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US weekly jobless claims rise to 10-month high

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Untitled design 2024 06 13T183500.199 US weekly jobless claims rise to 10-month high

Unemployment Claims Rise in the US

Last week, more Americans filed new claims for unemployment benefits than in any other week in the past 10 months, indicating that the job market might be getting a bit tougher.

Increase in Unemployment Claims

The Labor Department reported that the number of people applying for state unemployment benefits went up by 13,000 to 242,000 for the week ending on June 8. This is the highest it has been since last August. Before this report, economists predicted there would be around 225,000 claims for the week.

Impact of Federal Reserve’s Interest Rate Hikes

The job market seems to be cooling down gradually due to the lasting effects of the Federal Reserve’s interest rate hikes, which started back in 2022. Since then, the economy has been feeling the impact.

  • Unemployment rate in May: 4%
  • Economic growth slowed down in the first part of the year

Federal Reserve’s Decision

The Federal Reserve decided to keep its benchmark interest rate between 5.25% and 5.50%, where it’s been since last July.

  • Fed officials hinted at possible rate cuts in December
  • Expectations for one reduction of a quarter-percentage-point this year

Labor Market Analysis

Fed Chair Jerome Powell mentioned that various indicators show the labor market is similar to how it was before the pandemic – relatively tight, but not too hot.

  • Number of people receiving benefits after their first week of aid: 1.820 million for the week ending June 1

Tesla’s Elon Musk Compensation Package: Key Vote Outcome & Texas Move Impact

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Tesla's Elon Musk Compensation Package: Key Vote Outcome & Texas Move Impact

Tesla Shareholders’ Decision on Elon Musk’s Compensation

If Tesla shareholders agree to a CEO compensation plan for Elon Musk using only company stock, it could ensure he stays with the company. This plan was rejected by a Delaware judge earlier this year. Musk has steered Tesla to become a global leader in electric vehicles and is now focusing on AI, robotics, and autonomous vehicles, which he believes are crucial for Tesla’s future.

Possible Consequences of Voting Against Musk’s Pay Package

However, if shareholders vote against restoring Musk’s $44.9 billion pay package, Musk might carry out his threats to move his AI research to another company he owns or even leave Tesla altogether.

Current Developments

Musk announced on his social media platform that early voting results show strong support for his pay package and other company initiatives, like shifting Tesla’s legal headquarters to Texas.

Challenges Faced by Tesla

Musk’s statements on social media have caused issues for Tesla in the past, leading the company to file his comments with the U.S. Securities and Exchange Commission.

Anticipation and Uncertainty

Despite a likely approval of his compensation package at the annual shareholders’ meeting, there remains uncertainty. Musk has indicated he wants a 25% stake in Tesla, which he may pursue through AI development if not granted.

Analysts’ Predictions

Analysts anticipate overwhelming approval of the package, which would ease concerns surrounding Musk’s future with Tesla.

Differing Views Among Investors

Tesla’s stock has declined this year, and Musk’s pay package has been a point of contention, especially after a Delaware judge invalidated it. While some institutional investors oppose the package due to its size and potential dilution of shares, individual shareholders, who own the majority of Tesla’s shares, are likely to support it.

Efforts and Potential Impact

Efforts to get the package approved have included lobbying from Tesla and Musk across various platforms. If Tesla relocates its legal headquarters to Texas before the vote on Musk’s pay package, it could impact the effect of the Delaware court ruling. Lawyers have filed motions to prevent Tesla from moving the case, but the company has stated it has no intention to do so.

Future Steps

While the situation remains uncertain, it’s expected that Tesla will appeal the Delaware court’s ruling to the state’s Supreme Court.

Tesla Shareholders Approve $56 Billion Payment Plan for Elon Musk

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Elon Musk

Tesla shareholders are voting to agree to a $56 billion payment plan for Elon Musk and to relocate the electric vehicle company’s legal headquarters to Texas, according to Musk’s announcement on social media platform X. Musk added that the approval was by a large margin.

A positive vote provides Tesla with stronger support in a Delaware court, where a judge nullified the 2018 payment plan, the largest in U.S. corporate history at that time, stating that the board was too influenced by CEO Musk.

This outcome is a significant victory for Musk and the board, who have staked their reputations to secure shareholder approval, despite opposition from major investors Glass Lewis and Institutional Shareholder Services (ISS).

“Thanks for your support!!” Musk expressed in his post on X.

The final result will be revealed at a meeting at Tesla’s Texas headquarters at 4:30 pm (2130 GMT) on Thursday.

An individual familiar with the initial voting count mentioned that a combination of large institutional investors and retail investors pushed the ‘yes’ vote across the finish line.

However, shareholders can alter their vote until the start of the annual meeting.

