| |  | TOGETHER WITH |  | | | Good morning and happy Friday.
Let's dive right in — a lot to cover today. | | | • | | The chip crunch that knocked 1% off US GDP may finally be easing. | | • | | Ford is boosting its EV production. | | • | | Tiger Global is vying to keep investors on board with its hedge fund down 52% this year. | | | | |  | Semiconductors | The Global Chip Crunch Might Finally Be Easing | | We have been living through the global semiconductor shortage for two years now. But new data shows the chip crunch — as it’s more deliciously known — may finally be easing. Not everyone, however, will be cracking open a celebratory bag of Doritos. | Washer Scavengers | | According to Goldman Sachs, no fewer than 169 industries have felt the brunt of the global chip shortage. The big one, of course, is the personal electronics industry, which accounts for 50% of global chip production and explains why it’s easier to get a table at Rao’s in New York City than a Playstation 5. The White House said in April that the crunch — caused by a one-two punch of demand for electronics and supply chain snarls, both a result of the pandemic — shaved 1% from US GDP last year, a $230 billion hit.
It’s called for some incredible cases of business ingenuity — Mike Juran, CEO of Altia, which builds software interfaces for appliances, said some companies started using 10-year-old chips “that weren’t cutting edge” but were sitting unused in warehouses. Peter Wennink, CEO of ASML, which builds machines that mint computer chips, said last month that he’s aware of an industrial conglomerate that bought washing machines just to rip the chips out of them for its own products.
Finally, though, there are signs the crisis is easing — not everyone will walk away a winner: | • | | The good news for almost everyone: days of inventory on hand in the semiconductor industry rose to 53 days in the first quarter of 2022, up from 42 days in Q4 2021, according to Credit Suisse. That’s a huge win for people still in line for household appliances, cars, or game consoles that have been in short supply. | | • | | Economies in East Asia, which controls some 75% of chip production, are in for a rough correction as demand for chips slows and becomes less stressed. It’s already started: smartphone shipments dropped 8.9% in the first quarter of this year and PC shipments 5.1%, according to data tracking firm IDC. | | | | Not Quite There: “It’s better, it’s not perfect, but it’s better than last year,” Karin Radstrom, a board member at Daimler Truck, the world's largest truck manufacturer, told Bloomberg, “I try to not celebrate too early, we’re still monitoring the situation closely.” Unless you got that PS5, keep the champagne on ice. | | | | | | Automobiles | Ford Announces $3.7 Billion in Midwest EV Plants |  | (Ford Plant on the Mississippi River; Photo by Tony Webster) The Rust Belt may soon be getting some new shine. On Thursday, Ford announced a massive initiative to invest $3.7 billion and bring over 6,200 United Auto Workers union jobs to the Midwest as it plans to drastically expand its electric vehicle production capacity. There’s only one question: can an electric current flow through rusted metal? | 21st Century Production Line | | In November, the auto titan made public plans for an ambitious new goal to catch up to EV pack-leader Tesla: producing 600,000 electric vehicles a year by the end of 2023, and 2 million a year by 2026. Last fall, Ford also made an $11 billion investment in battery plants in Tennessee and Kentucky.
