• Exec Sum
  • Posts
  • Short volatility in this economy?

Short volatility in this economy?

Short vol bets got clapped, corporate credit spreads surged, JPMorgan raised US recession odds, Lumen became an AI stock overnight, and UK wants to emulate the Maple 8.

Together with

Good Morning,

Short vol bets got clapped, corporate credit spreads surged, JPMorgan raised US recession odds, Lumen became an AI stock overnight, and UK wants to emulate the Maple 8.

Up your financial modeling, pitch book curation, and everything Excel with the ultimate Office productivity add-in for finance, Macabacus.

Let’s dive in.

Before The Bell

As of 08/07/2024 market close.

Markets

  • US stocks closed lower as a market comeback failed to materialize 

  • Europe's Stoxx 600 rose 1.5% in its best day since November  

  • US 2Y-10Y yield curve inversion is now at just -2 bps 

  • Junk spreads surged to 393 bps on Monday, their highest since November 

  • Investment grade spreads rose to 112 bps, their highest since December 

  • Yen fell 2.5% after BOJ played down chances of a near-term rate hike

Earnings

  • Disney beat Q3 EPS and revenue estimates as its combined streaming businesses turned a profit sooner-than-expected, though theme parks saw a slowdown on lower consumer demand (CNBC)

  • Shopify jumped 18% after beating Q2 estimates and forecasting an upbeat Q3 on strong demand despite a 'mixed consumer spend environment’ (CNBC

  • Robinhood beat Q2 EPS and revenue estimates on a surge in trading volume among crypto and equities (RT)

  • CVS beat Q2 EPS estimates but slashed its FY outlook again due to climbing medical costs across the industry (CNBC)  

  • What we're watching this week:  

    • Today: Eli Lilly

  • Full calendar here

Headline Roundup

  • UK plans to re-create the Canada pension model (FT)

  • Hedge funds who shorted volatility lost 10% on Monday (RT)

  • Traders avoid 0DTE options in this week's market tumble (RT)

  • Fund managers lengthen FX hedges on election and volatility fears (RT)

  • JPMorgan raised US recession odds to 35% by year-end (BBG)

  • US corporate bond issuance jumped after a brief pullback (RT)

  • US consumer spending slowdown weighs on travel / leisure groups (FT)

  • India's central bank warned banks against raising short rupee bets (FT)

  • Chinese banks debt issuance hit a record high (BBG)

  • Shareholders sued Intel (RT)

  • Lumen stock is up 500% QTD on AI-driven FCF outlook (RT)

  • Rich Barton resigned as Zillow CEO (BBG)

  • CFPB is probing big banks over handling of Zelle scams (WSJ)

  • Italy doubled tax for wealthy foreigners (FT)

  • US 30-year mortgage rates dropped to a 15-month low (RT)

  • Era of pay raises and bonuses is over (WSJ)

  • Department stores fall behind in retail real estate comeback (WSJ)

A Message From Macabacus

Escape the late-night financial modeling grind and weekend pitch deck purgatory with Macabacus, the ultimate Microsoft Office productivity add-in for finance professionals. 

Created by a former investment banker, Macabacus helps you format spreadsheets, audit models, and create pitch decks swiftly and efficiently.

  • Excel shortcuts on steroids: Over 100 shortcuts to enhance your productivity

  • Model auditing: Pinpoint formula errors instantly

  • Seamless Excel-to-PowerPoint linking: Refresh charts with one-click

  • Shared content libraries: Branded slides, templates, charts, and images

Start your free trial today and see how Macabacus can save you hours in Excel and PowerPoint.