Tesla shareholders also voted on other proposals, including relocating its legal headquarters from Delaware to Texas, and the reelection of two board members: Musk’s brother Kimbal Musk and James Murdoch.

REFERENDUM

Some investors saw the vote on Musk’s payment as a gauge of confidence in his leadership. Despite being Tesla’s driving force and credited with much of its success, the company has recently experienced slowing sales and profits.

Tesla’s stock has dropped nearly 60% from its peak in 2021, when Musk began selling billions of dollars of his stake, partly to fund his acquisition of Twitter, raising concerns about his divided focus. He currently oversees six companies, including SpaceX, X (formerly Twitter), and the AI firm xA1, created in 2023.

Musk’s outspoken nature and propensity for controversy have also impacted Tesla’s reputation and sales.

Tesla’s stocks rose by 3.9% on Wednesday, a day before the shareholder meeting.

Shareholders, led by major institutional investors, criticize such compensation as overly generous for a leader who divides his time among six companies and oversees declining sales and strategic changes at Tesla.

The payment plan would allow Musk to increase his ownership “at the expense of diluting the value of other shareholders,” said Marcie Frost, CEO of the California Public Employees’ Retirement System earlier on Wednesday.

Tesla has been rallying support for Musk’s payment plan, particularly from retail investors, who represent a significant portion of its ownership but often do not participate in voting.

Company executives have utilized social media to emphasize Musk’s importance to Tesla’s success. Tesla has run social media advertisements, and Musk has pledged personal tours of Tesla’s factory in Texas to some shareholders who cast votes.

The board argues that the world’s wealthiest person deserves the payment plan because he achieved all the ambitious targets for market value, revenue, and profitability.

The payment plan is also necessary to ensure Musk’s commitment to Tesla, despite the Delaware judge’s criticism that the 2018 plan failed to ensure Musk’s substantial time commitment to Tesla.

Musk has warned that if he doesn’t gain enough voting control, which requires approval of the 2018 payment plan, he will develop AI and robotics products outside of Tesla.

Earlier this month, Tesla shareholder Donald Ball filed a lawsuit challenging the upcoming shareholder vote, alleging that ratifying the payment plan should be invalidated because Musk has used coercive tactics to obtain shareholder approval.

COURT BATTLE

The same payment plan was previously rejected by a Delaware judge, who deemed it an “unfathomable sum” granted by a conflicted board with close personal and financial ties to its top executive.

The board conducted the shareholder vote to strengthen its appeal of the ruling, where the judge highlighted the board’s failure to fully inform shareholders before approving the payment plan in 2018.

“Even if the shareholders approve the old plan, it’s uncertain whether the Delaware court will recognize that vote,” noted Adam Badawi, a corporate governance law professor at the University of California Berkeley.

Musk may have to wait months or years for his payment plan to be reinstated as appeals progress through Delaware’s Supreme Court.

Alexander Hamilton’s bank is getting a new name: BNY

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U.S. Bank's Rebranding

The Oldest U.S. Bank’s Rebranding Journey

The oldest U.S. bank is getting a new name.

Embracing Change: BNY’s Transformation

Bank of New York Mellon, now embracing “BNY” as its new name, announced the change in a memo from CEO Robin Vince on Tuesday. The company has also put up block-letter signs with the new name at its major offices.

Founded 240 years ago by Alexander Hamilton, BNY has grown to manage $48.8 trillion in assets and acts as a custodian bank for other financial institutions.

BNY is the longest continuously operating company in New York City, with its founding predating the U.S. Constitution.

“While we’ve always been known as trusted and resilient, thriving for over two centuries required continuous innovation,” Vince stated.

Visionary Leadership and Strategic Growth

Since becoming CEO in March 2022, Vince has introduced new leadership and focused on growth areas like real-time payments and artificial intelligence, while also improving efficiency. Before joining BNY, Vince spent 26 years at Goldman Sachs, where he became the chief risk officer.

Key Achievements in 2024

  • BNY’s stock has increased nearly 17% in 2024, outperforming the 13% rise in the S&P 500 bank index.
  • Its earnings per share and revenue also rose last year.

A New Identity for BNY

This rebranding is BNY’s first since it adopted the name BNY Mellon 17 years ago, following a trend on Wall Street towards shorter names after years of mergers and acquisitions.

BNY also introduced a new teal arrow logo and will rename some of its divisions: BNY Investments, BNY Wealth, and BNY Pershing. To mark the rebrand, the bank is releasing new branded merchandise like sweatshirts.

However, its legal name will remain The Bank of New York Mellon Corporation.

US to award Rocket Lab $23.9 million to boost satellite, spacecraft chips

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Rocket Lab Receives Funding Boost

Rocket Lab Receives Funding Boost for Compound Semiconductor Production

The U.S. Commerce Department announced on Tuesday that it plans to give Rocket Lab $23.9 million to significantly increase the production of compound semiconductors used in satellites and spacecraft.