Now, the massive investment in domestic production continues, with Ford planning to spend $2 billion across three plants on its Michigan home turf, another $1.5 billion on three Ohio factories, and $95 million on a plant in Missouri. A bevy of state subsidies will help accelerate Ford’s push into an EV-focused future: | • | | Ford will be receiving $200 million in economic incentives from Ohio, and another $150 million from Michigan, according to the president of Ford’s internal combustion engine division, Kumar Galhotra. Since 2002, US states and local governments have granted over $5 billion to automakers developing EVs, according to the Financial Times. | | • | | The Michigan plants will produce the F-150 Lightning pickup, which currently has a three-year-long waitlist; the Missouri plants will focus on the production of an electric van, while the Ohio plants will support the assembly of a yet-to-be-announced new EV that will debut by mid-decade. Some of the funding will also go toward the production of a new gas-powered Ranger pick-up model and Mustang coupe — some old habits die hard. | | | | Union Victory: In addition to the 6,200 new jobs, Ford says it will transition another existing 3,000 part-time workers into full-time, union roles. The company is also spending another $1 billion to improve workplace conditions at its factories, including healthier cafeteria options and better parking lot lighting. It’s a rare win for the United Auto Workers union, which typically doesn’t see victories outside of once-every-four-year bargaining sessions. Who said company-union relations have to be so hostile? | | | | | | SPONSORED BY Aquipor | The Solution To Climate Change Is… Permeable Concrete? | If that seems like an improbable reality, hear us out. The current cement industry is responsible for 8% of global CO2 emissions each year. Plus, traditional concrete isn’t great at handling water, which can lead to urban flooding and untreated runoff. If there was a way to get rid of those highly-pollutive cement plants and solve runoff, the impacts on the climate would be massive. Enter Aquipor’s permeable concrete, which does double-duty: | • | | Aquipor’s patented concrete is made of upcycled aggregates, industrial minerals and a catalyst, giving it an extremely low carbon profile. | | • | | The permeable surface allows rainwater to seep through while filtering out pollution and managing runoff, mitigating urban flooding. | | | That one-two punch doesn’t just make it a very appealing investment to the infrastructure industry (which is keen to see trillions of carbon-friendly spend in the next decade)... it also makes it a smart investment for you and I. Check out their StartEngine to get the details on their latest fundraising round, or invest in Aquipor right here. | | | | Investing | High Flying Tiger Global’s Hedge Fund Has Lost 52% This Year | | We’ll call it a case of biting off more than you can chew.
Tiger Global, the so-called “Tiger Cub” offshoot from Julian Robertson’s famed Tiger Management, closed on a new, $13 billion growth fund earlier this year. After adeptly riding the tech wave for more than two decades, the fund was the envy of every 2-and-20 outfit around.
Oh, what a difference a 50 basis point fed rate hike can make.
Internal documents reviewed by Bloomberg reveal the fund has been crushed in the rising interest rate environment, falling 14% in May and a whopping 52% on the year. Now, management must channel their inner Bobby Axelrod and convince investors they can claw back the losses. | Streak of Tigers | | Tiger’s hedge fund has been a money loser every month in 2022, and, along with the firm’s long-only and crossover funds, has lost roughly $17 billion in the last year. That’s enough to evaporate nearly two-thirds of dollar gains made for investors since it launched in 2001.
The firm first made a splash by investing in Chinese internet stocks during the dot-com bubble bust and developed an investment strategy focused on the size of opportunities, with valuation sometimes coming as a secondary consideration. That’s helped Tiger invest early in eventual big winners, but has left it exposed as the broader market reawakens to the importance of fundamentals.
Now, with tech stocks plummeting and the IPO market cooled, Tiger is introducing more investor-friendly terms to keep backers around: | • | | Tiger is cutting the management fees at its hedge fund by 0.5% to 1% until December 2023. The firm also charges 20% performance fees on positive returns. | | • | | Tiger will let clients redeem up to a third of their investment this year, more than the 25% limit in normal years to try and assuage investors who want more money back sooner. | | | | “We take very seriously that our recent performance does not live up to the standards we have set for ourselves over the last 21 years and that you rightfully expect,” Tiger wrote to investors.
Head in the Clouds: Yes, tech is still down. But yesterday many cloud stocks mounted a strong comeback, with the WisdomTree Cloud Computing fund having one of its best days of the year. Not much, but it’s a start. | | | | | | Extra Upside | • | | The US will cancel $5.8 billion in student loans for the over 560,000 borrowers who attended the private Corinthian Colleges, which shut down in 2015 following widespread fraud allegations. | | • | | The development of NASA’s moon spacesuit is being outsourced to the private sector. | | • | | A new survey shows the search for a new home often ends in tears — literally. | | | | | | |  | Just For Fun | | | | | Written by Sean Craig and Brian Boyle. | Disclaimer | | | | The preceding post was written and/or published as a collaboration between The Daily Upside’s in-house sponsored content team. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. The Daily Upside may receive monetary compensation from the issuer, or its agency, for publicizing the offering of the issuer’s securities. This content is for informational purposes only and is not intended to be investing advice. This is a paid ad. Please see 17b disclosure linked in the campaign page for more information. | | | | | No longer want to receive these emails? Unsubscribe here. Copyright © 2022 The Daily Upside, LLC., All rights reserved. 1230 York Avenue, Box 154, New York, NY 10065 | | | | |
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