Tard has made a buyout offer to Seven & i Holdings, the Japanese owner of 7-Eleven. The deal would be the largest foreign takeover of a Japanese company, pending regulatory scrutiny over potential antitrust concerns.

10. Wells Fargo to Sell Commercial Mortgage Servicing Business

Wells Fargo has agreed to sell the majority of its commercial mortgage servicing portfolio to Trimont, marking a strategic shift for the bank. The sale will reduce Wells Fargo’s exposure to the commercial real estate sector and streamline its balance sheet.

CONTINUE READING ➔

Today's insights are provided by Homes & Villas by Marriott Bonvoy. Book your next getaway by August 31, 2024 and receive 24K Bonus Points Plus 10% off.

Learn More Now ➔