VantagePoint | June 26th, 2024

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GOOD MORNING

Here's everything you need to know this week: The Conference Board Consumer Confidence Index reported a slight dip in June to 100.4 from May’s 101.3, indicating growing consumer uncertainty. This dip in confidence could signal cautious consumer spending and investment behaviors, potentially affecting overall economic growth and stability.

Oracle warned investors that a new U.S. law potentially banning TikTok could significantly impact its financials. This development stems from long-standing security concerns over TikTok’s data-sharing practices with its Chinese parent company, ByteDance, leading to legislative action mandating TikTok to either find a U.S. buyer or face a ban.

Democratic Representative Sara Jacobs is facing scrutiny due to her substantial financial holdings in Qualcomm, a company founded by her grandfather. Jacobs' influential positions on numerous boards and committees, including the House Committee on Oversight and Accountability, highlight the need for stricter regulations to prevent potential conflicts of interest.

Let’s dive into more detail below.

ECONOMICS

Consumer Confidence Index Drops in June With All Eyes on the FED

With key economic reports due at the end of the month, many are wondering what the Federal Reserve's decisions on rate cuts and overall economic strategy will be

BREAKING NEWS
The Conference Board Consumer Confidence Index reported a slight dip in June to 100.4 from May’s 101.3, indicating growing consumer uncertainty.

The report involves critical metrics like the Present Situation Index, which measures consumer sentiment regarding the USA’s current economic situation and future expectations. This index reflects mixed sentiments about current and future economic conditions.

This dip in confidence could signal cautious consumer spending and investment behaviors, potentially affecting overall economic growth and stability.

WHAT HAPPENED
This divergence in consumer confidence shouldn’t be surprising, given the ongoing effects of sticky inflation, fears of stagflation, and the FED’s lack of a white flag regarding rate cuts. It indicates that while consumers are relatively optimistic about current business and labor market conditions, their outlook for the future remains uncertain.

Fewer consumers rated current business conditions as “good,” dropping from 20.8% to 19.6%, yet the percentage of those viewing conditions as “bad” also fell slightly. Regarding the labor market, more consumers now believe jobs are “plentiful,” increasing from 37.0% to 38.1%, while those finding jobs “hard to get” decreased marginally.

The most significant aspect of this report is the persistent uncertainty regarding future business conditions and income prospects. Consumers’ short-term business expectations declined, with only 12.5% anticipating improvements, down from 13.7% in May. Additionally, there is a slight drop in the percentage of consumers expecting more job opportunities in the coming months. Persistent inflation, particularly in essential goods such as food and groceries, continues to weigh heavily on consumers’ minds, alongside concerns about the labor market and political climate.

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BIG TECH

Potential TikTok Ban Looms Over Top Host Oracle

Losing TikTok might damage Oracle’s reputation as a provider of secure, compliant cloud solutions

BREAKING NEWS
The news of the TikTok ban sent content creators and social media into a toosie back in April.

Oracle, one of the top hosts and processors for U.S. user data for TikTok, warned investors that a new U.S. law potentially banning TikTok could significantly impact its financials.

The law, signed by President Joe Biden in April, could prohibit providing internet hosting services to TikTok unless specific conditions are met.

WHAT HAPPENED
Oracle’s recent regulatory filing revealed that compliance with the new U.S. law may prevent it from providing internet hosting services to TikTok, potentially impacting Oracle’s revenues and profits adversely. Analysts estimate that Oracle’s cloud business could lose between $480 million and $800 million annually if TikTok is banned. This development stems from long-standing security concerns over TikTok’s data-sharing practices with its Chinese parent company, ByteDance, leading to legislative action mandating TikTok to either find a U.S. buyer or face a ban.

In the short term, Oracle may incur increased expenses to comply with the law. Long-term, if TikTok is banned and the capacity cannot be redeployed, Oracle could face substantial revenue losses. This situation highlights the intricate relationship between regulatory measures and financial performance in the tech sector, emphasizing the significant risks associated with geopolitical tensions and data privacy issues.

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VIRTUAL REALITY

Enovix Shares Jump 35% with New Mixed Reality Headset Battery Deal

U.S. mixed reality market expected to grow to $5.35 billion by 2030, signaling robust expansion in this growing sector

BREAKING NEWS
A recent report from ResearchAndMarkets.com found that the U.S. mixed reality headset market size is anticipated to reach USD 5.35 billion by 2030, growing at a CAGR of 26.6% from 2024 to 2030.