Key Points:

  • The award aims to create a more reliable supply of space-grade solar cells, which power spacecraft and satellites.
  • This funding is expected to boost Rocket Lab’s compound semiconductor production by 50% over the next three years.

Funding Details:

  • The funds come from the Biden administration’s $52.7 billion chip manufacturing and research subsidy program.
  • The State of New Mexico has pledged $25.5 million in financial assistance and incentives to help Rocket Lab expand its Albuquerque facility.

Background:

  • Rocket Lab, founded in 2006 by New Zealander Peter Beck, is one of two U.S. companies that produce space-grade solar cells.
  • Commerce Secretary Gina Raimondo emphasized the importance of solar cells for maintaining communication and space technology.

Applications:

  • Rocket Lab’s solar cells support various U.S. space programs, including:
    • Missile detection systems
    • The James Webb Space Telescope
    • NASA’s Artemis lunar missions
    • The Ingenuity Mars Helicopter
    • The Mars Insight Lander

Future Prospects:

  • Rocket Lab has secured hundreds of millions of dollars in U.S. federal contracts for satellite production and spacecraft launches.
  • The investment is also expected to benefit Rocket Lab’s Albuquerque facility expansion and create over 100 manufacturing jobs.

Tax Credit:

  • Rocket Lab plans to take advantage of the Department of the Treasury’s investment tax credit, estimated to be worth about $24 billion.

Singapore Airlines offers compensation to passengers on flight that hit extreme turbulence

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Singapore Airlines

Singapore Airlines’ Response to Turbulence Incident

Singapore Airlines recently announced its compensation plan for passengers affected by a harrowing flight incident that resulted in one fatality and numerous injuries.

Incident Details

On May 20, a Boeing 777 flying from London to Singapore with 211 passengers and 18 crew members encountered severe turbulence over the Irrawaddy basin. The turbulence caused chaos in the cabin, leading to an emergency landing in Thailand.

Casualties and Injuries

  • A 73-year-old British man passed away, likely due to a heart attack.
  • Many passengers suffered injuries, including spinal, brain, and bone or organ damage.
  • Nineteen individuals are still hospitalized in Bangkok.

Compensation Offered

  • $10,000 compensation for passengers with minor injuries.
  • Advance $25,000 payment for passengers with serious injuries requiring long-term medical care.
  • Full airfare refunds for all passengers, along with delay compensation as per EU or UK regulations.
  • Immediate $1,000 provided to all passengers for urgent needs.

Investigation Findings

A preliminary investigation revealed that the sudden turbulence caused extreme g-force changes, leading to injuries, especially among passengers not wearing seat belts. The incident occurred during meal service, catching many passengers off guard.

Turbulence Facts

  • Turbulence accounts for 37.6% of all accidents on large commercial airlines.
  • Clear air turbulence, even in clear skies, can be extremely dangerous due to abrupt changes in air currents.

Singapore Airlines continues to investigate the incident while ensuring passenger safety remains a top priority.

Meta Platforms, Facebook’s Parent Company, Developing AI Tech for Europe

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Meta Platforms Facebooks Parent Company Developing AI Tech for Europe Meta Platforms, Facebook's Parent Company, Developing AI Tech for Europe

Meta Platforms, the parent company of Facebook, is developing artificial intelligence (AI) technology tailored specifically for Europe. This AI technology takes into account linguistic, geographic, and cultural nuances unique to the region, according to a statement made by the company on Monday.

Meta will train its advanced language models using publicly shared content from users within the European Union, sourced from platforms like Instagram and Facebook.

In an interview with Reuters in September, Meta’s top policy executive mentioned that the company utilized publicly available Facebook and Instagram posts to train certain aspects of its new Meta AI virtual assistant. However, to uphold user privacy, Meta excluded any private posts shared solely among family and friends.

Last month, Meta announced its intention to inform Facebook and Instagram users in Europe and the United Kingdom about how their publicly shared information on Meta’s platforms is utilized to enhance and develop AI technology.

Cognizant to acquire Belcan for $1.3 billion

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Cognizant to acquire Belcan for $1.3 billion

Cognizant Technologies Acquires Belcan for $1.3 Billion

Information technology services provider Cognizant Technologies announced on Monday that it has agreed to buy digital engineering firm Belcan for nearly $1.3 billion in cash and stock. This acquisition will expand Cognizant’s presence in the aerospace, defense, space, and automotive sectors.

