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mXa Roundup - Volume 28

March 11th - 15th, 2024

A higher-than-anticipated inflation report cast doubt on the possibility of imminent interest rate cuts

  • The S&P 500 is down 0.27%, the Nasdaq is down 1.19%, and the Dow Industrials is up 0.33% WTD; elevated inflation has pushed stock prices sharply lower, as investors adopt a more cautious stance

  • The 10-Yr U.S. Treasury yield has increased +0.225% to a current yield of 4.292%, whereas the 30-Yr U.S. Treasury yield increased +0.189% to a current yield of 4.433%; anticipation of delayed interest rate cuts has triggered a decline in bond prices

  • Crude oil prices increased 2.16% to a current $80.53/bbl while bitcoin increased 1.98% to a current $69,836/coin; lower-than-anticipated growth in U.S. crude stockpiles has sent prices climbing

  • The recent surge in U.S. economic growth has led investors to diversify their portfolios beyond the dominant technology giants, driving gains across a broader range of stocks [WSJ]

  • President Biden's rhetoric in his State of the Union address criticized big corporations for practices like "shrinkflation," "price gouging," and "deceptive pricing," attributing these to high profit margins [WSJ]

  • China's $200 billion quant fund industry, which previously beat the market with complicated statistical models, suffered losses last month due to government interventions and regulatory clampdowns [WSJ]

  • Reddit plans to go public with a proposed market value of up to $6.4 billion, a significant drop from its previous private valuation of $10 billion [WSJ]

  • Gold prices have surged to record highs, surprising analysts who attribute this rally to a combination of factors including investor optimism about the U.S. economy, geopolitical risks, and central bank buying [WSJ]

Tesla's market capitalization has fallen, Gaza continues to face a severe economic crisis, India experienced a surge in equity options trading, and central banks are adjusting their interest rate-setting mechanisms

  • Tesla's market capitalization fell below $540 billion, placing it below JPMorgan Chase for the first time since January 2023, as the EV maker's stock has declined by 32% this year [WSJ]

  • In Gaza, the ongoing conflict has led to a severe economic crisis, with prices of essential goods soaring by as much as 600%, leaving many families struggling to afford basic necessities like diapers [WSJ]

  • In India, a stock speculation boom has led to a surge in equity options trading, with the country accounting for a significant portion of worldwide contracts traded [WSJ]

  • Central banks, including the European Central Bank, are adjusting their interest rate-setting mechanisms as they seek to sell off their bond portfolios [WSJ]

M&A activity shows signs of vibrancy with multiple deals across various sectors including energy, hospitality, high-tech, and pharmaceuticals

  • US natural gas producer EQT agreed to buy back former unit Equitrans Midstream for ~$5.5B in stock [BBG]

  • Spain approved the $20.3B merger of French mobile operator Orange's Spanish business with rival MasMovil [RT]

  • Apollo Global Management reached out to $8B media giant Paramount Global regarding a possible takeover or asset purchase [AX]

  • Hilton announced its acquisition of Graduate Hotels for $210 million from Adventurous Journeys Capital Partners, marking its first brand purchase in over twenty years [RT]

  • Chinese entrepreneur Li Ning is considering leading a consortium to take his $7.3B Hong Kong-listed eponymous sportswear brand Li Ning private [BBG]

  • Japan’s Nidec and PE firm KPS Capital Partners are competing to acquire Siemens’ Innomotics large motors business, which could fetch ~$3.3B [BBG]

  • Campbell Soup completed its $2.3B acquisition of Rao's Homemade-owner Sovos [RT]

  • Aluminum producer Alcoa agreed to acquire Alumina in a deal that values the Australian company’s equity at $2.2B [WSJ]

  • PE firm Astorg is considering a sale of US-based IP software firm Anaqua, which could be worth up to $3B [RT]

  • British American Tobacco, the maker of Lucky Strike cigarettes, is preparing to kick off a sale of part of its stake in Indian partner ITC worth $2B-$3B [BBG]

  • Italy conditionally approved ION Group’s $1.5B acquisition of asset manager Prelios [BBG]

  • Billionaire Hans Georg Näder, the controlling shareholder of Ottobock, is nearing an agreement to purchase EQT’s 20% stake in the German prosthetics company for ~$1.2B [BBG]

  • PE firm Advent International is weighing a sale of CAES that could value the aerospace and defense technology company at over $1B [BBG]