The timing is notable as Enovix, a global high-performance battery company that designs, develops, and manufactures lithium-ion batteries, saw its stock rocket 35% Tuesday after it announced that it had signed an agreement with a leading California-based technology company to provide silicon batteries and packs for a mixed reality headset.

WHAT HAPPENED
Enovix’s announcement shows that a steady demand for VR and AR technologies, particularly in gaming, healthcare, and education, fueled this partnership, reflecting broader trends in technology adoption.

According to IDC, global shipments of virtual reality and augmented reality headsets are forecast to grow from just under 10 million units in 2024 to just over 35 million units in 2028. Enovix’s high-performance batteries utilize a proprietary architecture and manufacturing process to replace graphite with a 100% active silicon anode to deliver leading energy density. In May, Enovix sent out the first samples of its EX-1M silicon batteries from its Fremont facility.

In June, Enovix began producing EX-1M battery samples from Fab2 in Malaysia. Enovix will receive immediate payments for tooling and subsequent payments for sample and production quantities, which could boost its financial performance and market share in the short term. In the long term, this partnership could cement Enovix’s role as a key supplier in the mixed reality sector. By leveraging its advanced battery technology to meet growing market needs, Enovix could ultimately enhance its competitive edge and drive innovation in the industry.

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1. Tesla to Build New Battery Plant in India

Tesla has announced plans to construct a new battery manufacturing plant in India, aiming to boost its global production capacity and meet the rising demand for electric vehicles. This move is expected to create jobs and strengthen Tesla's presence in the rapidly growing Indian market.

2. Apple Unveils Revolutionary AR Glasses

Apple has introduced its highly anticipated augmented reality glasses, which are set to revolutionize the tech industry. These glasses will integrate with Apple's ecosystem, offering new applications in entertainment, productivity, and communication, potentially creating a new revenue stream for the company.

3. Pfizer Acquires Seagen for $43 Billion

Pfizer has completed the acquisition of biotech company Seagen for $43 billion. This deal aims to enhance Pfizer's oncology portfolio, allowing it to develop new cancer treatments and strengthen its position in the biopharmaceutical market.

4. Amazon Expands Grocery Delivery Service

Amazon is expanding its grocery delivery service to 20 new cities across the United States. This expansion is part of Amazon's strategy to increase its footprint in the grocery market and compete with other major players in the sector.

5. Goldman Sachs Launches New ESG Fund

Goldman Sachs has launched a new environmental, social, and governance (ESG) fund to attract investors interested in sustainable and responsible investment opportunities. This move reflects the growing demand for ESG-focused investment products in the financial market.

6. Shell Invests $2 Billion in Wind Farm Projects

Shell is investing $2 billion in offshore wind farm projects in Europe. This investment is part of Shell's strategy to diversify its energy portfolio and transition towards renewable energy sources, aiming to reduce its carbon footprint and support global sustainability goals.

7. Microsoft Announces Major Azure Update

Microsoft has announced a major update to its Azure cloud platform, introducing new AI and machine learning capabilities. This update aims to enhance the platform's functionality, making it more competitive in the cloud computing market and attracting more enterprise customers.

8. Ford to Triple Production of Electric Trucks

Ford plans to triple its production of electric trucks to meet the increasing demand for electric vehicles. This expansion will involve significant investments in manufacturing facilities and is expected to bolster Ford's position in the competitive electric vehicle market.

9. SEC to Tighten Regulations on Cryptocurrency Exchanges

The SEC has announced plans to tighten regulations on cryptocurrency exchanges to ensure better protection for investors and reduce fraudulent activities. These new regulations are expected to bring more stability and transparency to the rapidly evolving cryptocurrency market.

10. Meta Introduces New Monetization Tools for Creators

Meta has introduced new monetization tools for content creators on its platforms, including Instagram and Facebook. These tools aim to help creators generate more revenue from their content, thereby increasing user engagement and attracting more influencers to Meta's social media ecosystem.

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Today's insights are courtesy of VantagePoint, over 40,000 traders worldwide use their patented world leading AI forecasting software.

Learn More ➔