Black Swan Street Weekly Stock Market Summary (June 24-June 28 2024)

Welcome to Black Swan Street!

Welcome back to another edition of the Black Swan Street newsletter!

It was an action-packed week, so let’s get into it:

• Volkswagen-Rivian: What To Know🚗

• The Swan’s Selections🦢

• In Other News🗞️

• Next Week In The Stock Market🔮

• The Swan’s Story Of The Week🦢

Read time: 6 minutes

Volkswagen-Rivian: What To Know🚗

Earlier this week, Volkswagen announced that it would invest up to $5 billion into electric vehicle startup company Rivian.

Both companies are set to benefit from this major partnership that could reshape the entire EV industry as we know it.

The Facts: At first glance, the Volkswagen and Rivian partnership seems like an odd pairing; however, when considering two major facts, this development makes complete sense.

1. Volkswagen has struggled with EV development and needs Rivian’s engineering expertise.

2. Rivian is low on cash and is desperate for a much-needed cash infusion.

Rivian: The EV company has struggled to turn a profit even as sales have increased for two of its most popular vehicles: the R1S Sport Utility and the R1T truck.

The final quarter of 2023 saw a car production and delivery record but reported losses of more than $600 million. During this period, the company delivered 14,000 cars but is evidently bleeding money.

Not only would a cash infusion help stop the bleeding, but streamlining costs and operations may help lower losses.

Since beginning operations in Germany before World War II, Volkswagen has grown into a global powerhouse with over 114 production facilities worldwide. They have been in the industry and know the ins and outs better than most vehicle manufacturers. They are the perfect partners who will know how to lower costs without compromising on quality.

Volkswagen: However, Volkswagen isn’t perfect either.

For the first quarter of 2024, Volkswagen has brought in over $80 billion dollars in sales. This is about 67 times larger than the revenue generated by Rivian during this same time period.

Even though Volkswagen is Goliath and Rivian is David, the company has struggled with the transition to EVs and hybrids. Massive supply chains and infrastructures weren’t able to save EV sales from falling slightly in 2024.

Find out how the deal will work (here).

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The Swan’s Selections🦢

 🤖Nvidia Entering The Middle East: Nvidia has signed a deal to deploy its artificial intelligence technology at data centers owned by Qatari telecoms group ‘Ooredoo’ in five Middle Eastern countries. This comes even as the U.S curbs AI chip exports to the region.

🎶Queen Sells Music Catalog for $1.27 Billion: British rock band ‘Queen’ is selling its music catalog for $1.27 billion to Sony Music. Interesting enough, this deal comes months after Sony paid $600 million for a 50% stake in Michael Jackson’s catalog.

💰HPS Investment Partners Raises Largest Private Credit Fund On Record: HPS Partners is a leading global credit investment firm with ~$114B in AUM, and this week, they announced the final close of a new fund that includes $21.1B in investable capital.

👕Amazon Launching Discount Store to Compete with Temu/Shein: With the rampant issue of poor quality products coming from China on the site, Amazon has decided to embrace its foreign sellers by planning to launch a new section of its site dedicated to low-priced fashion and lifestyle items. This will allow Chinese sellers to ship directly to the US consumer.

In Other News🗞

• US business activity rose to a two-year high - RT

• US corporate credit spreads jumped to a three-month high - RT

• Asian L/S hedge funds are leading global gains this year - RT

• European companies cut jobs as economy sputters - RT

• PE roll-ups bet energy transition will go slow - FT

• Apple and Meta discussed an AI partnership - WSJ

• Airbus is nearing a deal to acquire some of aerospace supplier Spirit AeroSystems' projects, paving way for Boeing's $3.9B purchase of Spirit - FT

• KKR agreed to acquire European music festivals owner Superstruct Entertainment in a $1.4B deal - DMN

• Fed's Daly says 'more work to do' before cutting rates - RT

• Apple risks billions in fines after EU antitrust charge - WSJ

• US gender-savings gap is at over 66% - RT

• Shein, the Chinese fast-fashion brand last valued at $66B, confidentially filed for a London IPO - RT

• KKR is seeking to raise $20B for its latest flagship North America buyout fund - USN

• Home prices hit another ATH - CNBC

• Volkswagen will invest $5B to form a JV with EV maker Rivian - BBG

• Surging returns are luring PE giants to India - BBG

• U.S. new housing supply is at the highest since 2008 - BBG

• Musk's SpaceX launched a tender offer at a $210B valuation - NYP

Next Week in the Stock Market🔮

Earnings Calendar Next Week:

Economic Calendar Next Week:

The Swan’s Story Of The Week🦢

What is Going on with Stock Market Concentration?

When major indexes are only chalking up smaller gains, but you have individual stocks booming, it creates an interesting dynamic in the market. 

Moderate losses in large-cap energy and financials are offset by outsized gains in consumer discretionary, such as Amazon and Tesla. Typically, no matter how large the individual stock is, it can’t keep the entire market up, right?

Well, things are changing. 

The Wrap-Up🔄

🎊🎉 That’s it for this week 🎉🎊