About Belcan

  • Location: Cincinnati
  • Ownership: Private equity firm AE Industrial Partners
  • Employees: 60,000
  • Global Presence: 60 locations worldwide
  • Key Clients: Boeing, General Motors, Rolls-Royce, NASA, US Navy

Synergy and Growth Opportunities

Cognizant CEO Ravi Kumar expressed his excitement about the acquisition, noting that Belcan operates in the fast-growing aerospace and defense sectors, which presents an opportunity for growth beyond Cognizant’s current focus on IT services. Kumar highlighted the potential for combining Belcan’s engineering expertise with Cognizant’s strengths in industrial manufacturing and automotive, creating a synergy that leverages both companies’ distribution networks.

Deal Details

  • CEO of Belcan: Lance Kwasniewski
  • Operational Structure: Belcan will operate as a unit within Cognizant
  • Market Value of Cognizant: $33 billion
  • Revenue Forecast: $18.9 billion to $19.7 billion (revised down from $19.0 billion to $19.8 billion)

Cognizant aims to enhance its offerings in specialized areas as it anticipates a slowdown in client spending. This strategic move reflects the company’s commitment to strategic growth and diversification in the competitive IT market.

Nvidia sparks chatter over possible Dow inclusion after stock split

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Nvidia sparks chatter over possible Dow inclusion after stock split

Nvidia’s Stock Split and Potential Dow Inclusion

Nvidia’s 10-for-1 stock split, designed to attract retail investors, has taken effect, raising speculation about the company’s potential inclusion in the blue-chip Dow index.

Purpose of the Stock Split

The purpose of the split is to lower the per-share price, making it more affordable for employees and investors. This move increases the number of shares available without changing the overall value of the stock.

Impact on Market and Investors

  • “An effect of Nvidia’s stock split is that it might join Amazon and Apple in the Dow, possibly replacing Intel, which currently has the lowest weighting,” said Ben Laidler, global markets strategist at digital brokerage eToro.
  • On Monday, Nvidia’s stock dipped 0.5% in premarket trading, after rising nearly 27% since the company announced the share split and a strong forecast last month. The leading AI chip maker also reached a market value of $3 trillion, surpassing Apple to become the second-most valuable company in the world, just behind Microsoft.

Investor Behavior and Stock Valuation

  • Market analysts noted that stock splits tend to attract individual investors who trade smaller amounts and have less capital compared to institutional investors.
  • However, Goldman Sachs strategists led by David Kostin mentioned in a note that most recent stock splits haven’t significantly increased retail trading activity, with a few exceptions like Amazon’s split in 2022 and Nvidia’s 2021 split.
  • Additionally, the strategists pointed out that “investors typically assign higher valuations to liquid stocks because of their low trading costs and flexibility in various market conditions.”
  • Goldman’s analysis of 45 Russell 1000 stock splits since 2019 showed that trading volumes briefly increased following split announcements but changed little during and after the splits took effect.

Nvidia’s stock was last trading at $120 per share post-split, down from $1,200 on Friday, making it a potential candidate for the 30-member price-weighted Dow index.

European Countries Vie for Chinese Electric Vehicle Factories and Employment Amid EU Consideration of Tariffs

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European Countries Vie for Chinese Electric Vehicle

European Governments and the Rise of Chinese Electric Vehicles

European governments are closely monitoring the increasing presence of affordable Chinese electric vehicles in their markets. They are treading carefully, balancing caution with the desire to welcome investment and job opportunities from Chinese manufacturers.

Incentives and Investments

As the European Union scrutinizes China’s subsidies for its auto industry and considers tariffs, individual EU nations are rolling out incentives to attract Chinese automakers to Europe. Companies like BYD, Chery Automobile, and SAIC Motor from China are looking to Europe to enhance their brand reputation, reduce shipping costs, and avoid potential tariffs. They understand the importance of being perceived as local to Europe by European consumers.

  • Hungary: Has secured investments from BYD and is in talks with Great Wall Motor for manufacturing facilities, offering various incentives to attract foreign investment.
  • Spain: Has attracted Chery to establish a presence.
  • Italy: Is providing attractive incentives to automakers like Dongfeng.

Tariffs and Competition

The EU is nearing a decision on tariffs. While tariffs could benefit European automakers, they might also incentivize Chinese competitors who are heavily investing in Europe for the long term.

Market Growth and Investments

Although Chinese-brand cars currently have a small market share in Europe, this share is expected to grow significantly in the near future.

  • SAIC: The parent company of MG, has plans to build two plants in Europe, with potential locations in Germany, Italy, Spain, and Hungary.

Manufacturing Benefits

Despite higher operational costs in Europe compared to China, Chinese automakers see the advantages of manufacturing closer to their target markets. For high-end vehicles, Italy and Spain offer a mix of lower labor costs and strict manufacturing standards. Eastern Europe and Turkey are appealing for budget-friendly vehicles.

Turkey’s trade agreements with the EU and other nations ensure duty-free exports of vehicles and components, making it an attractive destination for Chinese automakers.