Roaring Kitty's Reddit post sends GameStop soaring

Good morning. Here's what happened overnight and what you need to know today.

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1.

GameStop rockets: GameStop shares soared as much as 75% on Monday after Keith Gill, known as 'Roaring Kitty' and 'DeepF***ingValue', posted on Reddit revealing a USD116 million ($174 million) stake in the company. The unverified post is the first from Roaring Kitty’s Reddit account since it drove the 'meme-stock' mania and fuelled gains in GameStop shares of over 2,000% in early 2021. The post showed Gill holding 5 million shares purchased at about USD21.27 each, along with USD65.7 million in call options expiring on 21 June at a strike price of USD20. GameStop shares traded as high as $40.50 each on Monday before paring most of the gains and closing 21% higher. Gill resumed posting memes on X in May, sparking renewed volatility in the stock, which ended the month 33% higher at USD23 each. Other meme stocks like AMC also saw significant gains. The move puts GameStop short sellers on track for nearly USD1 billion in paper losses. (Reuters) (Financial Times) (Reuters) (WSJ).

2.

Ackman cashes in: Billionaire activist investor Bill Ackman has sold a 10% stake in his hedge fund, Pershing Square, for USD1.05 billion ($1.57 billion) to a consortium of family offices and investment firms, including San Francisco-based wealth management firm Iconiq Capital and Israel’s insurer Menora Mivtachim, among others, according to a statement. The deal values Pershing at over US $10 billion and sets the stage for a potential IPO next year. It would be the first major hedge fund public offering in over a decade and could significantly increase Ackman's fortune. The sale proceeds will help establish a new NYSE-listed closed end fund, Pershing Square USA, and fund growth. Pershing Square, which manages over $15 billion in assets, earned USD155 million in management fees and USD312 million in performance fees in 2023. Successful bets during the pandemic helped the fund rebound strongly from a poor performance spell between 2015 and 2018. (Pershing Square statement) (Financial Times).

3.

Chip wars: AMD unveiled new AI chips at the Computex tech conference in Taipei as it aims to challenge Nvidia's dominance. The new Ryzen AI 300 series targets next-gen laptops and also potentially competes with Intel’s Lunar Lake and Qualcomm’s Snapdragon X. It also revealed the new Ryzen 9000 series, which is aimed at desktops, describing them as “the world’s fastest consumer PC processors” for gaming and content creation. The announcement follows Nvidia’s unveiling of its next-generation AI chip platform Rubin AI at the same conference, continuing the fierce competition in the AI chip market. AMD also outlined its data centre chip roadmap, including the Instinct MI325X accelerators planned for release in the fourth quarter. AMD shares rose 2.48% in Monday trading, while Nvidia stock soared close to 5%. (Reuters) (CNBC)

4.

Guns, drugs and politics: The criminal trial of Hunter Biden, son of US President Joe Biden, began in Delaware on Monday. He faces three felony charges related to his 2018 purchase and possession of a revolver, including one count of lying about his drug use on a federal form. Hunter Biden, 54, who has pleaded not guilty, is the first child of a sitting president to be tried. Previous attempts to avoid trial with a plea deal fell apart, leading to the current charges. The trial, which is expected to last through the week, carries significant legal and political implications, potentially exposing the Biden family’s personal dynamics as the president campaigns for re-election. If convicted, Hunter Biden, who has admitted to being addicted to crack cocaine at the time, faces up to 25 years in prison, though any sentence is likely to be far less. The trial follows last week’s conviction of former president Donald Trump on 34 felony counts related to falsifying documents, and is set to unfold just weeks before President Biden's first debate with Trump, adding to the high stakes of the case. (Reuters) (AP)

5.

Stericycle snagged: The largest waste management company in the US, Waste Management Inc (WM), has agreed to acquire medical waste disposal company Stericycle for USD5.8 billion ($8.7 billion), a 20% premium to its market value as of Friday’s close. The Gates Foundation-backed WM offered USD62 per share in cash in a deal valuing Stericycle at an enterprise value of USD7.2 billion, including USD1.4 billion of net debt. The deal will boost Waste Management’s presence in the growing medical-waste sector, which saw increased demand during the Covid-19 pandemic. Stericycle, based in Illinois, specialises in hazardous medical waste disposal and document shredding. The deal, expected to close by Q4 2024, is tipped to generate over USD125 million in annual cost savings and positively impact Waste Management’s earnings and cash flow within a year. (Waste Management) (Stericycle)

6.

Korea tensions: South Korea announced plans to suspend a 2018 military agreement with North Korea following Pyongyang’s launch of hundreds of trash-filled balloons across the border. The balloons, which included items such as cigarette butts and manure, were viewed by Seoul as a provocation. North Korea has said the balloons were in retaliation against anti-regime propaganda sent by North Korean defectors and activists in the South. The suspension of the agreement, set for approval by the cabinet, would allow South Korea to resume military training near the border and take immediate measures against North Korean provocations. The 2018 pact aimed to ease tensions on the Korean Peninsula but has been largely disregarded by North Korea, which has deployed troops and weapons near the border. The move to suspend the agreement comes as ties between the two Koreas have deteriorated, with North Korea increasing its weapons testing and South Korea strengthening its alliance with the United States. (Reuters)

7.

Commodities dive: Oil prices fell to a four-month low during US trading overnight, while iron ore prices also tumbled over 4% after weak US factory data dented investor sentiment. Iron prices dropped 4.2% to $US110.65 ($165.69) a tonne in Singapore due to increased stock builds in China amid sluggish consumption, with its housing crisis continuing to impact its economic recovery. Brent crude fell more than 3% to below $US79 a barrel, WTI dropped to below $US75 a barrel, and spot prices fell further than oil for delivery in the fourth quarter. UBS commodities analyst Giovanni Staunovo told the Financial Times there was no obvious trigger point for the sell-off but speculated the drop could have accelerated after Brent prices breached the $US80 support level. Earlier, US manufacturing data weakened further in May, disappointing economists. The ISM manufacturing index fell to 48.7 in May, driven by a slowdown in new orders amid weakened activity in housing, construction and capital expenditure. “Demand remains elusive as companies demonstrate an unwillingness to invest due to current monetary policy and other conditions,” said Timothy Fiore, chair of the ISM manufacturing business survey committee. The US 10-year yield fell to 4.40%. (Financial Times)

8.

Mexican slide: The Mexican peso slid against the US dollar after the ruling left-wing party secured a two-thirds congressional majority in Sunday’s election, raising concerns about potential constitutional changes that could increase state control and weaken democratic checks. Claudia Sheinbaum, a former mayor of Mexico City and ally of President Andrés Manuel López Obrador, garnered 58.6% of the vote with nearly three-quarters of ballots counted, significantly ahead of her closest rival. Her Morena party and allies are close to achieving the two-thirds majority in Congress needed to amend the constitution, potentially eliminating independent regulators. Investors, fearing increased political risk and uncertainty for the business environment, sold the peso, causing it to drop more than 3% to 17.54 per US dollar. Mexico surpassed China to become the leading exporter of goods to the United States last year. The peso's decline reflects market anxiety over the ruling party's potential to overhaul Mexico's democratic institutions and increase state control over the economy. Sheinbaum, Mexico’s first female president-elect, has pledged to respect business freedom, attract foreign investment, and uphold Mexico’s trade agreements with the US and Canada. (Wall Street Journal) (Financial Times)