China Slides Into Deflation as Consumer and Factory Prices Drop (4 min read)

China's economy has entered deflation as consumer prices fell by 0.3% year on year in July, marking the first decline in more than two years. The producer price index (PPI), which measures factory gate prices, also dropped by 4.4% in July. China going into deflation is likely the key prompt for government to increase stimulus amid other challenges like trade weakness. This development may lead to a downward spiral in growth and private sector confidence, making it necessary for the government to take action to prevent matters from worsening.

Biden signs order to ban certain tech investments in China (3 min read)

President Biden signed an executive order restricting US investments in the tech sector in China that focuses on semiconductors, quantum tech, and AI. The order aims to prevent tech from aiding China's military and compromising US security. Most investments will require government notification and only affects future investments, not existing ones. Although this move could further escalate tensions between the US and China, the white house believes it will address acute national security risks.

WeWork’s ‘Substantial Doubt’ About Its Future Marks a Stunning Fall (3 min read)

WeWork, a co-working company that rents office space to customers, has been trying to deliver a turnaround since its IPO failed in 2019 due to excessive spending and co-founder’s scandals. As the company tries to bring the business back to profits, it was faced with the challenges of the Covid-19 pandemic. WeWork now says there is substantial doubt it can survive, as it loses customers and money. It plans to cut costs, renegotiate leases, and raise capital. The news sent its stock 37% lower on Wednesday in addition to the 98% plummets over the last two years.

Amazon Is in Talks to Become Anchor Investor in Arm IPO (3 min read)

Amazon is reportedly in discussions to become an anchor investor in Arm's upcoming initial public offering (IPO), alongside other tech companies. The IPO by Arm, owned by SoftBank Group, is aiming to raise as much as $10 billion and is expected to be the largest tech IPO this year. Arm designs chips that are favored for their efficiency by companies like Amazon, which uses Arm-based chips in its Web Services operation. Amazon's potential investment could bolster Arm's IPO, given the popularity of AI chips and rising chip valuations.

What to Be Asking as FANG ETF Returns Match Bonds’ (3 min read)

In the 2.5 years leading up to August, short-term T-bill ETFs had about a 4% total return. Surprisingly, FANG stock focus ETFs like the Microsectors FANG+ ETN (FNGS) only achieved a 5% total return during the same period, even with T-bill rates near zero. The reason is because tech stocks lost nearly a third of its value last year during the sell-off, so even with the 40% rally this year, it is still barely back at par. This highlights emotional misperceptions in investing cycles that investors should be aware of when looking at current gains of any assets.

The Investment Case for Single Bond ETFs (Podcast)

The US Treasury 3 Month Bill ETF (TBIL) recently became the first single-bond ETF to reach the $1 billion in AUM milestone. The company behind TBIL is US Benchmark Series where its suite of single-bond ETFs now have over $2 billion in assets. Unlike multibond funds, these ETFs only hold a single bond that was most recently issued for a month before rolling into the next one. This short podcast is with the co-creator of these ETFs where he discusses more about the strategy and how it can fit in an investor’s portfolios.

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Thomas

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