Wall St slips as shorts hit Burry’s targets and SpaceX

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

1.

Mixed signals: US stocks finished slightly lower overnight, as a slide in chipmakers outweighed strength in economically sensitive sectors. The S&P 500 edged 0.2% lower and the Nasdaq Composite was down 0.66%, while the Dow was little changed. Fed chairman Kevin Warsh said inflation risks had eased since the last Fed meeting, telling the European Central Bank’s forum in Portugal he wanted “a good family fight” about inflation and interest rates when policymakers meet in four weeks. He vowed to stick to the 2% inflation target. Two-year yields edged lower, though traders still expect at least one hike this year, according to Reuters. In corporate news, Alcoa agreed to buy South32’s bauxite, alumina and aluminium assets for up to USD5.6 billion. Michael Burry disclosed short positions against Caterpillar, Nvidia, Applied Materials and the SOXX semiconductor ETF, sending several lower. Reuters reported short sellers have piled into SpaceX, with short interest reaching about 31% of its tradable shares, up from 13% a week earlier. And the FT reported Apple is lobbying the Trump administration to buy memory chips from blacklisted Chinese maker CXMT. (Bloomberg)(Reuters)(WSJ)(FT)

2.

Smoke signals: Westpac has begun a new review of its $515 billion mortgage book, flagging investors hiding out in owner-occupier loans and tightening its risk capital weights, in a move set to leave misclassified borrowers paying more. In a memo sent to its mortgage brokers this week and viewed by Capital Brief, Westpac revealed it had begun flagging investors it suspected were incorrectly classified as owner-occupiers (or vice versa) and would automatically switch their loans unless they could prove otherwise. Investors are typically charged 15 to 40 basis points more than homeowners, making them more lucrative for lenders. Brokers say it is not uncommon for investors to wrongly claim owner-occupier status across multiple properties to lower repayments and free up cashflow. Therefore, most affected borrowers are likely to be moved to more expensive investor loans rather than out of them. About 5000 customers have been contacted, with reclassification to begin from 10 August. The review comes as the federal government’s move to cut back negative gearing bites, with Westpac forecasting credit growth to fall from 6.5% to 4.7% this financial year as investor lending nearly halves. (Capital Brief)

3.

Spare cloud: Meta Platforms shares rose as much as 11.53% to USD628.28 each after Bloomberg reported the tech giant is developing plans for a cloud business selling access to AI computing power and models, competing with AWS, Microsoft Azure and Google Cloud. Citing unnamed sources, the news outlet reported one option would sell access to AI models hosted on Meta’s infrastructure, including its Muse Spark models, similar to AWS’s Bedrock offering. Meta is also weighing selling raw computing capacity, similar to neocloud businesses such as CoreWeave, the report added. The effort sits under Meta Compute, led by infrastructure chief Santosh Janardhan, Meta Superintelligence Labs’ Daniel Gross and Meta president Dina Powell McCormick, according to the report, which added the strategy could still change. Meta did not comment. Shares in pure-play neocloud providers CoreWeave and Nebius Group fell 13.9% and 17% respectively. (Capital Brief)(Bloomberg)

4.

Credit check: The chief executive of BlackRock’s troubled private credit fund, Phil Tseng, is in the process of leaving the firm, following months of losses on soured loans and a US regulatory probe into the unit’s valuation practices, Bloomberg reported, citing unnamed sources. Tseng runs the publicly traded BlackRock TCP Capital Corp and remains an employee for now. But according to the report, it is unclear when he will depart or whether plans have been finalised. A BlackRock representative declined to comment when contacted by Bloomberg. Tseng also declined to comment through a company spokesperson. The TCPC fund has been marked down twice this year (by 19% in January and 5% in May) after a series of troubled investments. TCPC shares have slumped over 35% so far this year. Federal prosecutors at the Manhattan US Attorney’s office are scrutinising the fund’s valuation practices and have questioned executives as part of the probe. (Bloomberg)(Capital Brief)

5.

