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THE HEADLINES

 

PARTY LIKE IT’S 1929

The Chinese Yuan dropped to its lowest level vs. the dollar in more than a decade. Unsurprisingly all hell broke loose in US markets. How bad was it? Well, it was the largest one-day loss of 2019, and the Dow closed down more than 700 points. So pretty f*cking bad.

While many, including the Commander in Chief, were quick to accuse China of currency manipulation (it’s probably worth noting that China’s government controls the Yuan), The People’s Bank of China denies the accusations …

China’s spokesman went as far as to say that China will “not engage in competitive devaluation, and not use the exchange rate for competitive purposes, and not use the exchange rate as a tool to deal with external disturbances such as trade disputes.” Translated from Mandarin: “prove it, POTUS.”

I don’t believe you

In response to China’s move, the US Treasury Department officially designated China as “currency manipulator.” In the Department’s defense, the timing was rather fishy, considering that just last week the US levied a 10% tariff on an additional $300B worth of imports that weren’t already subject to taxation.

As if this wasn’t enough, China has also asked (read: told) state-owned companies to stop buying US agricultural imports. Those same imports were one of the driving forces behind a trade agreement. China is scheduled to meet with its US counterparts on September 1 in Washington.

 

THE RENT IS TOO DAMN HIGH

Barneys is as New York as a homeless guy exposing himself on the F Train. But now, like so many Brooklyn-based novelists, it’s been chewed up and spit out by the city that never sleeps.

Barneys is prepping to file for bankruptcy as soon as Monday. The JCPenney of drug lords and Wall Street rainmakers will close a majority of its 13 stores immediately.

Funding secured

The retailer is reportedly closing in on a deal for a loan. Problem solved, Barney is saved! Not exactly. A deal with Gordon Brothers and Hilco Global would provide financing for 60 days, giving Barneys time to find a buyer.

The company hopes a buyer (just not Eddie Lampert) will save the day and purchase its seven core brick-and-mortar locations … or else the once-great retailer faces liquidation.

Where did we go wrong?

Sure the “retail apocalypse” had a hand in Barneys’ undoing, but its demise can almost single-handedly be attributed to one thing: rent at the company’s Madison Ave. (NYC) flagship nearly doubling from $16M to $30M.

The d*ck move by Ashkenazy Acquisition, which probably heard WeWork was in the market for over-priced real-estate, wiped out nearly all of Barneys’ EBITDA.

 

DON’T LET THE DOOR HIT YA

HSBC had itself a h*ck of a 24-hours, announcing both the departure of its CEO and major job cuts.

John Flint will leave HSBC, a mere 18 months after getting the promotion to CEO. Tough break. It’s been rumored that tension with chairman Mark Tucker lead to his undoing, as Flint focused on cultural issues (see ‘Dirty Money’), whereas Tucker wanted to take a more data-driven approach and a focus on growing the US business. Because that worked out sooo well for Deutsche Bank.

Tucker and Flint also clashed over HSBC’s strategy in China. HSBC found itself in the middle of the US-China trade tensions, as Huawei is a major client of HSBC. That relationship was leveraged in Washington’s case against and the eventual arrest of Huawei CFO Meng Wanzhou last December.

The current head of global commercial banking, Noel Quinn, will become the interim CEO while the bank searches for a replacement, which should take between 6 and 12 months.

Slice ’em and dice ’em

Johnny Finance isn’t the only one getting the boot. HSBC announced it will cut 4k jobs, focusing on the most senior roles. Welp, one down, 3,999 to go.

The bank estimates severance costs between $650M and $700M. The cuts are reportedly due to increased challenges and a complex macroeconomic climate, and will hopefully allow HSBC to launder money for the Mexican and Colombian drug cartels take advantage of future opportunities.

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IN OTHER NEWS

• Diversify, rinse, repeat. Blackstone’s Strategic Capital Group is buying a piece of BC Partners in one of the latest deals of investments in PE firms. Blackstone is paying $560M for a 10 to 15% stake in the European buy out firm. BC plans to use the money to re-invest in its own real estate and credit programs. The funding also provides BC with some liquidity to invest in long term programs. The stake won’t give Blackstone voter rights but the company will have a member of its investment team involved with BC deals going forward.

 

• Bigger is better. Two of the largest newspaper owners are joining forces as New Media and Gannett worked out a $1.4B deal to combine efforts. The new companies will boast 400 titles, making it the largest in the country … that nobody will read. The combined company will be lead by New Media’s CEO Michael Reed. The company’s strategy is to focus on generating ad revenue and avoid the fate of 2.1k newspapers that have gone under since 2004.

 

• @ramlover_69: “Cars.com can’t haul 12,000 pounds of steel beams.” The online auto trader announced it could not find a buyer (for itself) after a month-long search. Chairman Scott Forbes noted that while there were some offers, none of the deals were worthy of the 2019 MotorTrend Truck of the Year Award. The company will continue to operate independently but its shares dropped as much as 40% during trading on Monday.

 

• Grubhub is out here redefining Shake weight. Shake Shack announced Monday that it is partnering with Grubhub to deliver its fare. The company will test four pilot locations in the Northeast and Chicago and will roll out further in upcoming quarters. The Shack is the latest restaurant chain that’s looking to cash in on the delivery trend. After losing out on deals with McDonald’s and Chipotle, which have partnered with DoorDash and UberEats, respectively, this was a much-needed W for Grubhub. The company’s technology platform will help minimize wait times for customers and slowly contribute to the American obesity epidemic …

 

• When you think of the most corrupt industries, processed chicken doesn’t come to mind. Well, turns out that your nuggs might be a bit seedier than you thought. Tyson Foods disclosed in a filing Monday that it has received a subpoena from the Department of Justice as part of an investigation into a chicken pricing scandal. Grocers have complained since 2016 that Tyson and other chicken processors to prop up prices through breeding practices, and monitoring each other’s production to keep the chicken supply low … and demand high.

 

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