Deal Flow

M&A / Investments

  • Management and KKR will take private Japanese software developer Fuji Soft for ~$4.1B (RT) 

  • PE firm EQT will acquire a majority stake in Swiss cybersecurity firm Acronis at a ~$4B valuation (RT)

  • Bill Ackman's Pershing Square is considering taking ~$3.4B real estate developer Howard Hughes private (FT

  • Refining billionaire Paul Foster is seeking to sell private oil producer Franklin Mountain Energy for ~$3B (BBG

  • Swiss pharma giant Roche is considering divesting cancer data specialist Flatiron Health, which it acquired for $1.9B in 2018 (FT

  • PE firm Bansk will take pet wellness firm PetIQ private for $1.5B (RT

  • UK's Savannah Energy terminated a $1.25B planned acquisition of PETRONAS' South Sudan business (RT

  • Apartment REIT Equity Residential will acquire a portfolio of apartments from Blackstone for $964M (RT

  • Aramco will boost its stake in petrochemical JV Petro Rabigh by 22.5% for $702M (RT)

  • South Korean cargo carrier Air Incheon will acquire Asiana Airlines' cargo unit for $342M (RT

  • Mining giant BHP is seeking to sell Brazilian copper and gold assets acquired from its takeover of Oz Minerals (BBG

  • Walgreens is exploring a sale of primary-care provider VillageMD (RT)

VC

  • Mechanical Orchard, an AI startup building modernized copies of aging apps and services, raised a $50M Series B led by GV (TC)

  • Database startup Neon raised $25M from M12 (TC)

  • Anjuna, a universal confidential computing platform, raised a $25M Series B-2 led by M Ventures, SineWave Ventures, and AI Capital Partners (FN)

  • Datch, an AI startup improving frontline manufacturing and energy sectors, raised a $15M Series A extension led by Third Prime (BW)

  • LightSolver, an energy-efficient supercomputer, raised $12.5M from EIC (EU)

  • Visual AI platform Napkin raised a $10M round from Accel and CRV (TC)

  • Bandana, a startup for wage workers to find better jobs, raised an $8.5M round led by General Catalyst (TC)

  • BBTruck, a logistics and supply chain technology startup, raised a $6.5M pre-Series A led by Oasis Venture and others (PRN)

IPO / Direct Listings / Issuances / Block Trades

  • India's Adani Enterprises is likely to launch a $1B share sale in September (RT

  • Golf club maker Callaway is considering spinning off its Topgolf driving-range chain (BBG

Debt

  • Meta is selling $10.5B of investment-grade bonds in its largest-ever debt sale (BBG

  • BMW raised $3.7B in a senior unsecured notes issuance (RT) 

  • Healthcare firm HCA raised $3B in a senior notes issuance (RT

  • Argentina is in talks with Banco Santander for a potential $1B loan (BBG

Bankruptcy / Restructuring / Distressed

  • German commodities firm BayWa is in advanced talks with investors for a $546M injection to buy more time to reach a full debt restructuring (BBG

  • Del Monte Foods will receive a $240M injection in a debt restructuring that converts nonparticipating creditors to subordinate (BBG

  • Electric appliance maker Vanward filed a liquidation petition against a major Evergrande unit (RT)

Fundraising

  • Blackstone debuted an infrastructure fund targeting VHNWIs (BBG

Crypto Corner

  • Ripple Labs was fined $125M for selling XRP tokens to institutional investors (BBG)

Exec’s Picks

  • Uplevel your investing skills and learn from top PE executives like Carlyle co-founder David Rubenstein. Reserve your spot in the self-paced Wharton Online and Wall Street Prep Private Equity Certificate Program by August 12 and save $500 with code LITQUIDITY.

Financial Services Recruiting đź’Ľ

If you're currently a junior banker looking to break into the buy side, lateral to another investment bank, or consider new paths amid changing market dynamics, it's time you check out Litney Partners, a partnership between Litquidity and Whitney Partners (the oldest purely financial services executive search and consulting firm).

We aim to place strong candidates across private equity, hedge funds, venture capital, growth equity, debt funds, and investment banking.

To get started, simply head over to Litney Partners and create your profile by dropping your resume / filling out the form:

Meme Cleanser

Reply

or to participate.