Spoon rules: Bending Spoons shares jumped 39.66% above their IPO price on their Nasdaq debut overnight, after the Milan-based software acquirer and some of its backers raised USD1.68 billion. The company, which buys ageing subscription-software businesses and rebuilds them, priced its shares at USD29 (above the USD26 to USD28 marketed range) and they climbed as high as USD43.98 in intraday trading. The move handed Bending Spoons a market value of roughly USD23 billion, up from about USD14.5 billion at a 2025 funding round, according to PitchBook data cited by Bloomberg. Founded in 2013, the group has built its portfolio from once-familiar internet names, buying AOL, Vimeo, Rolodex, WeTransfer, Evernote and the AI photo app Remini. It typically cuts staff and reworks the products. Chief executive Luca Ferrari told Bloomberg the model delivers high returns but takes time, likening each acquisition to building an entirely new product. The business swung to net income of USD27.5 million in the first quarter, from a loss a year earlier, as revenue more than doubled. Goldman Sachs, JPMorgan and Allen & Co led the offering. (Bloomberg)

6.

Copilot landing: Xero has struck a deal to integrate its accounting software into Microsoft 365’s AI chatbot Copilot, its third such agreement with a large language model provider as the software firm works to convince investors of its place in an AI-native world. Once integrated over the coming weeks, Copilot users who are Xero customers will be able to reach Xero’s data and tools through its AI agent Jax, and eventually use that data to draft reports and presentations in Word and PowerPoint or build forecasts in Excel. The deal follows earlier agreements with Anthropic and OpenAI, which powers Jax. CEO Sukhinder Singh Cassidy told the AFR that AI “is a massive tailwind” for the business, framing Xero as a trusted infrastructure layer that “sits below any large language model.” The push comes as Xero shares have fallen over 60% over the past year, wiping more than $14 billion off its market capitalisation amid investor fears that traditional software companies could be displaced by AI models. Alongside the Microsoft deal, Xero unveiled plans to launch Xero Ultra in Australia, a suite of services including multi-entity consolidated reporting and scenario modelling. (Xero)

7.

Brave face: Australia’s biggest professional services firms offered measured support for a government crackdown on the sector, saying they back “many” of the proposals and want to help restore public trust. Assistant Treasurer Daniel Mulino yesterday unveiled a fresh round of consultation into accounting, auditing and consulting firms, with proposals that could see the Big Four broken up or subjected to tougher regulatory scrutiny. Speaking within 24 hours of reports that an EY graduate had allegedly accessed Prime Minister Anthony Albanese’s personal details while on secondment at the Commonwealth Bank, Mulino said ethical standards in the industry were “simply not good enough”. EY Oceania chief executive David Larocca welcomed the chance to “engage constructively” and said the firm was supportive of many of the options in the consultation paper. KPMG, PwC and Deloitte struck similar notes. Elsewhere, former KPMG chairman Peter Nash quit the Westpac board over his long-term links to senior partners at the firm, as the bank distances itself from the audit-leaks scandal and weighs re-tendering the $32 million contract it handed KPMG just two years ago. His replacement as audit committee chair, Michael Ullmer, is himself a former KPMG partner. (Capital Brief)

8.

Pact paused: The US will not renew its trade agreement with Mexico and Canada for another 16 years, opting instead to conduct annual reviews over the next decade, US Trade Representative Jamieson Greer told Bloomberg. Greer said the Trump administration was “not prepared to rubber stamp the agreement” and cited “substantial issues” requiring changes. The USMCA will remain in force for up to a decade and expire in 2036 if the three countries fail to reach agreement. The move comes as the Trump administration pushes for North American-built vehicles to contain 50% US content, raising the overall regional threshold to 82%. Mexican President Claudia Sheinbaum said “today is not a deadline” and that an extension remained possible if the parties reached agreement. Further US-Mexico talks are scheduled for the week of 20 July, while formal negotiations with Canada have not begun, Reuters reported. Intraregional trade between the three countries reached USD1.6 trillion in 2024, up from USD1 trillion in 2020, according to Bloomberg. US auto industry officials called for a swift resolution, saying current tariffs disadvantage them against Japanese and South Korean automakers. (Bloomberg)(Reuters)