  • Canada Pension Plan Investments (CPP) will acquire a 17.5% stake in the fixed-line network of Telecom Italia for up to $2.2B [RT]

Recent developments across four key industries highlight EU AI laws are introduced, Shell revises its carbon reduction goals, and Amazon Pharmacy will deliver Eli Lilly drugs

Energy & Natural Resources

  • Alcoa has agreed to acquire Alumina in a deal valued at roughly $2.2 billion, aiming to solidify its position as one of the world's largest bauxite and alumina producers amid expectations of increased demand driven by the energy transition [WSJ]

  • The U.S. Energy Information Administration (EIA) has revised its short term energy outlook (STEO), projecting a notable increase in Brent spot prices, averaging $87 per barrel in 2024 and $84.80 per barrel in 2025 [RZ]

  • President Joe Biden's decision to freeze the approval process of new LNG export projects has sparked global discussion and raised concerns among U.S. oil and gas producers about its impacts on LNG exporting dominance, environmental issues, safety concerns, and future gas supply to Mexico [HE]

  • Shell plans to loosen its target for carbon-emission cuts from its operations, aiming for a 15%-20% reduction in the net carbon intensity of its energy products by 2030 compared to 2016 levels, while introducing a goal for reducing customers' emissions [WSJ]

Technology, Media, & Telecommunications

  • European lawmakers have approved comprehensive legislation on artificial intelligence, introducing new rules and restrictions on AI development and usage, with fines of up to 7% of a company's worldwide revenue for non-compliance [WSJ]

  • Former Treasury Secretary Steven Mnuchin announced plans to form a consortium to buy TikTok amid increasing pressure from U.S. lawmakers to ban the app or force its Chinese owner, ByteDance, to sell its U.S. operations [WSJ]

  • Generative AI technology holds promise for enhancing productivity but raises concerns about data poisoning, where malicious actors insert misleading information into AI training data to spread misinformation or manipulate AI systems [WSJ]

Healthcare & Life Sciences

  • Amazon Pharmacy has partnered with Eli Lilly's direct-to-consumer service, LillyDirect, to handle home delivery of anti-obesity therapy Zepbound and other Eli Lilly drugs [WSJ]

  • Chinese pharmaceutical stocks experienced a sharp rise on Thursday following speculation about potential government support for drug innovation, driven by an alleged draft proposal circulated online and on social media [WSJ]

  • New research suggests that ultra-processed foods may impact both our bodies and brains, potentially leading to changes in learning, memory, and mood [WSJ]

Financial Services

  • Goldman Sachs Asset Management aims to expand its private credit portfolio to $300 billion in five years, more than doubling its current value, as it sees a significant opportunity in the market [RT]

  • Private fund managers like Apollo, Ares, Blackstone, and KKR are expanding into asset-based finance, targeting consumer loans, mortgages, and equipment-backed loans, with the potential market size estimated to reach $900 billion in the coming years [WSJ]

Outside of standard macroeconomic updates and M&A developments, Biden’s budget, SpaceX’s Starship rocket, and a potential TikTok ban in the U.S. have led news cycles

  • President Biden proposed a $7.3 trillion budget for the next fiscal year, aiming to raise taxes on the wealthy and corporations while reducing the deficit and addressing various social and economic issues [WSJ]

  • The House passed a bill overwhelmingly to ban TikTok in the US or force its sale, citing national security concerns [WSJ]

  • "Oppenheimer" emerged as the big winner at the 96th Academy Awards, securing seven wins including Best Picture, Best Director for Christopher Nolan, and Best Actor for Cillian Murphy [WSJ]

  • Dollar Tree, facing challenges from inflation, reduced government benefits, and increased theft, announced plans to close nearly 1,000 Family Dollar stores over the next few years [WSJ]

  • John Barnett, a former Boeing employee known for raising concerns about production standards, was found dead in the US after giving evidence in a whistleblower lawsuit against the company [BBC]

  • SpaceX successfully launched its Starship rocket on its third test flight, with the spacecraft separating from the booster and ascending as planned [WSJ]

  • The global art market experienced a 4% decline to $65 billion in 2023, primarily driven by a sharp decrease in the value of high-priced works [FT]

  • A new streaming service set to launch this fall, bundling ESPN+ with 14 sports-heavy channels, aims to simplify sports watching but raises questions about its appeal and competitiveness compared to existing cable and internet-TV alternatives [WSJ]

Cole LaCour

Mar 15, 2024

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