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Good Morning and Happy Q1 2023,

Stock and bond markets lost $30T in 2022, hedge funds had their worst year since 2008, Europe natural gas prices hit pre-Ukraine war levels, JPM is getting sued by the US Virgin Islands, Russia is now one of China's leading oil and gas suppliers, Southwest expects its holiday meltdown to impact Q4 results, Fidelity slashed its Twitter valuation by 56%, and Kim Jong Un wants more nukes.

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Let's dive in.

Before The Bell

Markets

• All three major US indexes inched lower in 2022's final trading session on Friday

  • The Dow and S&P 500 broke three-quarter losing streaks in Q4 2022 gaining 15.4% and 7.1% respectively, while the Nasdaq lost 1% in its fourth consecutive negative quarter for the first time since 2001

  • All three averages finished December negative

• The pan-European Stoxx 600 climbed 1.1% yesterday

• The dollar index recovered slightly after hitting a six month low last week

• To recap the year:

  • the Dow, S&P and Nasdaq lost 8.8%, 19.4% and 33.1% respectively

  • The Russell 2000 ended 21.6% lower

  • The pan-European Stoxx 600 shed ~12%

  • London's FTSE gained 0.9%

  • The 10Y Treasury finished at 3.88% and the 2Y near 4.43%. The 10-2 yield curve remains inverted since July 2022

  • Brent crude and WTI gained 10% and 7% respectively in a second straight annual gain, in a year marked by wild price swings

  • The dollar index recorded a 7.9% gain in its best year since 2015

  • Bitcoin and Ethereum fell over 60%

• The Russia-Ukraine war, inflation-induced rate hikes by central banks, Covid restrictions in China, and the crypto meltdown amongst others dominated market movements in 2022

Earnings

• What we're watching this week:

  • Thursday: Walgreens Boots Alliance, Constellation Brands

• Full calendar here

Headline Roundup

• Fed reverse repo facility hit a record $2.55T (RT)

• Stock and bond markets lost over $30T in 2022 (FT)

• Global equity funds posted net outflows for an eighth straight week to close 2022 (RT)

• Global hedge funds registered their worst returns since 2008 last year, down 6.5% (RT)

• State-owned investment vehicles lost $2.2T combined in 2022, with wealth funds down 8% and pensions down 6% (RT)

• European asset managers use ‘subadvisory’ to crack US market (FT)

• European natural gas prices hit pre-Ukraine war levels (FT)

• Russia is now one of China's leading oil and gas suppliers (RT)

• Job and wage growth showed signs of cooling in late 2022 (WSJ)

• Large pay gains are outpacing state minimum-wage boosts (WSJ)

• Exxon and Chevron are expected to make $100B combined in profits from 2022 (FT)

• Tesla vehicle deliveries increased 40% YoY, but short of target (WSJ)

• Fidelity slashed Twitter's value by 56% during first month of Musk's ownership (AX)

• US announced an additional $7.8B contract with Lockheed Martin, taking the total F-35 deal to $30B (RT)

• The EU is offering free Covid-19 vaccines to China to help curb outbreak (FT)

• Shopify is pushing a new marketing strategy to make up for Apple's privacy crackdown (FT)

• House Ways and Means Committee released six years of Trump's tax returns (AP)

• Trump's holding company recorded over $310M in losses from 2015-20 (AX)

• Dubai scrapped its 30% tax on alcohol sales (RT)

• Russia froze $488M of assets belonging to German industrial gasses firm Linde (RT)

• Kim Jong Un called for an 'exponential increase' of NK's nuclear arsenal (AX)

• US Virgin Islands sued JPMorgan for facilitating Epstein abuse (BBG)

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Deal Flow

M&A / Investments

• Canada’s antitrust tribunal approved Rogers Communications’s $14.77B bid for rival Shaw Communications (RT)

• PE fund MBK Partners will acquire a 99.5% stake in South Korean local intraoral scanner manufacturer Medit for $1.9B (RT)

• Brazilian retailer GPA took steps to spin off its Colombian subsidiary Exito, which has a market value of $925M (RT)

• India's Eicher Motors will buy a 10.35% stake in Spanish electric motorcycle maker Stark Future for $53.2M (RT)

• India's Reliance Retail Ventures agreed to buy a 51% stake in Indian chocolate maker Lotus Chocolate for $8.9M (RT)

• Russian state-owned Promsvyazbank acquired rival SMP Bank; terms of the deal were not disclosed (RT)

• Sweden-based carmaker Volvo purchased the remaining stake it doesn’t already own in its autonomous driving software development subsidiary Zenseact (RT)

• Airbus started exploratory talks to take a minority share in the cybersecurity unit of French IT group Atos (RT)

• Luxury watch maker Pascal Raffy will buy a 25% stake in peer Bovet from DKSH (RT)

• Russia's largest toy retailer Detsky Mir will restructure its business through a spin-off as it aims to go private (RT)

• Malt company Malteries Soufflet agreed to buy Belgian malthouse Castle Malting (RT)

• Chemical distributor Brenntag is no longer proceeding with discussions to buy US rival Univar Solutions (BBG)

VC

• Lipogems, a clinical stage global medtech focused on orthopedics, raised $13.2M in growth capital led by ABC Medtech and LIFTT investors (PRN)

Crypto Corner

• SBF will enter a "not guilty" plea in FTX fraud case (RT)

• Crypto exchange Gemini co-founder Cameron Winklevoss accused crypto broker Genesis of negotiating in bad faith (YH)

• Binance's $1B acquisition of bankrupt crypto lender Voyager Digital could be delayed or blocked by a US national security review (RT)

• FTX said Bahamas regulators hold $296M of their assets, and not $3.5B as claimed by Bahamas regulator (RT)

• FTX Japan users will be able to withdraw funds starting February (CNBC)

• Federal prosecutors are examining crypto wallets linked to SBF (RT)

Exec's Picks

• In case you missed it over the weekend, check out Litquidity's 2022 Annual Letter. It covers Lit's experiences and learnings from building a digital media business, deploying $1M of equity capital into startups, and getting rekt by the crypto collapse.

• Bloomberg compiled an extensive list of '2023 Market Outlooks' from a wide range of investment banks and asset managers. Check it out here.

• The Economist published a good piece on the implications of China's reopening.

• Jack Butcher's post on the value and importance of a strong name is worth a read.

The Hiring Block 💼

If you're looking to break into finance, lateral, or move out, check out our job board on Pallet, where we curate highly relevant roles for you. We aim to curate jobs across IB, S&T, VC, tech, private equity, DeFi, crypto, CorpDev and more. We'll sift through all the noise on LinkedIn, Indeed, Monster, etc. so you don't have to.

If you're a company looking to hire candidates and want to list a job opening on our board and feature on Exec Sum, click the button below:

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