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Good Morning,

UPS union asked Biden not to interfere in case of strike, markets appear convinced the Fed can pull off a soft landing, high-earning retirement savers are losing some of their 401(k) tax breaks, Twitter’s cash flow is still negative after a 50% decline in ad revenue, and UBS will retain EY as auditor after its Credit Suisse takeover.

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Let’s dive in.

Before The Bell

Markets

• US stocks finished Friday mixed as investors digested upbeat earnings from big banks' and optimistic economic/inflation data

  • All three major US indexes finished the week green

  • The Dow had its best week since March

• Oil managed a third consecutive weekly rise

• Dollar index suffered its worst week since November, down to its lowest level since April 2022

Earnings

• JPMorgan beat Q2 estimates with record profit thanks to its First Republic deal and a 44% jump in net interest income thanks to higher rates and better-than-expected bond trading (CNBC)

• Wells Fargo beat Q2 estimates thanks to net interest income increase of 45% on the back of soaring interest rates but said its quarterly non-interest income decreased 13%, driven by lower results in its affiliated VC and PE businesses as well as a decline in mortgage banking income (CNBC)

• Citigroup beat Q2 earnings and revenue estimates despite a 1% decline in revenue as clients stood on the sidelines while the US debt limit played out and Citi’s IB business has yet to rebound (CNBC)

• BlackRock beat Q2 estimates as the company generated an industry-leading $190B of total net inflows in the H1 2023, including $80B in Q2 (BN)

• State Street beat Q2 profit estimates as bank's interest income benefited from the Fed’s rate hikes and assets under management rose amid a recovery in the equity markets (RT)

• The Week Ahead:

  • Tuesday: Bank of America, Morgan Stanley, Lockheed Martin

  • Wednesday: Goldman Sachs, Tesla, Netflix, IBM, United Airlines

  • Thursday: Johnson & Johnson, TSMC, American Airlines, Capital One

  • Friday: American Express

• Full calendar here

Headline Roundup

• Janet Yellen reportedly dined on psychedelic mushrooms in China (NYP)

• US consumer sentiment hit a near two-year high (RT)

• China's economy grew 6.4% YoY in Q2, losing momentum (CNBC)

• Global hedge funds rush to unwind bearish US-stock positions (RT)

• Investors are hedging against a European stock market downturn (FT)

• S&P 500 Q2 earnings are expected to decline 8.1% YoY (RT)

• Big banks set aside more money for expected losses from CRE loans (RT)

• US banks warn stricter capital rules will raise prices (RT)

• Window opens for frozen high-yield emerging-market dollar deals (BBG)

• Venture firms are scaling down megafunds (WSJ)

• Quant funds move into unfettered OTC stock trading (FT)

• UPS union asks Biden not to intervene in case of strike (BBG)

• Tech layoffs put H1B visa workers on deadline to find new jobs (WSJ)

• Over 25% of European financial services board members hold over 3 posts (FT)

• Parliamentary inquiry into Credit Suisse will keep files secret for 50 years (RT)

• UBS to retain EY as auditor after Credit Suisse takeover (FT)

• Investors are bailing on Cathie Wood’s ARK fund (WSJ)

• Twitter's cash flow is still negative as ad revenue drops 50% (RT)

• Tesla builds first Cybertruck after two years of delays (RT)

• Call of Duty will stay on PlayStation after Microsoft-Activision merger (WSJ)

• Carlos Alcaraz beat Djokovic to win maiden Wimbledon title (ESPN)

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Deal Flow

M&A / Investments

• A US appeals court rejected the FTC’s request to temporarily pause Microsoft’s $69B acquisition of Activision Blizzard after a California judge rejected a similar request (RT)

• Pfizer’s $43B acquisition of cancer care company Seagen will undergo a thorough antitrust review by the FTC (BBG)

• Austria’s OMV and Abu Dhabi National Oil are in talks to merge their petrochemicals group Borealis and Borouge companies to create a $20B chemicals giant (RT)

