¶ Intro / Opening
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Good morning from the Financial Times. Today is Thursday, May 7th, and this is your FT News briefing. American fuel is making its way around the globe, and hedge funds are really enjoying last month's tech stock rally. Plus luxury conglomerate LVMH is trying to declutter its wardrobe.
They own seventy-five different brands spanning hotels and fashion brands. They own media houses and they are now sort of making hard decisions about what actually still fits.
I'm Mark Filipino and here's the news you need to start your day.
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¶ US Fuel Exports and Geopolitics
The U.S. is exporting more fuel than ever. It sent over 8.2 million barrels of refined fuels overseas every day last week. That includes gasoline, diesel, and jet fuel. And it's a twenty percent increase from the same time last year, according to US energy data. It's to make up for the shortages caused by the Iran War. Asia and Europe have been hit especially hard.
Everyone's holding their breath as Tehran considers a peace proposal from the U.S., but things are on shaky ground. Israel struck Beirut on Wednesday despite a ceasefire, and the U.S. hit an Iranian ship it says violated Washington's blockade of the country's port. Still, the cost of Brent Crude dropped below$100 a barrel at one point yesterday in anticipation of peace. The S P 500 closed about 1.5% higher.
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¶ Hedge Fund Tech Rally Gains
Hedge funds are sitting pretty right now thanks to a tech stock rally. That's led to hedge funds having their best monthly performance since twenty twenty. I'm joined now by the FT's Costas Marcellus to learn more. Hi Costas.
Hi.
Good to have you. So uh give us a sense of scale here.
So it's been a huge rally. We saw some very strong earnings from big AI companies like Alphabet. for the first quarter and they signalled a huge amount of spending, hundreds of billions, on AI infrastructure like chips. And that sent a lot of stocks soaring higher. So Intel more than doubled AMD went up seventy four percent and that has also meant that big blue chip indices like the S P five hundred was up ten percent. So it's been a huge rally in one month.
And hedge funds have taken advantage. So it's been it's been a very, very strong month.
So is this a big switch from earlier in the year?
It's definitely a dramatic turnaround. March was a terrible month for hedge funds, uh one of the worst since the COVID lockdowns which shut down the world economy in twenty twenty. And I mean hedge funds were really hit badly by the Iran war, which suddenly revised up inflation expectations and that hit government bonds. The stock market was partly impacted. So it was a brutal month. So it's a big rebound.
So hedge fund's performance was really tied to equities in the past month. Is that usually the case?
Hedge funds are typically quite correlated to the market, which means they they rise of the market, they fall with the market. We reported on some research from BMP Paraba that said that they were the most correlated to the market last year. than they've been in over five years. And uh this is partly mechanical. It's because equity hedge funds tend to be more long biased than short. So they they buy stocks more than they bet against them.
But in general the the stock market has been very strong and equity hedge funds have tried to to ride that and and perform well for their investors.
Is there a lesson hedge funds can learn from this past month's performance?
Hedge funds are having a bit of a moment right now. Um private equity and private credit have struggled with distributions back to investors and so hedge funds, which are more liquid, uh easier access for cash uh for investors, they've been having a bit of a moment.
But
Back in twenty twenty two, when we had a big bear market, a lot of hedge funds which are correlated to the market actually lost
a lot of money and investors pulled their money. So I think one of the lessons that investors should take from this is that hedge funds are quite correlated to markets and they need to be quite careful in how they invest in them. Because what we've found is that when markets Suffer, it's not just your equity portfolio, your bond portfolio, hedge funds can also suffer as well.
Costas Mursales covers hedge funds for the F T. Thanks, Costas.
Thank you.
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¶ Samsung's AI Profit Dispute
Samsung workers want a bigger cut of the chipmaker's ballooning AI profit. The South Korean company is beefing with its staff. Labor unions are threatening to strike if Samsung doesn't increase wages and bonuses. If their demands are not met, unions say they'll stage an 18-day walkout later this month. To give you a sense of how well the company is doing, Samsung's stock hit a record high yesterday, and its net profit last quarter is up more than five times what it was a year ago.
