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mXa Roundup - Volume 36

May 6th - 10th, 2024

The Dow Jones Industrial Average is underperforming the S&P 500, the worst since the dot-com bubble, and the U.S. labor market shows early signs of softening

  • The S&P 500 is up 1.78%, the Nasdaq is up 1.23%, and the Dow Industrials is up 1.75% WTD

  • The 10-Yr U.S. Treasury yield has decreased -0.036% to a current yield of 4.461%, whereas the 30-Yr U.S. Treasury yield decreased 0.052% to a current yield of 4.608%

  • Crude oil prices increased 1.79% to a current $79.78/bbl while bitcoin decreased 1.89% to a current $62,817.70/coin; oil prices rise while bitcoin has continued to decrease 

  • Fueled by strong earnings, U.S. companies, particularly in the tech sector like Meta Platforms and Apple, are increasing share buybacks, indicating executive confidence amid economic uncertainty and high interest rates [WSJ

  • Young Americans are starting their careers with higher credit-card debt due to increased costs of living and a higher percentage graduating with student loans [WSJ]

  • Interest rates on new federal undergraduate student loans are set to increase to around 6.5% in July, the highest level since 2008, due to the recent 10-year U.S. Treasury yield of 4.483% [WSJ]

  • India's upcoming election focuses on addressing rising income inequality amid rapid economic growth, with both ruling and opposition parties advocating for wealth redistribution [WSJ]

Weakened job growth points to a U.S. economic slowdown, while Donald Trump's 40 Wall Street tower faces financial strain, and Ukraine's bondholders urge Kyiv to resume interest payments

  • Evidence suggests a slowdown in the U.S. economy, particularly in the services sector, with indicators like weakening job growth and contractionary activity in April [WSJ]

  • Donald Trump's iconic 40 Wall Street tower, once considered a lucrative investment, faces financial strain with rising vacancy rates and a $120.5 million mortgage maturing next year, amid broader challenges in the weakening U.S. office market [WSJ]

  • Vernon Hill, founder of Commerce Bancorp, revolutionized banking but faced collapse with Republic First Bancorp due to conflicts and regulatory issues, showcasing a pattern of rapid growth leading to insolvency [WSJ

  • Ukraine's bondholders, including BlackRock and Pimco, are urging Kyiv to resume interest payments on its debt next year, seeking a deal that involves forgiveness of a significant portion of the country's outstanding debt [WSJ

M&A activity shows slight improvement; major developments within energy with activity in media and entertainment and tech prove to be encouraging

  • Apollo Global and Sony Pictures Entertainment are in formal negotiations with Paramount Global over a $26B takeover bid [NYT]

  • Tower operator Uniti Group will re-merge with telecom services provider Windstream in a $13.4B cash-and-stock deal [RT]

  • Bain Capital is in talks to take education-software provider PowerSchool at a ~$6B valuation, including debt [RT

  • CVC Capital Partners will buy an up to 30% stake in Hempel, the Danish owner of upmarket British paint company Farrow & Ball, in a $3.6B+ deal [FT

  • Global Infrastructure Partners and Canada's CPPIB will acquire utility Allete in a  ~$3.9B cash deal [BBG

  • EQT agreed to buy technology consultant Perficient in a cash deal worth $3B, including debt [BBG

  • PE firms Clearlake Capital and Francisco Partners will acquire chip-design company Synopsys’ software integrity business for up to $2.1B in cash [BBG

  • UK insurance firm Ardonagh will acquire Australia's PSC Insurance in a $1.5B deal [RT

  • Brookfield Asset Management will invest $1.5B in Castlelake for a majority share of the private debt firm’s fee-related earnings [BBG

  • KKR will acquire Indian medical device maker Healthium Medtech from PE firm Apax Partners in a ~$1B deal [BBG

  • Saudi Aramco is in talks to acquire Shell's Malaysia gas station business in a potential ~$1B deal [RT

Occidental Petroleum is exploring a sale of a part of its Permian Basin operations that could fetch over $1B [RT]

Recent developments across four key industries highlight European oil firm’s potential relocation of listings to the U.S., skepticism about AI's impact persists, and hospitals demanding upfront payment

Energy & Natural Resources

  • European oil companies are considering relocating their stock-market listings to the U.S. due to a persistent valuation gap with American peers, driven partly by European investors' and policymakers' skepticism towards the fossil-fuel industry [WSJ

  • Saudi Aramco's first-quarter profit declined to $27.27 billion, missing analysts' expectations due to lower crude oil sales volume and weaker refining and chemicals margins [WSJ

  • BP's profit fell to $2.72 billion on account of lower oil and gas prices and a U.S. refinery outage, leading to plans for at least $2 billion in cost cuts by 2026 and organizational simplification [WSJ]

Technology, Media, & Telecommunications

  • At a Wall Street Journal CEO Council Summit, skepticism was raised about the transformative potential of AI despite its recent stock-market boom, with concerns expressed about its misuse and regulation [WSJ

  • Duolingo reported a significant increase in paid subscribers and revenue for the first quarter, attributing much of its success to the implementation of generative AI, which has accelerated subscription growth and content creation [WSJ

Healthcare & Life Sciences

  • Hospitals and surgery centers are increasingly demanding upfront payment for procedures to avoid chasing patients for payment later, causing distress for those unable to afford the costs [WSJ

  • Steward Health Care System's bankruptcy filing, one of the largest in decades, has left hospitals in eight states facing financial uncertainty, raising concerns among regulators about patient safety and access to healthcare [WSJ

  • Fresenius exceeded expectations in the first quarter, reporting a 10% increase in net profit, driven by improved performance in its core businesses [WSJ

Financial Services

  • Binance dismissed an investigator amid market manipulation concerns involving a top client, amidst ongoing legal challenges and regulatory scrutiny over anti-money-laundering violations [WSJ

  • BBVA launched a hostile takeover bid for Banco de Sabadell, sparking criticism from Spain's economy minister over potential negative effects on customers and employees [WSJ

Outside of standard macroeconomic updates and M&A developments, flooding in Brazil, campus protests, and Xi Jinping's recent European tour have led news cycles

  • President Biden has paused a shipment of bombs to Israel amid disagreements over the handling of the conflict in Gaza, with the administration urging Israel to focus on securing a temporary ceasefire [WSJ

  • Severe flooding in southern Brazil has resulted in 107 deaths and over 165,000 displacements, with Rio Grande do Sul needing an estimated 19 billion reais ($3.68 billion) for infrastructure recovery and addressing looting in Porto Alegre [RT

  • Pro-Palestinian encampments at universities like MIT, Harvard, and Penn face criticism and administrative actions, prompting calls for eviction from university officials and political figures, as protesters persist despite warnings and police presence [WSJ

  • Neuralink faced issues with its first human patient, Noland Arbaugh, as some implant threads came out, but modifications improved performance, enabling Arbaugh to play chess using only his thoughts [WSJ

  • Xi Jinping's recent European tour focused on maintaining Chinese market access amid economic slowdowns and geopolitical tensions, aligning with controversial leaders like Hungary's Viktor Orbán and not addressing EU trade concerns [FT

  • Rory McIlroy's return to the PGA Tour's board was obstructed due to internal disputes and the concern from current members, including Tiger Woods and Jordan Spieth who see him as a threat to their influence [WSJ]

Cole LaCour

May 10, 2024

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