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THE HEADLINES

 

AND WE’RE BACK …

… kinda.

US markets rebounded following the financial equivalent of Custer’s Last Stand yesterday. After losing more than 750 points on Monday, the Dow rose approximately 300 yesterday.

Considering that Dow futures pointed to another day of chaos following the US Treasury’s decision to label China a “currency manipulator” late Monday night, investors will take 1-plus percent gainz across all major US indices.

So, why the bounce? 

Welp, it certainly helped that many market participants used the opportunity to BTFD (buy the f*cking dip). It also appears that tensions have cooled, with China fixing the yuan (albeit at a stronger level than markets had hoped for) essentially stopping the bleeding and POTUS providing reassurance that a deal can still be made.

The St. Louis Fed Prez also announced that he has one more interest rate hike penciled in for 2019. Music to market’s ears.

The fallout

It wasn’t just equities that took their lumps. Brent oil fell into bear market territory while safe-haven investments like gold and Treasuries soared thanks to the wild volatility.

 

“LET’S JUST TALK ABOUT THIS …”

– Opioid distributors, apparently

On Tuesday, reports surfaced that McKesson, Cardinal Health and AmerisourceBergen are proposing a $10B settlement against claims they helped fuel the US opioid epidemic.

The proposal came as part of the companies’ discussions with a group of state attorneys generals that are handling the case.

Sweetening the deal

The AG’s response to the $10B offer? Oh f*ck no.

The National Association of Attorneys General, the group handling the case on behalf of several states, was having none of the distributors’ offer, countering with a demand for more than $45B … presumably with their pinky raised to their mouth a la Dr. Evil.

McKesson, Cardinal Health and AmerisourceBergen all took major L’s after the news broke. McKesson shares dropped 3.9%, while Cardinal and AmerisourceBergen were down 5.8% and 5.2%, respectively. Woof.

 

JUNK BONDS

Snapchat’s parent, SNAP, aims to raise $1B in convertible senior notes. At the time of maturity, which is August 1, 2026, investors will be repaid in either cash, stock, or a combination of the two.

But what does Snap need tres commas for, exactly? Mr. Miranda Kerr and the gang will use the funds for acquisitions, further growth of its AR platform, and possibly to buy back its shares down the road … because they’ll undoubtedly be available at a “discount.”

This is the first time Snap will add long-term debt to its balance sheet. As of June 30th, the company held $335.7M in cash and $849M in marketable securities. During Q2, Snap’s revenue rose 48% to $388M and the TikTok gateway drug posted a narrower net loss of $255M (down from $353M a year ago).

Announced first thing Tuesday morning, the debt load sent shares down as much as 2.5% in premarket trading, before recovering to close down about 1% on the day.

 

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IN OTHER NEWS

• Disney missed on its sales and earnings expectations as the company reported higher costs related to its streaming service during Q3. For the period ended June 29, 2019 the brilliant minds behind ‘Even Stevens’ and ‘Wizards of Waverly Place’ reported sales of $20.25B and earnings per share of $1.35, below expectations of $21.44B and $1.71, respectively. Disney plans to roll out a streaming service package that includes ESPN+, Disney+, and ad-based Hulu for $12.99 this November. CEO Bob Iger cited additional investment in integrating the three platforms as the main reason for the miss on the earnings call. Make profits, not excuses, Bob. Disney’s stock dropped nearly 4% after market close.

 

• Pawsitive vibes only. Viacom has purchased Paws Inc., no, not a competitor of Chewy, but the holding company and owner of the Lasagna-loving Garfield the Cat brand. No financial terms have been disclosed but Viacom will be able to create spinoff shows and license them to the likes of Netflix and Amazon. And that’s not all. This move has worked for Viacom in the past, most notably with a certain half-shelled fearsome-green-fighting-machine franchise that led to the production of two movies. The acquisition and subsequent detail is expected to close in the upcoming weeks.

 

• Klarna, which provides a “buy now, pay later” service platform has raised $460M. Klarna processes some $29B in transactions for its merchants and collects a processing fee, which has lead to it becoming the largest fintech in Europe with a valuation of $5.5B. And if that doesn’t get your attention, the company counts one of the world’s most prolific fintech investors as a backer. That’s right … Snoop Dogg.

 

• Break up witcha label, I’m bored. Tencent is working on a deal to buy a 10% stake in Universal Music Group. Ariana Grande, Drake, and Billie Eilish, as well as GOATs like Queen and The Beatles, call the UMG network of labels home. The deal will be worth $3.36B and gives the Chinese internet giant a larger footprint in the global music industry. French-based Vivendi which owns Universal announced a willingness to sell up to 50% of the LA-based company in an effort to cash in on the recent resurgence of the music industry. Tencent wants to become the number one music company in China and already offers streaming and karaoke apps in Asian markets. So do the US tariffs apply to ‘thank u, next’ … or?

 

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