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Good Morning,

Business activity picked up across the US and Europe, Canada inflation slowed to 5.9% in January, investors are piling into high-grade corporate bonds, Goldman expects three ECB rate hikes this year, state and local governments are stacked with cash, McKinsey will cut 2k jobs, and TPG is returning to private debt.

Let's dive in.

Before The Bell

Markets

• US stocks tumbled yesterday on pessimistic retail earning forecasts and economic data that continued to stoke fears of need for higher rates

  • The S&P and Dow has their worst day since mid-December

  • The S&P and Nasdaq ended down for a third straight session

• US 10Y Treasury yield hit a three-month high, while the US 2Y traded at 4.73% near its highest levels since 2007

Earnings

• HSBC beat Q4 EPS estimates on nearly doubled quarterly profit owing to rising net interest income, strong revenue growth, and lower operating expenses, but gave conservative earnings and profitability forecasts (FT)

• Walmart topped Q4 EPS and revenue estimates on increasing traffic from inflation-wary mid and high-income shoppers, but gave a weaker-than-expected FY outlook (FT)

• Home Depot missed Q4 revenue estimates for the first time since the pandemic on a slowdown in the home improvement category and declining lumber costs, while projecting flat sales growth for 2023; their stock fell 7% (CNBC)

• Coinbase beat on Q4 EPS and revenue estimates but reported lower than expected user numbers on a shrinking user base; their stock fell 4.8% (CNBC)

• Public Storage beat Q4 EPS and revenue estimates on a 15% increase in same store operating income (YH)

• What we're watching this week:

  • Today: Nvidia, eBay, TJX, Bumble

  • Thursday: Alibaba, Wayfair, Carvana

• Full calendar here

Headline Roundup

• US, eurozone and UK business activity picked up in February (WSJ)

• US existing homes sales declined for a 12th-straight month in January (WSJ)

• Canada inflation slowed to 5.9% in January (RT)

• Bond yields reversed downward trend to rise in February (AX)

• Investors are piling into high-grade corporate bonds at a record rate (FT)

• US bond holders are cutting exposure amid default risk (RT)

• Goldman Sachs expects three ECB rates hikes this year (RT)

• BlackRock 'overweights' US short-term Treasuries (RT)

• Office landlords, including major asset managers, are defaulting on loans in signs of permanent WFH trend (WSJ)

• State and local governments are swimming in cash (AX)

• EU per tonne carbon permit price hit €100 for first time ever (RT)

• TPG will return to private debt three years after demerging from Sixth Street (GC)

• McKinsey will cut ~2k jobs in of one of its biggest ever job cuts (BBG)

• HSBC cut staff bonus pool while lifting CEO pay (RT)

• JPMorgan laid off ~30 investment bankers in Asia-Pacific (BBG)

• Minority directors now make up 20% of Russell 3000 board seats (RT)

• UK-based four-day work week trial shows that most participants aren’t returning to five days (RT)

• Publishing magnate Si Newhouse’s art trove could sell for ~$150M (WSJ)

• Russia will suspend participation in last remaining nuclear treaty with US (AX)

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Deal Flow

M&A / Investments

• Germany’s government is in talks to pay $21B+ for the local unit of power grid operator TenneT in a deal that could mark the starting point for the consolidation of the country’s power grids (BBG)

• Japanese conglomerate Japan Post is considering cutting its stake in its Japan Post Bank by around a third to 60% by the end of next month, in a share sale potentially worth ~$9B (RT)

• Abu Dhabi Investment Authority is among parties considering a bid for a 34% stake in UK port operator Associated British Ports which could be valued at $2.4B+ (BBG)

• UK chemicals giant INEOS agreed to buy a portfolio of oil assets from a division of oil company Chesapeake Energy for $1.4B (WSJ)

• South African precious metals producer Sibanye-Stillwater, the biggest shareholder in Australian zinc miner New Century Resources, launched an unsolicited takeover offer for the miner at a ~$100M valuation (RT)

• Italian state lender Cassa Depositi e Prestiti may join forces with KKR in a bid for Telecom Italia’s landline network (BBG)

• Czech investment group PPF took a 9.1% stake in German broadcaster ProSiebensat.1 (RT)

• Italian PE fund Fondo Strategico Italiano raised its stake in asset management company Anima Holding from 7% to 9% (RT)

• Annuities provider American Equity Investment Life fell almost 13% after insurer Prosperity Group ended its takeover talks (RT)

VC

• Indian edtech Byju’s is in talks to raise over $500M at a $22B valuation from TPG and two Middle Eastern sovereign wealth funds (BBG)

• Hemab Therapeutics, a clinical-stage biotech company focused on bleeding and thrombotic disorders, raised a $135M Series B led by Access Biotechnology (PRN)

• Indian DTC fish / meat startup FreshToHome raised a $104M Series D led by Amazon’s India-focused Smbhav Venture Fund (TC)

• UK-based quantum computing startup Quantum Motion raised a $50.5M round led by Bosch Ventures (TC)

• Chaos Labs, an automated security system for crypto protocols, raised a $20M seed round led by Galaxy and PayPal Ventures (PRN)

