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First Republic became the second-largest-ever US bank failure, JPMorgan scooped up First Republic, Yellen said the US could default in a month, short bets against commercial REITs hit a post-Covid high, US ETF trading volume hit lowest level since Covid, Morgan Stanley plans to cut 3k jobs in Q2, and investors sued Adidas over its partnership with the one formerly known as Kanye.

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Let’s dive in.

Before The Bell

Markets

• US indexes finished near-flat Monday as investors digested First Republic Bank news and anticipate the Fed's rate hike this week

  • The S&P 500 Energy Sector fell 1.3% as crude oil prices declined

• European and Asian markets were closed in observance of respective holidays

• I bond yields fell from 6.89% to 4.3% in its semi-annual reset amid cooling inflation

Earnings

• Zoom beat Q1 estimates with revenue of $1.12B beating expectations by $20M thanks to a growing base of enterprise customers and 27% growth in customers contributing more than $100k in trailing 12 months revenue (GN)

• Norwegian Cruise Lines beat Q1 earnings estimates as revenues tripled to $1.82B on much-anticipated improving occupancy and bookings; their stock jumped 9% (MW)

• MicroStrategy beat Q1 earnings expectations by a surprising 6,143% due to lower operating expenses and less losses from operations compared to the last quarter (MS)

• What we're watching this week:

  • Today: BP, Uber, AMD, Pfizer

  • Wednesday: Ford, CVS Health, Qualcomm, Zillow, Starbucks

  • Thursday: Apple, DoorDash, Shopify, Block, Kraft Heinz, Coinbase, Lyft, Bumble

  • Friday: AMC, Warner Bros Discovery

• Full calendar here

Headline Roundup

• Yellen said US could default as early as June 1 (NYT)

• First Republic became the second-largest ever US bank failure (BBG)

• US manufacturing entered its longest contractionary streak since 2009 (FT)

• Debt-ceiling fight is restraining Treasury auction sizes (BBG)

• Short bets against commercial REITs hit a post-Covid high (BBG)

• US ETF trading volume hits lowest level since Covid (BBG)

• US is weighing more business deposit insurance amid banks failures (BBG)

• Pandemic graduates struggle with teamwork/communication (FT)

• Investors are increasingly pushing for better employee rights (BBG)

• Citigroup’s CEO thinks RTO trends are driving property fears (BBG)

• Morgan Stanley plans to cut 3k jobs in Q2 (RT)

• Deutsche Bank plans to expand its IB team (FT)

• 'Godfather of AI' Geoffrey Hinton resigned from Google amid fears of danger (NYT)

• US eased drug screening rules for employees (NYT)

• Citigroup is willing to adjust staffing levels in IBD (BBG)

• Investors sued Adidas over its partnership with Kanye (AX)

• ‘Super Mario Bros. Movie’ surpassed $1B at box office (VY)

• NYC airports hit record passenger traffic in Q1 (BBG)

• Environmental groups sue US over SpaceX launch license for Texas (RT)

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Deal Flow

M&A / Investments

• JPMorgan will acquire most of First Republic Bank (FT)

• Food distributor Quirch Foods is exploring a sale at a potential ~$1.5B valuation, including debt (RT)

• Deutsche Bank will acquire UK broker Numis for $512.3M (FT)

• PE firm KKR will invest $250M in Indian decarbonization platform Serentica Renewables (RT)

• Australian MA Financial will buy US-based credit asset manager Blue Elephant for $5M (RT)

• Saudi National Bank will hold a ~0.5% stake in UBS upon UBS's merger with Credit Suisse (BBG)

• Berlin-based e-scooter operator TIER Mobility is working with Qatalyst Partners to advise on a potential merger or sale with a rival (RT)

• Delivery company Getir is in talks to takeover loss making German rival Flink (FT)

• NJ-based wealth adviser Pathstone will acquire Texas-based investment adviser Brainard Capital Management (BBG)

• Hospitality giant MGM Resorts acquired online/mobile betting game maker Push Gaming (BBG)

