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☕️ Fed's last stand
Jerome Powell has an another doozy of a decision to make this week
Good morning.
The US Federal Reserve meets again this week and J Powell has another doozy of a decision to make about the price of borrowing money in the world’s largest economy.
After last month’s pause, the consensus among market economists is for a 25bp hike from the Fed. This would take the benchmark US Fed Funds rate up to 5.5%, its highest level in more than two decades.
The bigger question is what happens after that. Weaker than expected jobs figures and inflation data released in the US over past fortnight have cemented hopes in some quarters (i.e among equity bulls) that this week’s expected rise could be the last for this tightening cycle. But Powell has publicly signalled otherwise. So we all better listen carefully on Thursday morning.
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MARKET MOVERS
*Stock data as of the market close. Commodities and crypto data in USD.
Market News: Newcrest shares were smacked on Friday, falling in tandem with those of its acquirer, New York and Toronto-listed Newmont Mining. Newmont suffered its worst day in a year after it delivered a weak set of quarterly results due to operational problems at mines in various parts of the globe.
Recall that Newmont, the world’s biggest gold miner, struck a definitive deal to acquire Newcrest, the biggest gold producer on the ASX, for $32 billion including debt back in May. The agreement came after a customary game of cat and mouse between the two that dragged on for a while.
But all that glitters is not gold. The deal was heavily scrip based - aside from special dividends, Newcrest shareholders will get 0.4 Newmont shares for each share they own. Meaning Newmont’s operational problems at mines in far flung regions of Mexico, Argentina and Ghana could end up hitting ASX retail punters’ wallets before the deal is finalised in Sep/Oct.
THE QUICK SYNC
‘Barbenhemier’ is on track to be the second highest opening weekend ever at the US box office. (CNBC)
US Fed is likely to hike interest rates to a 22-year high this year (Economic Times)
CCPPIB, Canada’s largest pension fund, plans to seed more hedge fund startups (Bloomberg)
Oil markets will face ‘serious problems’ as demand from India and China ramps up (CNBC)
TRADING FLOOR
M&A:
Pupuk hires Citi and Gilbert+Tobin as it continues to work on a potential proposal for Incitec Pivot. (AFR)
Rio Tinto is close to finalising a billion dollar acquisition of Canadian recycling company Giampaolo Group a deal. (AFR)
Voluntary administrators claim a "strong interest" in the sale of Trident Plastics. (BNA)
Mirvac is believed to be working in concert with Pacific Equity Partners to buy the Serenitas land lease community business. (The Australian)
Kufpec is among the shortlisted bidders for round two in the contest for a stake in Santos’ Dorado project. (The Australian)
Volaris is believed to be poised to lift its offer for Eroad. (The Australian)
Capital Markets:
VC:
Gecko, an event equipment rental platform, raises $350,000 in pre-seed funding led by Techstars. (BNA | StartupDaily)
Stylerunner, a fashion discovery app, rebranded to Wrapd, closing a $1.8m capital raise including reinvestment from Touch Ventures. (BNA)
Edrolo, an educational materials start-up, has swapped its founders for a professional chief executive. (AFR)
Others:
Newcrest shares take a beating. (West Australian)
Elon Musk is looking to change Twitter’s logo. (SMH)
Elon Musk loses $29.5bn after Tesla warned it may have to keep cutting the prices of its electric vehicles. (SMH)
EQT is launching its first private wealth fund in Australia. (AFR)
David Kingston is urging Ardent Leisure’s board and management to lift performance. (The Australian).
THE WATERCOOLER
