- Market Munch
- Posts
- Market Munch 🍎 | 16 March 2023
Market Munch 🍎 | 16 March 2023
Credit Suisse's woes get worse, iPhones go global, and KPMG stands by their words. 🔥
Aryaansh Rathore
March 15, 2023
Happy morning, Munchers! 🙏
As always, here is your daily dose of the news that matters, from Wall Street to Dalal Street - in 4 minutes and 53 seconds.
Yesterday, Credit Suisse knocked around for money, Foxconn moved overseas, and KPMG stood by their judgement of SVB. 🔥
Let’s dive in.
What’s hot, what’s not?
Market Commentary
Turbulence is straining the interest rate markets as traders bet on the US Fed slashing rates… time will tell what JPow and his bandwagon do.
Not all is well down under - New Zealand’s economy contracted after some sloppy manufacturing and tourism revenue.
Oil also got caught up in all these banking fears and slid 5% yesterday. Came to rest at under $70 a barrel. Slippery situation. 🛢️
Story Roundup
“Liquidity is like a cab on a rainy night in New York. It disappears when you need it the most." - J.P. Morgan (the man, not the bank)
And liquidity is what Credit Suisse is seeking.
They plan to borrow up to $54bn from the Swiss National Bank and buy back about $3bn of their own debt.
CS shares have fallen about 33% in the last week and their big-ticket investors are starting to get angry.
The Saudi National Bank (one of the largest CS shareholders) ruled out any further capital infusions.
If you bought Credit Suisse stock 7 years back, you’d be down 95% today.
Investors would genuinely be better off soaking their cash in kerosene, stuffing it into an oil drum, and lighting that sucker up.
Insane wealth destruction. 💥
Foxconn and Pegatron are gonna be expanding into Southeast Asia.
No, these aren't the names of Transformers.
They're actually Apple's manufacturing partners - responsible for making every single iPhone, iPad, and iMac that exists.
And our transformer-sounding friends want to move away from China, and set up elsewhere.
This is an ongoing trend with big manufacturers.
They're all trying to diversify their supply chains, and in most cases, away from China.
Both of these folks see India as the best breeding ground for mega manufacturing facilities, with some interest going toward Vietnam too.
Changing world order. 🤔
Wanna talk about hypocrisy?
14 days before Silicon Valley Bank went bankrupt, KPMG issued an audit saying that all was well.
11 days before Signature Bank went bankrupt, KPMG also issued an audit saying that all was well.
As the shockwaves of these explosions battered the banking system, reporters rushed to KPMG offices to ask about this “audit”.
Their response was that these failures had to be blamed on market conditions and the “unpredictable reactions” of clients.
There’s this saying in Latin - quis custodiet ipsos custodes.
Who will guard the guards?
A COVID crunch has left China's economic glory days high and dry.
They wants to combat this ASAP - and the CCP has vowed to make consumption the main driving force behind the Chinese economy.
Economists are already betting that Xi Jinping's reopening plan will supercharge global economies with China's pent-up consumer activity.
Their national savings grew by a record $2.6 trillion last year.
All that cash is floating around in bank accounts, itching to be splashed on all sorts of goods and services.
Zero-COVID policies are gonna be abandoned, and China will embrace the "normal" life.
Spend like there's no end. 💸
The party days are over, and tough times are back.
Stripe is going fundraising, and they're heading for a down round.
A down round is when you raise money at a lower valuation than previously.
In their case, it's a move of $95 billion -> $50 billion. That's a 40% haircut.
They're not gonna use this money for day-to-day expenses, but instead to cover a suspiciously large tax bill on employee stock.
The only salvation?
Stripe won't be the only ones. The entire fintech + web3 world has seen industry giants slash valuations to get the cash pumping.
Tough times. 🤔
Hope you enjoyed this issue of Market Munch. If you’ve got any feedback - good or bad (😏) you can hit reply to this email and I'll get a ping in my inbox. Thanks a ton for reading!
Cheers, and have a lovely day. 🙏
- Aryaansh ⚡