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Good Morning,

America’s risk of a debt default is gathering steam, Charles Schwab began hedging interest-rate risks, PE firms are facing a new wave of portfolio company bankruptcies, buy now, pay later apps are rejecting users, IBM expects to replace ~8k jobs with AI, and retail traders are making risky bets on regional bank stocks (but who’s surprised??)

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Let’s dive in.

Before The Bell

Markets

• US stocks ended yesterday's session relatively flat as investors await more corporate earnings and April's inflation report

  • Regional banks ticked slightly higher, signaling greater stability

• Thailand’s SET index shed 6.4% to become Asia's worst performing market YTD

• BTC and crypto-related stocks fell as Binance halted BTC withdrawals again

• A much-anticipated meeting between Biden and House Speaker Kevin McCarthy over the debt ceiling is expected to take place this week

Earnings

• KKR beat estimates despite a 26% drop in Q1 earnings as they cashed out on fewer investments during a quarter of high inflation, rising interest rates, and geopolitical tensions (YF)

• Lucid missed Q1 estimates on a wider loss but reported $4.4B in liquidity which is expected to fund the company until at least the Q2 2024; their stock fell 8.6% AH (CNBC)

• Palantir beat Q1 estimates on interest unlike anything seen before in its new AI platform and expects to be profitable through the FY; their stock rose as much as 28% (YF)

• What we're watching this week:

  • Today: AirBnB, Electronic Arts, Under Armour

  • Wednesday: Walt Disney, Beyond Meat, Robinhood, Wendy’s

  • Thursday: Krispy Kreme

• Full calendar here

Headline Roundup

• Scope Ratings placed US under review for a possible downgrade (RT)

• Yellen is calling CEOs personally to warn on US debt ceiling (RT)

• US banks' credit tightening in Q1 was impacted more by rate hikes than banking crisis (RT)

• Eurozone investor morale unexpectedly dipped in May (RT)

• German industrial production fell 3.4% in March in the biggest drop in a year (FT)

• Japan's service activity grew at record pace in April (RT)

• Saudi Arabia economy grew 3.9% YoY in Q1 boosted by non-oil activities (RT)

• Fed warns of credit crunch risk after US bank turmoil (FT)

• Private equity is facing a wave of portfolio company bankruptcies (AX)

• Charles Schwab began hedging interest-rate risk with $3.9B in derivatives in Q1 (BBG)

• China's debt restructuring with developing nations hit an impasse (BBG)

• Price cap on Russian oil has forced the Kremlin to raise taxes on producers (FT)

• Concern over TD anti-money-laundering practices helped scuttle First Horizon deal (WSJ)

• Amazon is offering shoppers $10 to pick up own purchases (RT)

• Goldman Sachs agreed to pay $215M to settle a discrimination class-action (BBG)

• Occidental Petroleum began buying back Warren Buffett’s $10B in preferred stock (BBG)

• IBM plans to replace ~8k jobs with AI (YF)

• LinkedIn cut ~700 jobs and exited its China app (RT)

• Retail traders are making risky bets on regional bank stocks (BBG)

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Deal Flow

M&A / Investments

• A PE group including Warburg Pincus and Advent International agreed to buy healthcare firm Baxter International’s biopharma solutions unit for $4.25B (RT)

• Healthcare services company Premier is exploring strategic options including a sale; it has a current ~$3.3B market cap (BBG)

• Japan’s Hamamatsu Photonics’ application to acquire Copenhagen-based fiber laser manufacturer NKT Photonics from NKT for $226M was rejected by Danish regulators (RT)

• Global packaging solutions leader Amcor signed a definitive agreement to acquire privately held Moda Systems, a manufacturer of automated protein packing machines (PRN)

• HSBC agreed to buy out partner Shanxi Trust’s 51% stake in their HSBC Jintrust Fund Management JV (RT)

• Qualcomm will acquire Israeli car crash prevention chipmaker Autotalks for an undisclosed sum (RT)

