September 18th - 22nd, 2023
Renewed concerns surrounding ‘higher-for-longer’ rates and mixed IPO results have negatively impacted large-cap equities
The S&P is down ~2%, the Nasdaq is down ~3%, and the Dow remains down ~1% WTD; concerns surrounding sustained interest rates and depressed GDP expectations continue to negatively impact consumer sentiment in public equities
Shares of large-cap companies have surpassed smaller counterparts YTD; the ratio of large-cap S&P 500 prices to the iShares Russell 2000 ETF is at its lowest level since 2002 according to Dow Jones Market Data – a continued warning sign of a potential ‘large-cap tech asset bubble’ [WSJ]
Instacart’s Tuesday $30/share IPO led to an 12% valuation increase at close, although the stock has undergone a ~22% decrease since the opening bell on Wednesday morning [WSJ]
Marketing automation platform Klaviyo popped 9% on opening day of its Wednesday IPO, although it has since dropped 5% since; positive valuation growth continues to improve sentiment regarding future IPOs
Higher interest rates over the past 18 months continue to hinder bond markets, providing an opportunity for risky corporate loans to realize value for investors
Treasury markets continue to underperform as inflation sentiment worsened; the 10-yr U.S. Treasury Note yield grew an additional 0.15% to a total of 4.50%, the highest yield measure since September of 2007 and a bad sign for the remaining bond outlook this year
The Federal Reserve’s rate-setting committee decided on Wednesday to maintain the Federal Funds Rate at the current 5.25-5.50% benchmark; a cooling labor market and moderately improving inflation suggest one more rate hike in the 2023 calendar year to reach a ‘soft landing’ [FR]
Since the start of last year through Friday, loans backed by companies including PetSmart and Uber Technologies in the LSTA U.S. Leveraged Loan Index delivered a return of 9.3%; Investment-grade bonds lost 13% in that time, counting price changes and interest payments, while the S&P 500 lost 3.9%” [WSJ]
Sustained ‘higher-for-longer’ rate policies from the Federal Reserve will soon greatly impact U.S. consumers [WSJ]
The steady rise in crude oil prices and the national debt is both concerning and noteworthy, despite inflation's mitigating effect
WTI Crude Oil prices remain largely unchanged this week at ~$90/barrel; new supply from countries in eastern Europe seek to support tight oil demand in western countries
Brent crude, the global energy benchmark, is moving in the direction of $100/barrel for the first time in over a year; however, adjust for the rise in broad consumer prices since it first crossed $100 in 2008 and Brent stands at $65 a barrel, not $95 [WSJ]
The United States national debt officially hit $33T; the historic milestone comes two weeks before the federal government “faces a potential shutdown over a lack of funding authorization” [CNBC]
Inflows into private-credit vehicles continue to increase but show a sign of stabilization this summer [WSJ]
Despite high interest rates, the increased likelihood of a soft landing is spurring larger dealmaking within technology and media
Media entrepreneur Byron Allen made a $10B bid to buy Disney’s ABC television network and assets including the FX and National Geographic cable channels [RT]
Medical devices maker Boston Scientific will buy private medical tech company Relievant Medsystems for $850M cash [RT]
Cisco to buy cybersecurity firm Splunk for $28 billion [RT]
PE firm Japan Industrial Partners’ $14B tender offer to takeToshiba private is set to succeed [RT]
PE firm TPG is exploring options for Mendocino Farms, including a sale that could value the fast-casual restaurant chain at over $400M [RT]
Gold miner Newmont received regulatory approval from Australia to proceed with its proposed $16.9B acquisition of Australia's Newcrest Mining [RT]
Recent developments across four key industries highlight stalled climate change initiatives and the impact of new IPO listings
Energy & Natural Resources
U.S. commercial crude oil inventories, excluding the Strategic Petroleum Reserve, decreased by 2.1 million barrels standing at 418.5 million barrels [RZ]
Major corporations committed to emissions reduction goals are facing challenges such as higher costs, slow technology adoption, and doubts about carbon markets, leading them to scale back short-term emission and carbon retrieval targets [WSJ]
Technology, Media, & Telecommunications
Sequoia, Andreessen Horowitz, and other VC investors to take huge hit on 2021 Instacart investments after a 75% valuation drop from its Tuesday IPO [CNBC]
Apple debuted the new iPhone 15 and iPhone 15 Plus which will be hitting retailers today; iPhone sales performance will prove critical as Apple seeks growth to meet investor expectations [B]
Healthcare & Life Sciences
Artificial intelligence is revolutionizing synthetic biology, allowing scientists to reprogram living organisms for various applications, from medicine and agriculture to energy and climate research [WSJ]
Tobacco giant Philip Morris is considering selling its stake in a pharmaceutical business as its inhaled-medication business unit continues to struggle [WSJ]
Financial Services
Goldman Sachs is in advanced discussions to sell GreenSky, a specialty lender, to a group of investment firms, including Sixth Street, Pacific Investment Management, and KKR, in a deal worth approximately $500 million [WSJ]
A federal program that provides critical flood insurance is set to lapse unless renewed by the end of the month [WSJ]
Outside of macroeconomic updates and M&A developments, geopolitical tensions and fiscal policy risks prominently led news cycles
After a remarkable seven-decade career, Rupert Murdoch is set to retire as Chairman of Fox and News Corp; Rupert Murdoch’s eldest son, Lachlan Murdoch, will take over as chairman of the news conglomerate [WSJ]
Ukraine's President Zelensky visited Washington to seek increased military aid; concerns are growing in European nations about continued support for Ukraine amid trade challenges in the conflict with Russia [WSJ]
With no clear strategy to avert a government shutdown, Speaker Kevin McCarthy sent House members home for the week, raising concerns about a potential government at the start of October [CNN]
Chicago Bears' defensive coordinator Alan Williams resigned for “personal reasons,” dispelling false rumors of an FBI raid on the Bears' practice facility and his home [NBC]
Gavin McManus
Sep 22, 2023
