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In today’s edition,
- Uber’s autonomous bet
- Xiaomi’s EV gamble
- Walmart divests
- Bitwise’s strategic European move
Market Snapshot
Stocks hit one-month highs this week. This followed Fed Chair Jerome Powell’s hint at a possible 25-basis-point rate cut next month at the Jackson Hole Economic Policy Symposium.
Powell’s dovish stance suggested the Fed’s caution against further labor market cooling and reinforced a careful approach to rate adjustments. Despite previous market expectations of a more aggressive 50-basis-point cut, Powell’s remarks led to tempered expectations for such a significant reduction.
Powell also reviewed the US inflation trajectory post-pandemic and acknowledged past misjudgments regarding inflation’s “transitory” nature, while crediting the Fed for managing inflation with minimal job market impact. As a result, major U.S. indices ended the week on a high note: the S&P 500 increased by 1.4%, the Dow Jones by 1.2%, and the Nasdaq by 1.3%. These gains reflect the market’s positive response to the Fed’s supportive policy signals amid ongoing economic adjustments.
Stock market closing data for the week of Aug 19th to Aug 23rd, 2024
News Summaries
Uber (Explore: UBER) is expanding its self-driving car services by partnering with Cruise, a subsidiary of General Motors. This new alliance will see Cruise’s self-driving cars available on Uber’s platform starting next year in a yet-to-be-disclosed city. This move comes after Cruise faced challenges, including a serious crash in San Francisco last year. It led to safety investigations and a temporary halt in their autonomous operations. Uber’s CEO, Dara Khosrowshahi, is optimistic about expanding autonomous vehicles using their platform. Meanwhile, Cruise, despite facing legal issues, has restarted tests in Dallas, Houston, and Phoenix, now with added human oversight. The financial terms of the Uber-Cruise partnership are secret. The deal could boost Uber’s profits by cutting out the costs of human drivers.
Xiaomi Corp. is actively developing its electric vehicle (EV) arm, emphasizing growth over profit margins in the short term. This is part of Xiaomi’s plan to be a top global automaker, on par with Tesla (Explore: TSLA) and BYD (Explore: BYDDY). Xiaomi, new to the EV market for just five months, has invested $10 billion to mimic its smartphone success in car manufacturing. Currently, the EV division is facing significant losses. In the second quarter, it reported a loss of $250 million or about $8,500 per vehicle. Despite challenges, Xiaomi is hopeful. It aims to make 120,000 EVs by 2024 and plans to launch an SUV by 2025. The company is also setting the stage for global sales. It will show its cars worldwide and expand into new markets, even with the threat of new tariffs in Europe. This strategic investment phase is designed to build the foundation for future profitability as the business scales.
Walmart Inc. (Explore: WMT) has sold its stake in JD.com for approximately $3.6 billion, marking the end of an eight-year partnership with the Chinese e-commerce firm. The U.S. retailer sold its shares at $24.95 each, an 11% markdown from the market price, amidst a broader selloff in Chinese tech stocks. This sale aligns with Walmart’s review of its China operations. It is shifting focus to its e-commerce and hypermarket platforms, especially Sam’s Club, which is growing. The divestment is amid economic uncertainties in China. A property crisis and shaky consumer confidence have hurt the retail and tech sectors. By reallocating the proceeds from the JD.com stake sale, Walmart aims to bolster its standalone ventures in China, optimizing growth in a challenging market environment. This move also reflects a trend. Companies are rethinking partnerships that no longer yield expected returns, especially in volatile markets.
From the World of Crypto
Bitwise Asset Management, a US-based cryptocurrency fund manager, has acquired London’s ETC Group, marking its first venture into the European market.
This acquisition reflects a trend. American companies, supported by a strong domestic market, are venturing into Europe. They follow leaders like BlackRock and Vanguard. Bitwise, famous for launching the first bitcoin and ether ETFs in the US, aims to grow. It plans to use ETC Group’s European presence. Additionally, Bitwise wants to introduce new crypto products. These products will include exchange-traded products (ETP) with cryptocurrencies like Solana, Litecoin, and Cardano.
Bitwise and ETC Group have joined forces, benefiting both. Bitwise offers over 20 crypto products. ETC Group, with $1.1 billion in assets, leads in managing crypto ETPs in Europe. It will continue its operations under the Bitwise name. This partnership is set to enhance Bitwise’s management, bringing total assets to around $4.5 billion.
Bitwise’s acquisition shows the changing cryptocurrency market. It highlights regional differences in regulations. Europe’s relaxed rules now allow Bitwise to grow. In contrast, the U.S. market remains limited. This move also points to a trend. Companies are merging to build stronger, global platforms. Their goal? To attract a wider range of investors.
