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THE HEADLINES

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JUST THE DIP

“Haters will say it’s photoshopped” – everyone long the VIX.

A sell-off, a correction … Custer’s Last Stand. Call it what you will, but there was blood in the Street on Wednesday as US indices suffered their largest setback in 7 months …

• Dow: -3.15%
• S&P 500: -3.29%
• Nasdaq: -4.08%

The October tumult marks the worst start to a quarter in almost two years.

The tech sector, led by the FANG stocks were pummeled more violently than Conor McGregor’s trainer post-UFC 229, dragging down the major US indices. Roughly $120B of Facebook, Amazon, Netflix and Google market value evaporated. What’s Cramer’s soundboard effect for “totally f*cked?”

It’s hard to point to one trigger that set off the US equity selloff, but that doesn’t mean Bloomberg can’t try. There’s the buyback blackout. And of course, the projection misses. And who can forget about all the cyclical pressures?

Of course, the selloff comes on the heels of an IMF report indicating that the global economy has plateaued. And for the first time in two years, the International Monetary Fund has cut growth projections. Their reasoning? An escalating global trade war. Speaking of trade wars …

Meanwhile, in PA, Donny Politics was busy playing the blame game pointing fingers at Jay Powell and citing a fed “gone crazy“ as the reason for the market’s woes.

Water Cooler Talking Point: “I’m not panicking, you’re panicking.”

 

SAY CHEESE

Smile Direct Club, the direct-to-consumer orthodontist service (aka the Uber of dentistry) has closed another funding round worth $380M, led by Clayton, Dubilier, and Rice, which values the company at $3.2B

Just two years ago, Smile Direct closed a round that valued Invisalign for introverts at just $275M, 11 times less than its current estimated value. Interestingly, Align Technology, the maker of Invisalign has invested close to $60M in its competitor, equating to a roughly 19% stake in the company.

According to Smile Direct Club, the funds will be used to spark innovation, R&D, and expansion overseas. Not a bad plan given Europe’s proclivity for bad teeth. To date, the company has treated more than 300k people.

Water Cooler Talking Point: “To be fair, a mouth full of metal and countless trips to the orthodontist builds character.”

 

NOOB KID ON THE BLOCK

The self-proclaimed pioneer in eSports network broadcasting, OnGameNet or OGN is looking to try its luck in the North American market. South Korea’s OGN announced a $100M investment which will secure its spot as the official partner of PUBG’s North American events.

PUBG is the publisher of the popular video game PlayerUnknown Battlegrounds. OGN now has exclusive rights to live stream tournaments and the two will form the National PUBG League (NPL), the first professional gaming league in North America with a prize pool of $1M.

OGN is also building a new arena for hosting eSports battle royales in Manhattan Beach (CA). The stadium can hold 100 gamers and seats up to 500 spectators. Newzoo, a company that tracks eSports market data estimates global revenue for the industry to be just short of $1B. Not quite the NFL, but there’s something to be said for retiring without a degenerative brain condition.

Water Cooler Talking Point: “Some of these prize pools have me wishing I had less real friends as a kid …”

 

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IN OTHER NEWS

• The DOJ has given preliminary approval for a merger between CVS and Aetna, potentially changing the way we access health care. The path to this deal, worth $69B (nice), was cleared of any regulators concerns when Aetna announced in late September that they’d sell their Medicare Part D drug plan business to WellCare Health Plans.

 

• Larry Fink is tired of all of those “missionary” investments. BlackRock, under the leadership of Fink, will invest $400M (of its $6.3T under management) with Gallatin Point Capital, a Greenwich-based PE shop. This will give the world’s largest money manager more exposure to alternative investments.

 

• Robinhood will start migrating accounts to its new in-house clearing service over the next few months, saving the ultra-discount broker from having to pay clearing fees on stock, option, ETF, and crypto trades. This move will help Robinhood boost its competitive edge by either eliminating or reducing its few existing fees. Remind me again how they make money?

 

• AT&T will launch a Netflix-like streaming service next year. The new service, which will be built around HBO plans to give users access to WarnerMedia’s library of films and shows and will feature additional third-party programming.

 

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