Happy morning, Munchers! 🙏

As always, here is your daily dose of the news that matters, from Wall Street to Dalal Street - in 5 minutes and 13 seconds.

Yesterday, Credit Suisse sent some shockwaves into debt markets, Amazon laid off tons more folks, and a Dubai coffee delivery biz got into the big leagues. 🔥

Let’s dive in.

What’s hot, what’s not?

Market Commentary

• Traders made big bets on the banking crisis easing soon. Markets rose slightly along with a decent side of luke-warm volatility. Perfect start to the week.

• Energy prices continued their race to the ground after the banking confusion gave traders a heads-up that demand might be decreasing soon.

• Only God knows what’s going on right now. Tons of confusion, tons of misinformation, and tons of volatility.

Story Roundup

1 - Credit Suisse’s bondholders get MAD. 😡

The biggest CoCo write-down in history just happened. And bond markets are in UPROAR.

CoCo’s aren’t just another type of breakfast cereal.

They’re called Contingent Convertible bonds.

These CoCos were introduced in 2008 to help absorb losses in case of bank stress.

In short, when things are going rough, CoCo bondholders take the bank’s losses instead of having to be bailed out by the taxpayers.

Now here’s the controversy.

Any losses applied happen top-down, from the debt all the way to the equity.

All debtors get paid back FIRST, and all equity holders get paid back LAST.

But Swiss regulators have said that this CoCo debt goes ALL the way to the bottom of the pile.

All of this debt is gonna be “wiped out”, by no fault of the debt-holders.

Now this is odd, since it violates the traditional corporate finance pecking order.

Other people holding CoCos from other banks might start thinking twice about their value now.

The Tier 1 CoCo market is worth $275 billion, and Credit Suisse is making some big waves.

Swimming with the sharks here. 🦈

2 - Amazon slashes another 10k away. 🔪 

Amazon’s trousers are getting a little tight around the waist.

The solution? Trim some fat.

It looks like Jeff Bezos and co. are gonna be saying bye-bye to 10,000 more employees.

Employees in unprofitable units have been asked to find work elsewhere and the bottom of the pack is also being asked to leave.

But a major chunk of these 10k come from one key unit - cloud computing.

AWS (Amazon Web Services) is Amazon’s cash cow. And any damage to it is unsettling.

AWS has not been growing at the breakneck pace of yesteryears, and it’s starting to show.

Sales are slowing, and the future is uncertain.

Bumpy road ahead.

3 - COFE splashes big bucks on coffee. ☕

A UAE-based online coffee marketplace just scooped up $15 million as part of a Series B to give the world a fresh cup of brew.

The company’s called COFE and they have been going ham of late.

Users are allowed to order coffee from shops, coffee beans, capsules, and machines. It’s like Amazon, but for caffeine addicts.

Round was led by a couple notable investors.

A $500mn Saudi fund led the deal along with some healthy participation from Kuwaiti and Chinese investors.

This one is interesting because it came around while everything else crashes to the ground.

Maybe a few of the hyper-growth 2021-flavoured startups have resilience? 🤔

4 - American banks stay moving in limbo. 💸

Another bank is facing a bank run.

They aren’t giants, but they’re big enough. Big enough to fail.

Shares in First Republic tumbled again yesterday - bring their total losses in the last 3 weeks to almost 80%.

In terms of market cap, that’s around $25 billion gone up in smoke.

Their credit rating has been evaporating too - with two rating cuts coming in the last 2 weeks.

A ton of depositors are getting nervous and pulling their cash. Which means that FRC has a lot of problems on their hands.

Liquidity, funding, profitability - all gone up in smoke.

God bless Uncle Sam. 💀

5 - Oil prices slowly slip away. 🛢️

Oil prices have been falling lower and lower, but the big boys of Wall Street think that all will be fine.

Citadel and Trafigura are two of the biggest commodity traders on the planet, and they just gave their two cents on oil markets.

Emotions and fear are running rampant.

Oil has hit it’s lowest level since Russia invaded Ukraine.

Traders reckon that this slump has happened because of the big banking crash - spurring worries that we could be in for something long and hard.

Slippery situation. 😬

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!

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Cheers, and have a lovely day. 🙏

- Aryaansh ⚡