• Chinese conglomerate Fosun International is considering reducing its 94% stake in mid-sized securities firm Topsperity Securities following a credit scare (BBG)

• BlackBerry will conduct a review of strategic alternatives, which includes the possible separation of one or more of its businesses (RT)

VC

• Initial Therapeutics, a startup developing medicines via selective termination of protein synthesis, raised a $75M Series A from Apple Tree Partners (FN)

• Zodia Custody, a regulated crypto custodian, raised a $36M Series A led by SBI Holdings and SC Holdings (FN)

• Campus.edu, a NYC-based company making community college accessible across the country, raised a $29M round from Discord founder Jason Citron, OpenAI founder Sam Altman, Figma founder Dylan Field, and more (FN)

• Fertility clinic network Kindbody received a $25M investment from Morgan Health (FN)

• Hived, a startup building a delivery network at scale using electricity, raised a $12.4M Series A led by Planet A Ventures (FN)

• Alison, an AI platform that analyzes creative advertising, raised a $5.1M pre-seed round from investors including a16z, Crescendo Venture Partners, yellowHEAD, and others (TC)

• Entendre Finance, a startup building an automated end-to-end accounting and bookkeeping solution for businesses operating in Web3, raised a $4M seed round led by Basis Set (PRN)

• Metaverse platform Transmira received a $4M investment from nChain for a 20% stake (FN)

• Onin, a London-based mobile keyboard calendar app, raised a $3M pre-seed round led by Octopus (FN)

• QuickReply.ai, an Indian WhatsApp marketing and automation platform, raised a $1.1M seed round led by Leo Capital (FN)

• SuperDuperSecret, a startup building a platform for battle royale multiplayer games, raised a $1M pre-seed round from Round 13 Digital Asset Fund, Merit Circle, Polygon Ventures, and more (BW)

IPO / Direct Listings / Issuances / Block Trades

• Acelyrin, an LA-based biopharma company, aims to raise $370M at a $1.5B valuation in a US IPO (RT)

• Indian conglomerate Reliance plans to IPO its fintech platform Jio Financial as soon as October (BBG)

• US lawmakers called upon the SEC to halt Shein’s IPO until it’s independently audited for use of Uyghur forced labor (RT)

SPAC

• Canadian plant-based food company Above Food Corp plans to merge with Bite Acquisition Corp in a $319M deal (BW)

• Women/pregnancy healthcare provider Nuvo is set to merge with LAMF Global Ventures Corp I in a $269M deal (MW)

Debt

• Meta is looking to raise $8.5B in its second blue-chip bond sale (BBG)

• Telecoms giant Comcast launched a four-part $5B bond deal (BBG)

• Chocolate manufacturer Hershey selling $750M in bonds with no growth potential (BBG)

Bankruptcy / Restructuring

• Media company Vice is preparing to file for bankruptcy if it fails to find a buyer (NYT)

• EV maker Lordstown Motors may be forced to file for bankruptcy amid threats of Foxconn abandoning their partnership deal (BBG)

Fundraising

• Horizon Capital, a US PE firm investing in fast growing Ukrainian companies, raised $254M for its Horizon Capital Growth Fund IV (FN)

• Australia-based PE fund-of funds manager Potentum Partners raised ~$200M for its inaugural global PE fund (AFR)

• Vera Equity, an NYC-based early stage VC firm, raised $20M for its first fund (FN)

Crypto Corner

• Google Cloud and Polygon partnered to develop Web3 products and dApps (BC)

• Robinhood will allow users to access funds from external DeFi apps (DC)

• Crypto Exchange Poloniex settled for $7.6M with the US over sanction violation charges (CD)

• Coinbase is prepared to go to court if SEC does not provide regulatory clarity (CD)

Exec’s Picks

• A shareholder lawsuit says that Coinbase execs and VCs saved $1B by selling before bad news, according to Semafor’s Liz Hoffman

• The Wall Street Journal explained why First Republic Bank collapsed

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