Five Things You Need to Know to Start Your Day: Americas

Good morning. Stocks are sliding globally, with US shares poised to follow, as bond yields spike on fading rate cut expectations. BHP’s bidd [View in browser]( [Bloomberg]( Good morning. Stocks are sliding globally, with US shares poised to follow, as bond yields spike on fading rate cut expectations. BHP’s bidding saga for miner Anglo American seems likely to be over for now, while another oil deal may be in sight. Here’s what’s moving markets — [Morwenna Coniam]( Want to receive this newsletter in Spanish? [Sign up to get the Five Things: Spanish Edition newsletter](. Bonds retreat as stocks fall US Treasuries fell after weak debt auctions and remarks from a Federal Reserve speaker fueled expectations interest rates will remain higher for longer. European bonds followed suit as German inflation data came in lower than expected. US equity futures are poised to open lower, with American Airlines extending post-market losses after it cut its profit forecast. European shares also fell with airlines among the laggards. Meanwhile, oil is extending gains as another attack in the Red Sea added to heightened geopolitical tensions in the Middle East. Is it all over for BHP’s Anglo bid? Anglo American said it [won’t give BHP Group any further time to commit to a takeover offer](, signaling the likely end for now to a $49 billion pursuit by the world’s biggest mining company. The decision came just hours before a deadline for BHP to commit to an offer or walk away for six months. BHP made a last-minute push to pressure Anglo’s board earlier on Wednesday but Anglo said its biggest concerns had still not been met. Oil deal on the horizon In further deals news, [ConocoPhillips is in advanced talks to acquire smaller rival Marathon Oil](, according to the Financial Times. The all-stock proposal would value the target at slightly more than its market capitalization of about $15 billion and give ConocoPhillips control of assets in Texas, Oklahoma, North Dakota and the Permian Basin, the newspaper says. Marathon shares advanced in pre-market trading. Hedge funds lap up big tech [Hedge fund exposure to US technology behemoths hit a record high]( following Nvidia’s earnings report last week, according to Goldman Sachs’s prime brokerage. The so-called Magnificent Seven companies — Nvidia, Apple, Amazon, Meta Platforms, Alphabet, Tesla and Microsoft  — now account for about 20.7% of hedge funds’ total net exposure to US single stocks, the report showed. Coming Up… Companies due to report on Wednesday include include Salesforce, Agilent Technologies, HP Inc. as well as Bank of Montreal and National Bank of Canada. In terms of economic data, releases are expected for MBA Mortgage Applications, May’s Richmond Manufacturing Survey and the Fed’s Beige Book. What We’ve Been Reading This is what’s caught our eye over the past 24 hours. - FTSE 100 [drops a sixth day]( as dismal run continues. - White House says[Israel’s Rafah strike](doesn’t cross red line. - [Trump prosecutor urges conviction](over hush-money plot and cover up. - The pound rose to the [strongest level against the euro]( in almost two years. - [Expulsions of Chinese students](spread confusion from Yale to UVA. - South Africa votes in [closest election in post-apartheid era](. - As the [world’s largest nuclear plant](sits idle, Japan debates restarting the facility shuttered after the 2011 Tsunami And finally, here's what Joe’s interested in this morning If you haven't seen it yet, you should go [check out the letter]( that activist investors at Elliott management sent to the board of chipmaker Texas Instruments about what it perceives as flaws in the company's strategy and the changes it wants to see. [Here is a good Bloomberg article]( about Elliott's $2.5 billion investment in the company, with a summary of its aims. Anyway, there's a lot of talk these days about chips, and Chinese manufacturing, and domestic US manufacturing and so forth, and the letter touches on all of these themes. The basic gist is that in 2022, Texas Instruments announced plans for a significant expansion of its US manufacturing footprint, and Elliott wants the company to go slower on the capital expenditures, with the benefit of increasing today's free cash flow. Specifically, it believes that TI can hold back on some of the equipment necessary to outfit its new facilities, as it waits to see how demand for the company's products materializes. Elliott proposes that TI "adopt a dynamic capacity-management strategy." The letter says that the company has done this in the past, breaking ground on new production facilities, but waiting until the time was actually right in order to build them out and get them operational. One of the things that's interesting about semiconductors is that American vulnerability and dependence on imports really came to the forefront during Covid, when, for example, automakers were unable to get the basic chip components to make cars. Not long after that the CHIPS Act was passed in order to encourage US manufacturing at the forefront of the industry. However, a lot of those missing chips for cars were not at the forefront of the industry, but rather cheaper, lagging-edge, mass consumption products, the likes of which are in TI's wheelhouse. In theory, from a, say, geopolitical standpoint it would be great to have more US capacity. But as Elliott notes, this is costly and perhaps shareholder unfriendly in the short term. And so you have these two competing forces: The overall policy desire to see more US manufacturing vs. the desire of investors to maximize returns. Now to be clear, Elliott expresses support for the notion that Texas Instruments can and should exploit its own production capacity. Here's a key section from the letter:  So it's not saying, 'Don't build here.' But it is saying, 'Don't build too aggressively here, particularly when it's not clear what the demand picture will be.' One of the key things about all of the big Chinese manufacturers that we're reading about all the time (in areas like cars, batteries, semiconductors, handsets etc.) is that none of them are particularly big stock market winners. So in one part of the world: Companies going flat out to expand market share, capacity etc, but not pleasing shareholders. And in another part of the world: a push-pull between the desire to expand geopolitically and secure supply while also placating investors who don't want to overspend too much on that project. Follow Bloomberg's Joe Weisenthal on X [@TheStalwart]( [Bloomberg Markets Wrap: The latest on what's moving global markets. Tap to read.]( Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Five Things to Start Your Day: Americas Edition newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. 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