What’s in the News?
- Online sales this U.S. holiday season are expected to rise 4.8% YoY as retailers go all out on discounts to attract inflation hit customers. Amazon’s Prime Day event in Oct is expected to generate USD 8.1B in sales.
- China’s factory activity expanded for the first time in 6 months rising to 50.2 in September from 49.7 last month. This coupled with strong industrial profits, indicates that the economy is gradually bottoming out.
Markets
- Nonfarm payrolls rose 336,000 for the month vs. Dow Jones estimates of 170,000.
- The unemployment rate rose slightly to 3.8%, compared to the forecast for 3.7%.
- Leisure and hospitality led job growth showing re- silience in consumer demand for services.
Deal Flows
- In possibly the largest takeover in 2 decades, Exxon Mobil Corp is in talks for a USD 60B acquisition of Pioneer Natural Resources.
- A deal with Pioneer would unite two of the biggest acreage holders in Texas and New Mexico, making Exxon the most dominant oil producer in the region with an output of about 1.2 million barrels a day — more than many OPEC nations.
- Footwear brand Birkenstock plans to IPO with a USD 10B in US according to SEC filings with shares likely to be priced between USD 44 and USD 49. They plan to reduce the company debt with funds raised.
India Corner
- Yields on 10Y bonds in India rose by 15 bp to a 6 month high of 7.36% after the RBI announced it would begin Open Market Operation sales – to keep tight liquidity and control inflation in India.
- Starting 9th Oct, the NSE will introduce options contracts on underlying WTI crude oil and natural gas futures. This expansion provides investors with a more efficient way to manage commodity risk.
- ADIA is set to invest INR 4,966.8 crore (USD 600M) in Reliance Retail Ventures for a 0.59% stake, which makes it 4th largest company by equity value in the country below HDFC, TCS and Reliance Industries.
Credit Crunch : Student Loans
- The pause on student loan payments in US ended last week, leaving USD 1.7T in federal student debt back up for payment.
- Though the growth in student loans has been slowing for the last few years, there is still over 40M borrowers with loans to pay.
- Estimates show around USD 7B to 8B per month will be reallocated to student loan pay- ments by American householdsEstimates show around USD 7B to 8B per month will be reallocated to student loan pay- ments by American households.
- We can expect to see consumer trends shift to discount retailers as some borrowers cut back on discretionary spending.
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