The headline of the past days is WeWork's decision to file for bankruptcy.
WeWork, once valued at $47 billion, has faced a series of challenges, including the departure of its CEO and CFO in May, decreasing occupancy rates, and a broader crisis in the office real estate market, driven by the widespread adoption of hybrid working.
The company has accumulated $17 billion losses to date, and it continues to operate at a deficit a decade after its founding. In a significant restructuring effort, WeWork laid off over 70% of its workforce and attempted to renegotiate leases with landlords. The company claimed that these leases were no longer sustainable, as they were initially negotiated during a period when the company was positioned for growth. Nonetheless, their plan yielded no results. In their bankruptcy filing, they are seeking to cancel the leases totaling over $13 billion as well as convert $3 billion of debt into equity to improve their balance sheet.
Source: Bloomberg Opinion
Markets
US stocks winning streak continued on Tuesday, marking the seventh consecutive day of gains, driven primarily by tech stocks and consumer discretionary spending. The Nasdaq composite led the charge, marking the eights consecutive daily gain (the longest winning streak in two years). The tech-heavy index has grown by 30% YTD. The S&P pushed it's YTD increase to 14%.
Source: FactSet
Macro
At the end of last week, the United States announced its latest hiring numbers, which were lower than anticipated, standing at 157,000—less than half the 300,000 reported back in September.
At its latest meeting, the Bank of England opted to maintain the benchmark interest rate unchanged. They expressed that it's premature to consider rate cuts, emphasizing that the anticipated inflation return to the target is not expected before 2025. Analysts are raising concerns that the UK may already be slipping into a recession, driven by surging interest rates and mounting unemployment, which have begun to weaken demand. This weakening demand has become the primary worry for companies in both Europe and the United States, with a record number of CEOs citing it as the most significant threat during earnings calls.
Turkey's Central Bank has signaled a shift towards tighter monetary policy by raising its year-end inflation estimate to 65% and projecting a peak of 75% in May. The Turkish Central Bank's commitment to combat inflation through tighter policy, in contrast to the rate cuts strategy employed in recent years, has lured some investors back to Turkey. This shift in economic policy has allowed Turkey to raise $2.5 billion in its first dollar bond market deal since April, attracting investors who had avoided Turkish assets in recent years.
Commodities
Saudi Arabia and Russia have reaffirmed their commitment to maintaining supply curbs of 1.3 million barrels per day until the end of the year. Saudi Arabia is set to review its production cuts next month - Bloomberg reports
WTI Crude $77.41 Brent Crude $81.72 Natural Gas $3.172
Codelco has reduced the premium it charges its Chinese clients for refined copper sales in the upcoming year by 36%, setting it at $89 per ton. This decrease comes after charging $140 per ton this year, marking the highest premium since 2008.
Corporate news
Telecom Italia is set to sell its landline network to KKR in a €22 billion deal, which is supported by Italy, despite objections from its largest shareholder, Vivendi. The achievement of this full valuation is contingent, in part, on whether the network merges with Open Fiber - Bloomberg.
Tesla has announced the commencement of production for a new model priced at 25,000 EUR. The production will take place at the Berlin factory, as reported by Reuters.
Bain is nearing the finalization of a deal to acquire Guidehouse at a price of $5.3 billion, inclusive of debt, according to the Wall Street Journal.
Moderna experienced a premarket decline due to a larger-than-expected loss of $3.6 billion, attributed to Covid inventory writedowns.
ESG
The regulations governing ESG funds are becoming tighter. France will only allow funds to carry the ESG label if they blacklist fossil-fuel companies that are expanding their output. This move aims to provide greater transparency for green investors, as noted by Finance Minister Bruno Le Maire.
Bankers handling $1.5 trillion in sustainability-linked loans are seeking legal protections against accusations of greenwashing. They are requesting declassification provisions that would enable them to reclassify what was originally a Sustainability-Linked Loan (SLL) as a regular loan if it is determined that the product doesn't meet ESG criteria.
China has released a plan to reduce methane emissions without specifying specific targets. The plan focuses on enhancing data transparency and employing new technologies to detect methane emissions, a potent greenhouse gas.
AI
Elon Musk's xAI startup introduced its first chatbot, named Grok.
Chris DeWolfe, co-founder of MySpace, unveiled a tool that utilizes AI to transform text into videos. PlaiDay generates three-second clips for free after a few prompts.
A $60 million funding round for AI fintech startup Black Ore was led by Andreessen Horowitz and Oak HC/FT.