US Markets to Tumble a Further 20%?

October 13, 2022

Good Morning,

There are fears of regional economic decline in New Zealand, the Reserve Bank of New Zealand has recommended the removal of the housing order from its remit, ASB economists have predicted house prices to fall 24%, the UK economy shrunk in August unexpectedly, the Bank of England has said the emergency bond-buying scheme would end this week, IMF has warned of a global economic downturn, a further 20% fall in US stocks is certainly possible, according to a IMF director & September PPI rose 0.4% MOM in the US.

Let's jump in.

Before The Bell

Markets

  • The US markets fell again with the UK bond market and Thursday's CPI reading in investors' minds.

  • It was the fifth consecutive day of declines for the S&P 500 and Nasdaq, with the Nasdaq joining the S&P and Dow in its second bear market this year.

Earnings and Data

  • PepsiCo (NASDAQ) topped its Q3 earnings and beat analysts' estimates. It also raised its earnings outlook for the rest of FY2022. (CNBC)

  • September PPI rose 0.4% MOM in the US, more than 0.2% expected. (RT)

  • Tourism Holdings (NZX) has increased its profit guidance for FY2023. (NBR)

  • What are we watching for the rest of this week in the US:

    • Thursday: Delta Air Lines, BlackRock, Taiwan Semiconductor, September's CPI

    • Friday: JPMorgan Chase, Wells Fargo, Morgan Stanley, Citigroup

Days are in the US timezone.

News Summary

  • There are fears of regional economic decline in New Zealand. (Stuff)

  • The skilled migrant and parent visas are opening up again in New Zealand. (Stuff)

  • The Reserve Bank of New Zealand has recommended the removal of the housing order from its remit. (Stuff)

  • ASB economists have predicted house prices to fall 24% in New Zealand from the peak. (Stuff)

  • Rob Hamilton has been appointed chair-elect of the NZX. (NBR)

  • Australia is set to reveal what new military aid it will send to Ukraine in the next few days. (AFR)

  • The UK economy shrunk in August unexpectedly, strengthening predictions of a recession. (BBC)

  • The Bank of England has said the emergency bond-buying scheme would end this week. (BBC)

  • The Bank of England has warned of tighter rules for crisis-hit pension funds using liability-driven investments. (RT)

  • IMF has warned of a global economic downturn with the worst yet to come. (BBC)

  • Arrests have been made over the attack on the Crimea bridge. (BBC)

  • A further 20% fall in US stocks is certainly possible, according to a IMF director. (CNBC)

  • US consumer inflation and spending expectations have declined. (CNBC)

  • Uber, Lyft, and Doordash shares plunged after US 'gig' economy plan. (BBC)

  • India's August industrial output fell 0.8% YOY, the first decrease in 18 months. (RT)

Deal Flow

Investments/ M&A

  • Japan Industrial Partners is leading a consortium of bidders looking to buy Toshiba, a Japanese-based multinational conglomerate, for $19B (USD). (RT)

  • US miner Peabody is in talks with Australian miner Coronado Global Resources to combine the two companies in what could be a $9.2B (AUD) deal. (AFR)

  • Uranium miner Cameco is set to buy a stake in nuclear power giant Westinghouse Electric in a deal in which they are teaming up with Brookfield Renewable Partners. The deal values Westinghouse at $8B (USD). (BBG)

  • ForgeRock, a maker of identity verification software, is being acquired by PE firm Thoma Bravo for ~$2.3B (USD). (BBG)

  • Hydro-Quebec has agreed to buy New England power firm Great River Hydro and its 13 hydroelectric generating stations in a deal worth $2B (USD). (BBG)

  • Diamondback Energy, a US shale oil producer, has bought Permian driller FireBird for $1.6B (USD). (BBG)

  • Volkswagen is closing in on a joint venture with Chinese autonomous driving startup Horizon Robotics. VW could invest as much as $1B (USD). (BBG)

  • Lego owner Kirkbi has agreed to purchase US video learning firm Brainpop for $875m (USD). (WSJ)

  • Bahrain-based investment company GFH has bought a portfolio of US medical clinics for $400m (USD). (RT)

  • General Motors has said it will invest up to $69m (USD) and take an equity stake in Australian mining company Queensland Pacific Metals. (RT)

  • Nissan has taken a $678m (USD) loss and sold its Russian business for 1 euro to the Russian state-owned entity NAMI. (RT)

  • ByteDance, the parent of TikTok, is offering to buy back employees' shares at $155 (USD) a share after IPO plans stalled. (BBG)

  • Mall giant Simon will acquire a 50% stake in real estate investment firm Jamestown. (BBG)

  • Indian craft beer maker Bira 91 will acquire The Beer Cafe, a beverage chain operator. (RT)

  • NIB, a health insurer, has acquired Maple Plan. (AFR)

VC & Fundraising

  • Puttshack, a tech-infused mini golf experience, has raised $150m (USD). (PRN)

  • SunDrive, an Australian solar disputer, has won over Malcolm Turnbull and Cameron Adams, who have joined Mike Cannon-Brookes and government innovation funds on SunDrive's share register after a $21m funding round closed. (AFR)

  • T-Shirt Ventures, a national disability health insurance scheme startup, has raised an $11m (AUD) Series A, which was taken out by health, education and lifestyle investment firm HEAL Partners. (AFR)

  • EatClub, an Australian restaurant ordering startup is seeking to raise $5-$10m (AUD) in a series A funding round. (AFR)

Equity Raises

  • Riyadh Cables, a manufacturer and exporter of power and telecommunications cables, is planning to raise $400m (USD) from a Saudi IPO. (BBG)

  • NIB is seeking to raise $150m (AUD), of which $135m (AUD) will be done via a share placement to institutional investors and $15m (AUD) via a share purchase plan. (AFR)

  • Conrad Asia Energy is trying to secure bids for its $45m (AUD) IPO by the end of the week. (AFR)

  • Pro-Pac Packaging has launched its retail shortfall bookbuild, in which it aims to sell the remaining 14.4m shares. The floor price is 30¢, a 33.33% discount. (AFR)

  • Japanese chip startup Socionext jumped 15% on its trading debut after completing Japan's biggest IPO of the year. (BBG)

Debt Raises

  • Carlyle's credit arm has invested ~$750m (USD) into the Citrix buyout split 50:50 between the secured debt portion and a preferred equity piece. They have also invested $750m (USD) in the second-lien debt backing the buyout of Nielsen Holdings. (BBG)

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