And a big part of its success is that memory chips are a huge deal right now. Supply is tight, and a strike at Samsung could disrupt global supply chains. It could also potentially hit South Korea's economy. The country's central bank says that about half of first quarter GDP growth was because of chipmaking.
Mm-hmm.
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¶ LVMH Luxury Empire Restructures
LVMH is looking to slim down a bit. The world's top luxury goods conglomerate is looking to sell even more of its brands like Marc Jacobs and its stake in Rihanna's Fenty Beauty. It's the first time that LVMH is selling more than it's buying. The FT's Adrian Classic covers the crossroads of money and luxury in Paris. She's here to tell us more. Hi Adrian.
Hi Mark.
Good to have you. So what's been going on at LVMA?
Well, the company is looking at selling some of its businesses that are not really in the center of what they do, which is sell luxury goods such as handbags and fashion like Dior and Louis Vuitton all around the world. And they're looking at some of their brands and assets that have not been doing quite so well or just are not as core to the business. and seeing if there might be people interested in buying them.
And why is the company doing this? It seems like it has acquired a lot of new businesses in the last forty years.
Yeah, so I mean LVMH was built through acquisition by Bernard, its uh billionaire CEO who built this whole thing from the ground up essentially. What's changed now is that the environment for luxury and the luxury industry in general has been pretty challenging for the past few years. Uh so pretty much since twenty twenty three.
A huge boom in demand for handbags and champagne and whatever else that you could think of, shoes, fashion, uh went into reverse. And it has not really picked up since then. That I think is the framework through which LVMH is looking at what it owns, which is a lot. They own 75 different brands spanning hotels and fashion brands. They own media houses, and they are now sort of making hard decisions about what actually still fits.
Yeah, well let's talk about that a little bit. What is it trying to let go of and what is it hanging on to or even acquiring?
So LVMH is not looking to sell any of their really big central businesses that drive profit. One of the things that they've been looking at is selling Marc Jacobs, the fashion brand, which was very, very successful uh and its design was very successful in the early two thousands and is now not really going anywhere. And they're also looking at things like fresh and makeup forever. So brands that probably aren't
as high-end, maybe aren't super stylish right now and that they've owned for a while. Interestingly, they're also looking for a buyer for their stake in Rihanna, the singer, in case you live under a rock. uh her uh beauty brand that she founded in which they own almost half. So they're looking for a buyer for that stake and that's actually a super valuable asset. So that's estimated to be worth between one point five and two point five billion.
So what does this tell you about the future of large luxury brand conglomerates?
Well, I think they're facing a real question that I I mean, maybe saying existential question is too strong, but there is A big question mark hanging over this industry that has grown immensely over the past two decades and especially in the past five to seven years. You know, luxury used to be this very rarefied world where you were buying high-quality products that most people could not access.
But now these have been transformed from brands with a few shops in Paris or in Milan into multi-billion dollar sales machines, essentially. Uh and the question of how big can you get as a luxury brand has been asked many times over the past decades. And each time it's been proven wrong and these brands have continued to grow.
But I think it bears, you know, thinking about again, uh, because at some point do shoppers get disillusioned and sort of the trick mirror of an exclusive product that's also available to everyone starts to fall away a bit.
That's the FT's Adrian Classe in Paris, who maybe thinks I don't know who Rihanna is. Thanks, Adrian.
Ha ha.
Thank you so much.
You can read more on all these stories for free when you click the links on our show notes. This has been your daily FT News briefing. Check back tomorrow for the latest business news.
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Sälla slut. Jag kommer inte köpa utåt er. Det blir i alla fall inte värre än så här. Ibland är ett nej, det finaste du kan ge. Systembolaget. Anorlän av en anledning.
Florist? Eller hotellreceptionist Jurist, kemist eller reservdelsspecialist.
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Redningslösning.
Субтитры сделал DimaTorzok
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