Happy Friday! As US market will be closed on Memorial Day next Monday, our crew members will also take a rest while preparing a surprise for you. 🎁 See you next Wednesday!
Morning Wrap your day:
- HSBC said goodbye to America.
- Oil should go greener: a difficult day for the oil giants Shell and Exxon Mobil.
- Biden will unveil his 6 tln budget plan; The release of US’s latest economic transcript.
Wall Street rose on a strong economic report (story below) and Biden’s fiscal plan.
- A 6 tln plan: Biden is set to unveil a budget that would raise federal spending to USD 6 tln in the coming fiscal year.
European shares closed at a record high boosted by Airbus - it hiked its jet output targets betting on aviation rebound. German shares weakened after pharmaceuticals maker Bayer was hit by a court ruling.
Asia: China stocks ended at three-month highs as subdued industrial data eased worries over policy tightening, while some positive signs on Sino-US relations also helped sentiment.
- No more equity trading: Morgan Stanley is closing its Indonesian onshore institutional equities trading business.
- Strong yuan: yuan rallied almost 1% this week against USD, boosted by export strength and low US real rates. Analysts are eying on a six-year high.
HSBC Said: Bye America
Source: Morning Wrap
After 40 years of trying, HSBC finally realized that its US retail banking business sucks. Here’s its final plan: sell, exit, and fly back to Asia.
Arr… what’s wrong with HSBC in America?
The retail business made huge losses under fierce competition. Think in this way - As an American resident, you’d rather choose Chase or BOA as your primary account, as the number of HSBC branches is limited.
- Compare the number of branches: Chase - 4,700, BOA - 2,500, and HSBC - 148 🤷 You won’t want to drive 6 hours just for visiting a branch.
While the scale is not enough, the operational cost is way higher than its revenue. So HSBC will stop servicing mass-market individuals and small businesses in America but keep up with high-end customers.
- No more services to 🙅.. individuals with deposits < USD 75k, or businesses with annual turnover < USD 5 mln.
As of yesterday, HSBC has sold 80 out of the 148 branches to Citizens Bank and Cathay Bank. It will retain ~20 branches as wealth centers for rich international customers (aka. high-net-worth individuals)... mostly in large cities like Washington and New York.
These are also on the way: ① HSBC will further invest in Asia - especially China and Singapore. ② Sale of French retail banking is also on the way.
Recovery Is Chugging
Source: Morning Wrap
Remember when you anxiously wait for the release of your semester grades? Investors had been doing the same thing - waiting for the release of US’s economic transcript. Fortunately, the result turned out pretty good overnight.
How does it look? We prepared a quick recap for you:
#1 Strong economic recovery continues 🚂
The second-quarter GDP increased at a 6.4% annualized rate (expectation: 6.5%), unchanged from the Q1 growth rate.
- Accelerating growth. 🚀 From the past 3 quarters, the growth rate: 4.3% -> 6.4% ->6.4%. Government + investors are happy to see that.
- This is the second-fastest GDP growth since Q3 2003. For sure, it’s on track to lift the US economy back to the pre-pandemic level.
#2 How about the labor market?
Good news as well. And this is more relevant to our daily life - e.g. whether we can secure our jobs 😂
The application for jobless benefits dropped sharply and hit a new pandemic low last week.
- Better than expectation: it decreased more than expected to 406,000 (estimate: 425,000).
Oh great! Does that mean its economy is back to normal?
Not yet, as the level of claims is still significantly higher than pre-pandemic level (at around 200k). So, still a long way to go to reach a full recovery.
Investors are happy. Stocks climbed on the strong economic report, especially for those companies that could benefit from the economic recovery. Industrial, commodity and financial shares led gains in the S&P 500, while the tech stocks retreated.
Oil Should Go Greener
Source: Morning Wrap
Shell and Exxon Mobil, two of the largest oil giants, probably didn’t sleep well overnight 🤯 They both lost landmark cases regarding climate yesterday… see how climate is reshaping the investment world!
Really? How’s Shell doing?
Not so good… Shell lost a lawsuit in the Netherlands. The Dutch court ruled that Shell is liable for climate change and must reduce their carbon emission by 45% by 2030 - more than double of Shell’s original target (20%). That sounds quite harsh tho 🧐
- Shell said it’s working hard enough to reduce CO2 emission… The court ruling is disappointing, and they would definitely fight back.
You know why that’s an industry-quake? The court rule is one-of-a-kind in the world, which may force the oil producer to reform or even change its business focus. Other big polluters could also be challenged following the case.
If that’s not enough… Exxon lost a big vote
Perhaps the only good news here is Exxon didn’t lose a lawsuit. 🤣 But it lost at least 2 board seats to environmental activist fund instead. Get ready to see a new Exxon.
- The activist would target to be carbon-neutral by 2050, demanding Exxon to shift away from its traditional fossil fuel business and invest in clean energy.
A question here: What would it be like if traditional oil & energy companies fully change their business model? 🤔
What’s Moving in the Business World?
📞 A “candid” first talk: US Trade Representative Katherine Tai and China’s Vice Premier Liu He had a “candid” first conversation on Thursday morning. (more)
🤨 ibanks, why didn’t you help struggling Americans more? The CEOs of the largest Wall Street banks continue the two-day congressional testimony. A chance you can see the CEOs of Goldman, JPM, Morgan Stanley, Citi etc altogether defending their banks. You can watch it here.
📱 A mega-app with 60% Chinese population. Pinduoduo, the Chinese e-commerce giant, reported better-than-expected quarterly earnings, with active buyers amounting to 834 mln. (more)
🔓 Oh no..UK’s reopening plan could change? UK Health Secretary said it’s too early to say whether England’s economy can fully reopen as planned on June 21, warning of the spread of Indian variant. (more)
🌿 Unilever goes meatless. The consumer goods giant Unilever steps into the plant-based industry by partnering with Scotland-based food tech startup Enough. (more)