Uncle Pennybags approves. (Eric Liebowitz/NBCU Photo Bank)

If you have wealth, every single thing in the American economy is working great for you right now.

And if you don’t, well...

6/27/24 9:44AM

Here’s something I’ve learned covering the markets for the last couple decades: Capitalism is a lot more fun if you have some capital.

That’s especially true right now. To a remarkable degree, if you have some kind of wealth — stocks, bonds, savings, a house, a rental property — your financial stars are favorably aligned.

Surging home prices have left home owners sitting on remarkably high levels of home equity, which, while illiquid, is the single largest source of wealth for most American families.

High interest rates — while painful for borrowers — are just peachy for those with cash they can park for a while, earning upwards of 5% per annum, while taking virtually no risk. Interest income is hovering near the highest level on record.

And of course, the stock market has knocked the cover off the ball over the last couple years. The S&P 500 rose 24% last year and is up 15% in 2024. Some 61% of US households said they owned stocks in 2023, according to Gallup, the most since 2008.

These stylized facts should always be accompanied by several giant, red, blinking asterisks. For one thing, we know that the majority of the country’s wealth belongs to the wealthiest sliver of the population. Of household holdings of stock and mutual funds, for example, 93% of it belongs to the wealthiest top 10% of households, the highest share on record. Housing wealth on the other hand is divided far more democratically across the population.

But perhaps the biggest thing to keep in mind, with regards to the data presented above is the definition of “household” used by the Federal Reserve. It oddly includes US hedge funds, private equity funds, and personal trusts under the “household” rubric, which likely means even more of this rising pile of wealth than first appears belongs to the richest among us.

Max Knoblauch

38m

Nio climbs ahead of new SUV launch as Chinese EV giants recommit to paying suppliers faster

Shares of Chinese EV maker Nio climbed in Monday morning trading as investors cheered news that its ES8 SUV — priced to compete with Tesla’s Model Y — will begin deliveries this weekend.

Nio may also be seeing a boost from the recommitment by several Chinese EV giants on Monday to pay their suppliers within 60 days. That effort could help tame some of the brutal price wars between automakers in the country, which the Chinese government has struggled to contain.

The move is seen as a boost to the stability of the Chinese auto industry, and Nio rivals Li Auto and BYD also climbed.

At the end of 2023, Nio took nearly 300 days to pay its suppliers, according to Bloomberg reporting. In June, Nio and 16 other Chinese automakers agreed to the 60-day payment window, though a government report in August found that only three had set up payment systems.

Luke Kawa

CoreWeave soars on $6.3 billion cloud computing purchasing agreement with Nvidia

Shares of CoreWeave are flying higher in early trading after the company struck an agreement with Nvidia that will see the chip designer purchase all of CoreWeave’s unused cloud computing capacity through April 13, 2032.

The new order has an initial value of $6.3 billion, per a filing from CoreWeave that outlines this modification to its April 2023 services deal with Nvidia.

Securing access to cloud computing capacity has been the hot topic in the AI space, which was underscored by last week’s deal between Microsoft and Nebius as well as Oracle’s mammoth pipeline of sales, thanks in large part to OpenAI.

As such, it strikes me as a bit odd that this particular agreement for CoreWeave — securing full utilization of its cloud computing capacity, which everyone seems to want and where demand appears to outstrip supply — is such a big deal, but hey.

Nvidia has secured a high degree of vertical integration throughout the AI ecosystem through its equity positions and partnerships with cloud computing and data center companies.

J. Edward Moreno

Novo Nordisk’s GLP-1 pill gets EU approval for cardiovascular benefits

Novo Nordisk rose in early trading after it announced that European regulators approved its diabetes pill to be marketed for cardiovascular benefits as well.

Rybelsus — a pill version of semaglutide, the active ingredient in Ozempic and Wegovy — will now list cardiovascular benefits on its label in the European Union. In the US, the Food and Drug Administration is expected to decide on adding the cardiovascular indication for Rybelsus later this year.

Wegovy, Novo’s blockbuster weight-loss shot, is approved to treat cardiovascular conditions in the US and EU. Expanding the conditions Novo’s drugs can be prescribed for could help the Danish pharmaceutical giant spark growth as it faces pressure from Eli Lilly’s competitor drugs.

Max Knoblauch

Investors pour into Joby and Archer after White House announces air taxi pilot program participation

On Friday, Transportation Secretary Sean Duffy announced the creation of a new FAA pilot program aimed at speeding up the development of “advanced air mobility” vehicles, including electric air taxis made by Joby Aviation and Archer Aviation.

Joby shares climbed more than 5% in premarket trading on Monday, after closing up 2% on Friday. Archer shares rose 7% in the premarket, following a 3% jump. Both companies announced their plans to participate in the eVTOL Integration Pilot Program (eIPP), which the FAA says will include at least five projects and run for three years.

Both companies have been burning cash as they work toward FAA certification to kick off their commercial air taxi businesses in the US. Joby last month said it’s 70% complete with the fourth stage of its five-stage certification process.

The eIPP was first hinted at in President Trump’s June executive order, aimed at speeding up adoption of the electric vertical takeoff aircraft.

Luke Kawa

IonQ rises on wave of Wall Street love following its Analyst Day event

IONQ’s Analyst Day event at the New York Stock Exchange on Friday was a major catalyst for the quantum computing space.

Its stock spiked 18% on the final session of last week, leading a charge that saw peers Rigetti Computing up 14%, D-Wave Quantum gain 7.5%, and Quantum Computing rise 7%.

Analysts obviously liked what they heard. Shares are up again in early trading on Monday, with IonQ’s price target hiked:

to $80 from $60 by Needham,
to $75 from $61 by B Riley Securities, and
to $60 from $45 by Cantor Fitzgerald.

“IonQ is the only company in the industry to have quantum computing, quantum networking and quantum security under one roof,” wrote Needham analyst N. Quinn Bolton, who has a “buy” rating on the shares. “Management highlighted the US Department of War recently stated ‘Cryptographically relevant quantum computers may be possible in as soon as three years.’ This fact is driving growing interest in the company’s QKD [quantum key distribution] systems.”

The company also announced on Friday that it received regulatory approval for its purchase of British startup Oxford Ionics and expects the deal to close shortly.

“We believe Oxford Ionic’s Electronic Qubit Control is a highly differentiated technology that not only enables significantly greater scalability but also enables higher fidelity and faster gate speeds,” Bolton added.