• MoonLake Immunotherapeutics, a $3.3B developer of treatment for inflammatory skin conditions, is exploring a sale (RT)

• Indian steel producer JSW Steel is considering a bid for up to a 20% stake in Canada’s Teck Resources steelmaking coal business, which commodity giant Glencore offered to buy for $8.2B cash (RT)

• Eli Lilly and Co will buy clinical stage obesity biopharma company Versanis for $1.9B to expand in the weight-loss treatment market (RT)

• General Atlantic and Goldman Sachs have bid $1.7B cash for Norwegian edtech Kahoot! (BBG)

• Nabiax, a Spanish operator of data centers, is exploring a sale at a ~$1.1B valuation (RT)

• Western Digital and Kioxia Holdings are looking to spinoff Western Digital’s flash business to merge it with Kioxia and aim to reach a merger agreement by August (BBG)

VC

• Reinsurance broker Augment raised $100M in funding led by Altamont Capital Partners (FN)

• CurvaFix, a developer of medical devices to repair fractures, raised a $39M Series C led by MVM Partners (BW)

• In-store inventory tracking startup Radar raised a $30M Series A led by Align Ventures (FN)

• Embrace, a provider of a mobile experience engineering solution, raised a $20M round led by NEA (FN)

• Nomic AI, an AI explainability and accessibility startup, raised a $17M Series A led by Coatue (FN)

• Austrian medical device startup Piur Imaging raised a $5.5M Series A led by Ascend Capital Partners (FN)

IPO / Direct Listings / Issuances / Block Trades

• Indonesia is planning to launch an IPO of Pertamina Hulu Energi, the upstream oil and gas unit of state-owned national energy company Pertamina, to raise at least $1.3B (RT)

• Indonesia is planning to launch an IPO of its state palm oil planter PalmCo to raise ~$500M (RT)

Debt

• JPMorgan and Wells Fargo are launching a $1.9B debt sale to support Apollo’s acquisition of Arconic Corp. (BBG)

• Tesla will sell $1B in prime EV lease ABSs (BBG)

• Brazil tapped JPMorgan, Itau, and Santander to advise on its debut ESG bond sale (BBG)

Bankruptcy / Restructuring

• Bankrupt Brazilian electricity distributor Light submitted a plan to restructure $2.3B of debt (RT)

• Czech billionaire Daniel Kretinsky is close to taking control of troubled French retailer Casino with a $1.4B cash injection after 3F Holding abandoned their bid (RT)

• Pot producer Canopy Growth agreed with lenders to reduce its debt by $333M amid its liquidity crisis (RT)

• Bookseller Barnes & Noble Education is facing liquidity issues and may not be able to stay in business if its unable to restructure its debt (WSJ)

• Bankrupt wedding gown retailer David's Bridal will sell its business to Cion Investment in a no-cash transaction to keep its 195 stores open (RT)

• Dutch EV bike maker VanMoof is exploring a sale under court protection as it struggles with bills (TV)

Fundraising

• PE firm Welsh Carson raised $5B for its largest ever fund to continue investing in tech and healthcare (LW)

• Alpine Investors raised $4.5B for its newest technology buyout fund, its ninth main fund (WSJ)

• PE firm Shore Capital Partners raised $208M and $436M for its Shore Capital Industrial Partners Fund I and Shore Capital Healthcare Partners Fund V (WSJ)

• Lower middle market PE firm Riverside raised $350M for its Riverside Value Fund I to back struggling businesses (WSJ)

Crypto Corner

• Crypto exchange Binance laid off over 1k employees in recent weeks (WSJ)

• BlackRock's CEO thinks crypto will transcend international currencies (CT)

• Biggest DeFi lender Aave set to launch decentralized stablecoin (BBG)

• Crypto altcoins outperform as Ripple court ruling spurs FOMO (BBG)

Exec’s Picks

• The Wall Street Journal published a cool piece about NBA salary structures and the market value of top role players like Bruce Brown.

• Ken Griffin sat down with Goldman’s Raj Mahajan to discuss lifelong learning, democratization in finance, and the evolution of Citadel’s business.

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