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mXa Roundup - Volume 5

September 11th - 15th, 2023

The combination of a higher-than-expected inflation report and positive earnings have helped keep equity and bond markets stable

  • Equities remain stable as the S&P is up ~0.5%, the Nasdaq is up ~0.3%, and the Dow is up 0.75% across the week

  • U.S. Treasury Bonds have remained stable across this week in maintaining a current yield of ~4.3% for 10-Yr U.S. Treasury Notes, highlighting future sentiment of stable interest rates

  • Consumer prices rose in August at the fastest pace in more than a year due to a jump in energy costs, with overall inflation increasing from 3.2% to 3.7% in August – the hotter than expected inflation result forecasts a future likelihood of further rate hikes [WSJ]

  • Higher gasoline prices have boosted retail sales, with a monthly increase of 0.6% [WSJ]

Growing conflict within the Middle East and a strengthening dollar have complicated commodity markets and U.S. foreign policy

  • The overall supplemental poverty rate jumped from 7.8% in 2021 to 12.4% in 2022 and the child poverty rate increased from 5.2% in 2021 to 12.4% in 2022, translating to 5 million more children falling into poverty – program expirations and high inflation have erased progress on U.S. poverty alleviation [CNN]

  • Prices of heavy fuels that power trucks, airplanes, and ships have risen more than crude oil and gasoline, adding financial pressure to construction, transportation, and farming stakeholders – OPEC+ production cuts suggest prices will continue to rise in Q3 [WSJ]

  • Uranium prices have risen 50% in the past year, adding financial pressure to countries reliant on nuclear power as western sanctions in Russia continue to hamper the process from mining to enrichment [WSJ]

Strong cash positions and a bullish economic outlook support a favorable environment for future large-cap M&A transactions

  • Kroger will sell over 400 grocery stores to C&S Wholesale Grocers for $1.9B cash in an effort to get regulatory approval for its $25B takeover of rival Albertsons [RT]

  • $14B building materials firm Kingspan Group made an informal approach to combine with $12.5B construction materials manufacturer Carlisle Companies, which rebuffed the tie-up offer [BBG]

  • Food manufacturer J.M. Smucker agreed to acquire Twinkies maker Hostess Brands for ~$5.6B [BBG]

  • Alternative investor 777 Partners is nearing a deal to acquire Everton Football Club from owner Farhad Moshiri [BBG]

  • Apollo Global Management is among suitors competing to acquire International Game Technology’s global gaming division, which could fetch $4B-$5B, including debt [BBG]

  • CrownRock LP is exploring a sale that could value the US oil and gas producer at well over $10B, including debt [RT]

Recent developments across four key industries highlight the increasing importance of current financial regulation and consumer spending

Energy & Natural Resources

  • CEO of BP, Bernard Looney has resigned, providing additional opportunities for BP to limit current initiatives and strategically refer back to increasing oil production [WSJ]

  • Soaring energy prices pose a risk for broader consumer inflation, affecting airline fares, transportation costs, and various goods and services [WSJ]

Technology, Media, & Telecommunications

  • British chips Designer ‘Arm’ listed the biggest public offering of the year with prices rising ~25% in the first day of trading, providing future tech-IPO candidates with positive momentum [WSJ]

  • Apple virtually debuted the iPhone 15 release with new features, battery capacity, and a USB-C port amidst sluggish smartphone demand [BBG]

Healthcare & Life Sciences

  • Johnson & Johnson is rebranding and refocusing as their new logo reflects a shift toward its prescription-drug and medical-device businesses following the split from its consumer-health division [WSJ]

  • Recent reports highlight health insurers marking up prices of generics for cancer, multiple sclerosis and other complicated diseases on average of 24x of manufacturing prices [WSJ]

Financial Services

  • Banks have been loading up on $1.2T in risky ‘hot’ deposits recognized as brokered deposits – the 86% increase this year has regulators worried as these non-customer deposits serve to shore up balance sheets [WSJ]

  • Bank CEOs push back on regulators pursuing furthercapital requirements for financial institutions [BBG]

North Africa's catastrophic events were the leading news stories, while AI and U.S. politics also undertook significant developmentss

  • The past week has been catastrophic for Northern Africa with floods in Libya and an earthquake in Morocco killing 5,000 and 8,000 people – humanitarian efforts have dealt with political complications [BBG]

  • ChatGPT traffic has slipped for the third month in a row, although new analysis suggests the decline will end this month – a mixture of cooled AI “hype” around consumers and the cyclical implications within college use are the leading causes [RT]

  • Hunter Biden has been indicted on gun charges related to a 2018 firearm purchase, potentially deepening his legal troubles and causing political complications to be expected during President Biden's re-election campaign [WSJ]

Gavin McManus

Sep 15, 2023

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