• Fortem Technologies, an airspace awareness and security startup, raised $17.8M in funding led by Lockheed Martin Ventures, Hanwha Aerospace, and AIM13 Crumpton Venture Partners (PRN)

• Paleo, a Belgian food tech startup creating plant-based meat and fish alternatives, raised a $12.8M Series A led by DSM Venturing and Planet A Ventures (FN)

• Cloud-native airport management platform AeroCloud raised a $12.6M Series A led by Stage 2 Capital (TC)

• Sublime Security, a startup building an anti-phishing email security platform, raised $9.8M in funding led by Decibel (TC)

• Qualinx, a startup providing low power tracking and connectivity solutions, raised an $8.5M Series A led by FORWARD.one, InnovationQuarter Capital, and Waterman Venture (FN)

• German 3D printing startup Xolo raised an $8.5M Series A led by the HZG Group, the DeepTech & Climate Fonds, SquareOne, and more (FN)

• Abilita Bio, a biotech startup focused on membrane protein-targeted therapeutics, raised a $7.5M round from Two Bear Capital (PRN)

• Governance, risk, and compliance (“GRC”) automation platform Scrut Automation raised a $7.5M round led by MassMutual Ventures (FN)

• Chronicle, a startup creating storytelling formats for teams, raised a $7.5M seed round led by Accel and Square Peg (FN)

• Robotic mower startup Swap Robotics raised a $7M seed round led by SOLV Energy (TC)

• Hypercraft, an electric drive systems provider for vehicle manufacturers, raised a $6.5M seed round at a $51.5M valuation led by RevRoad Capital (FN)

• Sentio, an observability platform for decentralized applications, raised a $6.4M round led by Lightspeed Ventures (BW)

• TipLink, a startup allowing for the seamless transfer of digital assets, raised a $6M seed round led by Multicoin Capital and Sequoia Capital (PRN)

• Strider, a story-driven world building platform, raised a $5.5M seed round led by Makers Fund and Fabric Ventures (BW)

• UK-based global licensing platform Fabacus raised a $5.5M round led by Wealth Club (FN)

• Crypto search engine Kaito raised a $5.3M seed round led by Dragonfly Capital (TC)

• Nestment, a startup helping friends and family buy homes together, raised a $3.5M pre-seed round led by Protofund and IDEA Fund Partners (TC)

• Current Surgical, a startup developing a smart needle to treat cancerous tumors, raised a $3.2M seed round led by True Ventures (PRN)

• Kenyan HR payroll provider Workpay raised a $2.7M pre-Series A from Launch Africa, Saviu Ventures, Acadian Ventures, and others (TC)

• Strive, an online learning platform teaching kids to code, raised a $1.3M seed round led by Y Combinator (TC)

IPO / Direct Listings / Issuances / Block Trades

• Shenzhen-listed internet financial services provider East Money Information selected banks to arrange its planned GDR sale in Switzerland that could raise ~$1B (BBG)

• Indonesian gold miner Amman is considering an IPO in Jakarta that could raise up to $1B (BBG)

• Indian jeweler Joyalukkas withdrew plans for a $278M IPO (RT)

SPAC

• Bridgetown Holdings, a SPAC backed by billionaires Peter Theil and Richard Li, is considering merging with fintech Hyphen Group in a potential ‘several hundred million dollar deal’ (BBG)

Debt

• Porsche raised $2.9B from over 120 investors in the largest-ever German debt deal (BBG)

• India's Tata Steel plans to raise $260M via unsecured non-convertible 5 year debentures to repay debts and fund capital expenditure (HBL)

Bankruptcy / Restructuring

• Cosmetics firm Revlon reached a restructuring deal with key creditors to cut $2.7B in debt, cancel existing equity shares and raise $670M through an equity sale in the reorganized company, paving way to exit bankruptcy in April (RT)

Fundraising

• European pension fund investor IIP Denmark raised $2.2B for a new buyout and VC fund of fund (ALT)

• Investment firm Muzinich is preparing to launch third European private debt fund after raising $852M for its second similar vehicle in January (GC)

• PE firm Warburg Pincus is raising $440M for in its maiden yuan-denominated fund (RT)

• Barcelona-based VC Asabys Partners raised $106M for a $212M second health and biotech fund (SFT)

• South African chemicals company Sasol established Sasol Ventures with $53M to invest in sustainable chemical/energy companies (BW)

• New VC fund Salus Ventures raised $40M to back early-stage startups developing sovereign capabilities (SD)

Crypto Corner

• Coinbase, Silvergate, MicroStrategy and Marathon Digital are now among the most heavily shorted stocks on the market (BRN)

• Stablecoin issuer Paxos severed its relationship with Binance (AX)

• Paxos is in talks with the SEC over Binance stablecoin (RT)

• Stablecoin Tether now commands 52.6% of the stablecoin market (RT)

• FTX Japan started allowing asset withdrawals (RT)

• European crypto asset manager CoinShares' 2022 income fell by 97% (CD)

• NFT transactions topped $480M in the past month (AX)

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• PWC published their 2023 private equity US deals outlook.

• CNBC's Andrea Miller wrote about the curious history of the Fed's 2% inflation target.

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