Busted Inflation Bets

The record-sized rate futures bet blew up, KPMG and Deloitte were fined for exam cheating, commodities giants do not care to IPO, Fitch cut China’s credit rating to negative, options selling is helping temper stock market volatility, and retail investors are loving the risk.

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Litquidity Capital
April 11, 2024

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Good Morning,

The record-sized rate futures bet blew up, KPMG and Deloitte were fined for exam cheating, commodities giants do not care to IPO, Fitch cut China’s credit rating to negative, options selling is helping temper stock market volatility, and retail investors are loving the risk.

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Let’s dive in.

Before The Bell

As of 04/10/2024 market close.

Markets

  • US stocks slumped yesterday after a hotter-than-expected CPI report killed hopes of a June rate cut

    • The Russell 2000 notched its steepest one-day slide since mid-February

    • Traders are now pricing in a 17% chance of 25 bps June rate cut, down from ~50% before the report

  • US 10Y yield soared above 4.5%, its highest since November and largest one-day increase since September 2022

  • US 2Y yield spiked to nearly 5%

  • Yen weakened ~1% to a 34-year low vs the dollar, raising risk of BOJ intervention

Earnings

  • Delta Air Lines beat Q1 earnings estimates driven by strong demand for business and leisure travel, while also forecasting record Q2 revenue (CNBC) 

  • What we're watching this week:  

    • Today: Constellation Brands

    • Friday: JPMorgan, Wells Fargo, BlackRock, Citigroup, Progressive

  • Full calendar here

Headline Roundup

  • Record-sized rate futures bet blew up in spectacular fashion (BBG)

  • Hot inflation report derails case for Fed June rate cut (WSJ)

  • Investors buy European bonds over US Treasuries as economies diverge (FT)

  • Bull markets embolden retail traders to make risky bets (RT)

  • Options selling have helped temper US stock swings (RT)

  • Meta trades at discount to M7 despite $1T AI rally (BBG)

  • Traders flee real estate stocks as inflation darkens outlook (BBG)

  • Commodities giants dismiss IPO route after bumper profits (FT)

  • Fed to reduce pace of QT by half (WSJ)

  • US budget deficit hits $1.07T in H1 2024 (BBG)

  • Investors pump $126B into ETFs in March (FT)

  • KPMG fined record $25M in exam-cheating scandal (WSJ)

  • ByteDance full-year profit jumped 60% (BBG)

  • Fitch cut China's credit rating to negative (RT)

  • Macy's settled its proxy fight with Arkhouse (CNBC)

  • UBS faces tougher rules in Swiss response to Credit Suisse rescue (RT)

  • UK plan for private share trading could encourage firms to delist (FT)

  • NYCB’s online arm is paying the nation’s highest APY at 5.55% (CNBC)

  • Adobe is buying videos for $3/min to build AI model (BBG)

  • S&P slashed property giant China Vanke's credit rating to junk (RT)

  • World Bank cut LatAm 2024 GDP forecast (RT)

  • Foxconn considers rotating CEOs in management reshuffle (RT)

  • Four Paramount board members to step down amid merger talks (RT)

  • Apple follows big tech rivals to expand in Miami (BBG)

  • BMW EV sales surge as rivals struggle with weak demand (BBG)

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Deal Flow

M&A / Investments

  • KKR is considering a sale or IPO of IT solutions firm BMC Software, which could be worth ~$15B, including debt (BBG) 

  • Europe’s largest gas distributor Italgas made a $4.3B-$5.4B preliminary offer for domestic rival 2i Rete Gas (RT) 

  • Vertex Pharmaceuticals will acquire immunotherapy developer Alpine Immune Sciences for $4.9B in cash (RT) 

  • $2.3B cancer drug maker Janux Therapeutics is exploring options including a sale after receiving takeover interest from larger pharma companies (BBG) 

  • Lionheart Capital agreed to acquire yacht maker Sunseeker International from an entity affiliated with Chinese conglomerate Dalian Wanda Group (BBG) 

VC

  • HysetCo, a startup developing hydrogen-powered transportation solutions, raised $216M in funding led by Hy24 (EU)

  • Guesty, a platform for accommodation managers to manage their business online, raised a $130M Series F at a ~$900M valuation led by KKR (TC)

  • Collaborative Robotics, a startup building robots that can reason like humans, raised a $100M Series B led by General Catalyst (TC)

  • FloQast, a finance and accounting operations platform, raised a $100M Series E at a $1.6B valuation led by ICONIQ Growth (FN)

  • Web infrastructure solutions provider Auradine raised an $80M Series B led by StepStone Group, Top Tier Capital Partners, and more (VC)

  • Novidea, a cloud-based data driven insurance management platform, raised $30M from HarbourVest Partners (FN)

  • Oden Technologies, a data and AI software company servicing the manufacturing industry, raised a $28.5M Series B led by Nordstjernan Growth (FN)

  • Yoshi Mobility, a startup making car maintenance easier, raised a $26M Series C led by General Motors Ventures (TC)

  • Turkish e-commerce startup Ikas raised a $20M Series A led by the IFC (TC)

  • Disinformation detection and mitigation startup Alethea raised a $20M Series B led by GV (FN)

  • Andesite AI, an advanced AI security analytics platform, raised $15.3M in initial funding from Red Cell Partners and General Catalyst (FN)

  • Digital private market solution Pactio raised a $14M Series A led by EQT Ventures (EU)

  • Leasecake, a startup providing lease and location management solutions, raised a $10M Series A extension led by PeakSpan Capital and Las Olas Venture Capital (FN)

  • Mode, a startup providing IoT and Gen AI solutions for factories and construction sites, raised an $8.8M Series B from SBI Investment, True Ventures, and more  (FN)

  • Weenat, a French agritech startup, raised an $8M Series C led by ECBF, Pymwymic, and more (FN)

  • PVML, a startup providing secure AI-powered data access, raised an $8M seed round led by NFX (PRN)

  • Spines, an AI-powered publishing platform, raised a $6.5M seed round led by Aleph (FN)

  • Sapien, a data labeling company, raised a $5M seed round from Primitive Ventures, Animoca, and more (PRN)

  • Tomo, a Web3 social app, raised a $3.5M seed round led by Polychain Capital (FN)

IPO / Direct Listings / Issuances / Block Trades

  • KKR is considering an IPO or sale of IT solutions firm BMC Software, which could be worth ~$15B, including debt (BBG)

  • Luz Saude, a Portuguese hospital operator controlled by China’s Fosun International, plans to proceed with a ~$109M IPO, Portugal’s first IPO in three years (BBG)

Debt

  • Banks including JPMorgan and Morgan Stanley are gauging investor interest in a debt package to refinance Staples’ $5B+ near-term debt (BBG) 

  • Spanish pharma company Grifols is planning its first bond sale since coming under a short-seller attack in January (BBG) 

Fundraising

  • Lower MM PE firm Compass Group Equity Partners closed its third fund at $408M (BW) 

Crypto Corner

  • Short bets against MicroStrategy have lost ~$2B since March (RT) 

  • EU sees crypto trading concentration as a 'considerable concern' (RT)

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