Morning Toast 18th May

The Velvet Hammer | Creepy cool Apple features.


Biden declares the US ‘will not default’. US President Joe Biden said he was confident that an agreement on the debt ceiling could be reached by the weekend. Given that the US now spends more money on servicing its debt than national defence, naturally, that has lifted hopes for the global markets that the worst can be avoided.

In more good news, some good-looking indicators point to the US potentially avoiding recession...unless the banking system does actually collapse after all - which is still a small chance at this stage.

US factory output bounced back in April. The gains were driven by the largest jump in auto production since October 2021.

US homebuilder sentiment improved to its highest level in 10 months in May; it was the 5th consecutive month of growth for the index, and driving the gain was a lack of existing supply and strong demand for new construction.

After back-to-back months of declines, retail sales rebounded in April as consumer spending held steady despite rising prices and high-interest rates.

Stock Spotlight

In Twitter slash Tesla news last week, Elon Musk named Linda Yaccarino the new Twitter boss.  Making her one of the few female CEOs of a major tech company. Musk will remain involved as Executive Chairman and Chief Technology Officer.

Described as the ‘The Velvet Hammer’, Linda Yaccarino is an unequivocal gun hire. Unless you lean ‘Right’ and believe that her work at the World Economic Forum in Davos, which is a target for conspiracy theorists, will lead her to undermine Twitter’s absolutist free speech policy.

This hire is good news for Twitter as  Linda Yaccarino is hugely experienced and successful in driving ad-based sales business as well as bringing systematic rigour and accountability to business. Can she overcome the platform's biggest problem? Elon Musk is still Twitter’s most-followed user, meaning his controversial statements to his nearly 140 million followers could still create headaches for the company. Meanwhile, he will most likely remain the public face of the brand. with or without the title of CEO, potentially to Twitter’s detriment.

Good news for Tesla (and Space X). Tesla’s stock has lost nearly half of its value since Musk sold off shares to pay for his new social media platform. His renewed focus led to a 2% bump in the stock price, and this announcement comes at a crucial moment for the electric vehicle maker, as the China recall, dwindling US demand, and an EV pricing war pressure the stock.

Stock Spotlight

A new feature debuting this year for Apple devices will allow you to create a digital version of your voice to speak with anyone you’d like.

Personal Voice is one of several forthcoming accessibility features that Apple unveiled yesterday. It’s meant to aid people with conditions such as ALS that put them at risk of losing their ability to speak.

Apple promises that after a user spends 15 minutes reading text prompts into an iPhone or iPad, their digital voice will be ready to go. Another new feature, Live Speech, will let a device read messages you type.

Cool stuff that's kinda creepy. Apple also claims the feature will rely on “on-device machine learning to ensure user privacy,” so your voice won’t be waiting in the cloud for hackers ready to deep fake you.

Sustainability News

Morgan Stanley raises $500 million for a climate solutions fund with a billion-ton emissions reduction goal. An epic outcome, whatever their true motivation is.

In other news, Goldman funds slashed exposure to the global mining conglomerate Adani from active ESG products. What it was doing investing in Adani under the guise of ESG, most are unclear. But the good news is that Goldman was among 13 funds that dumped a total of 12 million Adani shares in the wake of recent fraud allegations.

In less good news. Gen Z's addiction to fast fashion is destroying the planet. A recently released report on Gen Z by the online vintage-resale platform ThredUp found that while 65% of Gen Z respondents said they want to shop more sustainably and buy higher-quality clothing. One-third also described themselves as addicted to fast fashion; more than two in five said they buy clothes that they're likely to wear only once. 

Researchers from Sheffield Hallam University in England found that despite their preference for sustainable clothing, 90% of young Brits still opt for fast fashion and only 16% of those surveyed could name a single sustainable fashion brand. This is the Gen Z paradox; engrained unsustainable habits will be compounded as this generation's economic power grows faster than other generations. According to Bank of America, by 2030, their income is predicted to account for over a quarter of the world's income. By 2031, they will surpass the income of millennials.

Quote of the Day

"The stock market is a device for transferring money from the impatient to the patient." - Warren Buffett

What does this mean to you? Think about value. And invest for the long term. Perhaps?

Douugh, did you know?

A stock split is pretty much as it sounds. It occurs when a company decides to split each of its shares into smaller pieces. The company ends up with more shares overall but the price of each share falls to account for the split. 

Stock splits don’t make you suddenly richer. Think of them like exchanging a $10 note for ten $1 coins. You physically have more dollars in your hand, but it’s still only $10.

You might be wondering why a company would want to reduce its share price. If a company has a really high price it can be out of reach for a lot of people who might otherwise like to own shares, making it more attainable. 

Say Tesla does a 3-for-1 stock split. If you bought 2 Tesla shares for $600 each before the split, you’d have a total value of $1,200. After the 3-for-1 stock split, you’d now own 6 shares valued at $200 each. Whilst you now own more shares, the value of your shares hasn’t changed, and is still $1,200. 

Having more shares in circulation can also improve liquidity, making it easier for investors to buy and sell. 

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