• Nigeria’s Fidelity Bank finalized the acquisition of the London unit of rival Union Bank of Nigeria (BBG)

VC

• Funderbeam, an angel investing and trading platform, raised $40M in funding from VentureWave (FN)

• Pietra, a NY-based e-commerce infrastructure startup, raised $16M in funding led by M13 (FN)

• Solarea Bio, a clinical stage biotechnology startup focused on food-derived microbes, raised a $15M Series B led by S2G Ventures (FN)

• Viceversa, a Milan-based revenue-based financing startup, raised an $11M round led by CDP Venture Capital (FN)

• Webb Protocol, a privacy system for cross-blockchain asset transfers, raised a $7M seed round led by Polychain and Lemniscap (PRN)

• Bloomfilter, a process intelligence platform for software development, raised a $7M seed round led by Magarac Venture Partners (FN)

• PermitFlow, a startup streamlining permit applications for builders and owners, raised a $5.5M seed round led by Initialized Capital (BW)

• Green-Got, a Paris-based neobank focused on ecological transition, raised $5.5M in funding from VC Pale blue dot and others (FN)

• Golioth, a startup building an IoT cloud platform for hardware, raised a $4.6M seed round led by Blackhorn Ventures and Differential Ventures (FN)

• Pet health insurance startup Barkibu raised a $5M round led by Kfund (FN)

• Olyns, a recycling tech startup, raised a $4M Series A led by Vanedge Capital (PRN)

• Vibe, a startup building a non-fungible token platform, raised a $4M seed round from lchemy Ventures, Agla Ventures, and more (FN)

• NFT spinoff Artifact Labs raised a $3.3M seed round led by Blue Pool Capital (TC)

• Cloudburst Technologies, a provider of cyber threat intelligence solutions aimed at digital currency fraud, raised a $3M seed round led by Strategic Cyber Ventures (PRN)

• Data broker opt-out startup Optery raised a $2.7M seed round led by Bayhouse Capital (TC)

IPO / Direct Listings / Issuances / Block Trades

• Blackstone's delisting offer for Indian IT services firm R Systems International failed to draw enough interest from public shareholders (RT)

• Italy is open to reducing its 64% stake in Italian bank Monte dei Paschi di Siena via a share sale (RT)

• Estonian startup and Uber rival Bolt is aiming for a 2025 IPO (RT)

SPAC

• Singapore TV Licensing Startup Allrites Holdings will merge with Aura FAT Projects Acquisition Corp. in a $92M deal (BBG)

Debt

• Apple raised $5.25B in a five-part bond sale (BBG)

Bankruptcy / Restructuring

• US crypto exchange Bittrex filed for Chapter 11 bankruptcy weeks after being sued by the SEC (BBG)

• Weight loss brand Jenny Craig filed for Chapter 7 bankruptcy (BBG)

• PE giant Apollo is involved in a bid for bankrupt crypto firm Celsius (CD)

Fundraising

• PE firm Bain Capital is nearing the final close of its fifth and biggest Asia-focused fund after raising ~$6B (RT)

• Bain Capital is seeking to raise $4B for a new global special situations fund (RT)

• Early-stage investor Mayfield raised $580M for its Mayfield XVII fund and $375M for its Mayfield Select III fund (BW)

Crypto Corner

• Crypto exchanges list over a dozen cryptos the SEC says are illegal to sell (WSJ)

• Binance halted Bitcoin withdrawals for several hours citing heavy volumes and processing fee surges (RT)

• Ripple’s battle with SEC lawsuit to cost the firm ~$200M (CNBC)

• Liechtenstein will allow payment for certain state services in Bitcoin (BBG)

Exec’s Picks

• Market Watch answered an important question on what will happen to Social Security payments if no debt-ceiling deal is reached.

• The Wall Street Journal published an interesting piece on the pandemic-fueled growth of tipping culture, even at self-checkouts…

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