The Week Ahead - September 14th

The Week Ahead Of Us 🔍

Welcome back!

This is the week! It’s finally time for the Federal Reserve to start cutting interest rates again. The market broadly expects a 25bps rate cut, with the future path in flux, albeit with an expectation of at least another 25bps cut through year-end. It’s a tale of two cities. The wall of worries in the labor market and currently, relatively muted inflation is driving the cut. Meanwhile, the AI trade and funding for AI startups remains in bubble mode, with IPO activity dramatically increasing as of late.

Here’s a look at earnings this week.

• Monday: Dave & Buster's, Korea Electric Power Corporation, PACS Group

• Tuesday: Barnes & Noble, Ferguson Enterprises

• Wednesday: General Mills, Cracker Barrel, Bullish, Steelcase

• Thursday: FedEx, Lennar, Darden Restaurants, FactSet, Scholastic

Here’s a look at economic data this week (estimates are in quotations).

• Monday: Empire State manufacturing survey (4.5)

• Tuesday: U.S. retail sales (0.3%), Retail sales minus autos (0.4%), Import price index (-0.2%), Import price index minus fuel (--), Industrial production (-0.1%), Capacity utilization (77.4%), Business inventories (0.2%), Home builder confidence index (33)

• Wednesday: Housing starts (1.37 million), Building permits (1.37 million), FOMC interest-rate decision, Fed Chair Powell press conference

• Thursday: Initial jobless claims (243,000), Philadelphia Fed manufacturing survey (4.0), U.S. leading economic indicators (-0.2%)

• Friday: San Francisco Fed President Mary Daly speech

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Earnings Corner 📈 📉

Adobe $ADBE ( ▼ 0.34% ) Came in with a top and bottom line beat. The company had a 1% beat on revenue, and an EPS beat $5.31 vs. $5.18. Growth came from strength in its Digital Media and Experience businesses, while AI-influenced ARR jumped past $5B. Management raised full year revenue and profit guidance, highlighting AI integration across its product suite as the key driver. CEO Shantanu Narayen pitched Adobe as the leader in AI creative apps, with AI-first ARR already ahead of targets.

Kroger $KR ( ▲ 1.58% ) Miss on revenue but beat on EPS $1.04 vs. $1.00. Growth came from pharmacy, e-commerce (up 16%), and fresh, with identical sales ex-fuel up 3.4%. Margins improved on lower supply chain costs and shrink. Management raised FY guidance, lifting identical sales growth to 2.7–3.4% and adjusted EPS to $4.70–$4.80, while keeping capex and free cash flow outlook steady. Strategic focus remains on digital, fresh, and cost discipline, supported by store closures, new store projects, and a $5B buyback program.

RH $RH ( ▼ 4.6% ) Revenue and EPS both missed as higher tariffs and a weak housing market weighed down on results. Still, demand rose double digits, free cash flow swung positive, and expansion continued with the opening of RH Paris which is a milestone in its European growth push. Management cut near term guidance, citing cost pressures and sourcing shifts away from China and India.

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Today’s Headlines 🍿 

• Consumer confidence hits low: The Conference Board’s index slipped in August, as job market worries mounted for the eighth month in a row. Short-term expectations for income, business conditions, and employment dropped further below recession-warning levels. Job growth has slowed sharply, unemployment edged up to 4.2%, and layoffs are rising, all while tariffs drive producer prices higher. Ultimately, more Americans now expect a recession within the next year

• Fed Governor Lisa Cook mortgage fraud probe complicated by new loan document. A review found Cook’s Atlanta home was declared a “vacation home,” not a primary residence, in her 2021 loan estimate, potentially undermining Trump administration’s fraud allegations. Cook, who also labeled the property a “2nd home” on a federal security form, never claimed a Georgia tax exemption. She is suing to resist Trump’s dismissal order amid broader tensions over White House influence at the Fed

• Deutsche Bank’s desk is dialed in: The bank’s U.S. distressed-products team scored over $100M in profit from bets on EchoStar Corp. during its near-bankruptcy and recovery. The desk traded both debt and equity across EchoStar’s units, with gains surging after the company announced $40B in wireless spectrum sales to AT&T and SpaceX

• Ellison eyes HBO: Paramount Skydance, backed by the Ellison family, is preparing a cash-heavy bid for Warner Bros. Discovery, including its cable, film, and streaming units. The deal would combine Paramount’s library with Warner’s franchises and networks like CNN and HBO - a major media consolidation

• Private equity’s “zombie” era looms Arctos warns a record number of buyout shops risk becoming zombie funds in 2025 as weak deal activity and tight fundraising bite. With 18,000 funds chasing limited LP capital ($3 demand for every $1 supply), many managers face stalled growth, staff losses, and survival-mode operations — a Darwinian shakeout expected to drive GP consolidation favoring large, proven players like Apollo and KKR

• Apollo’s Zelter sees private equity “washout” ahead: A multi-year fundraising slump shows no signs of easing, with global PE capital raised slipping again in Q2. Jim Zelter and KKR’s Robert Lewin warn many firms may have already raised their last fund, predicting GP consolidation over the next five to seven years that favors scale players able to deliver returns

• Veritas Capital closes 9th flagship fund with $14.4B in total capital commitments: The fund was significantly oversubscribed and closed above its initial $13B target. Veritas now manages over $54B in assets across strategies

• U.S. and China search for path forward on TikTok: Treasury Secretary Scott Bessent is representing the U.S. in Madrid to discuss a variety of trade issues with China, including a solution for TikTok. China-based parent company ByteDance’s deadline to sell the app or see it banned in the U.S. is on 9/17, although Trump has said he is likely to give an extension

• IPO Latest:

  • StubHub: With its listing reportedly over 20x oversubscribed, the ticket resale platform aims to raise up to $851M at $22–$25/share, targeting a valuation of $9.2B

  • Gemini: The Winklevoss twin’s crypto-exchange priced at $28/share, raised $425M at a ~$3.3B valuation under the Nasdaq ticker GEMI

  • Black Rock Coffee Bar: Raised $294M at $20/share (above range), jumped over 30% on debut, valued at $1.27B

  • Citymapper (Via parent): Raised $493M, shares priced at $44 but dropped sharply

  • Legence: The Blackstone-backed engineering and maintenance services firm raised $728M at $28/share, valued at $2.9–$3.2B in early trading

  • Alliance Laundry: The BDT & MSD-backed commercial washer and dryer maker seeks to raise equity to pay down its $2.1B term loan. The Wisconsin-based company, operating factories across the U.S., Europe and Asia, posted $836.8 million in H1 revenue. BofA, JPM and MS are leading the deal

• Seeds vs. sprays: Corteva is weighing a breakup that would separate its seed franchise (incl. Pioneer/Enlist) from its crop-protection chemicals, with an announcement possible soon. The ~$50B agricultural giant did ~$17B in 2024 sales (~$9.6B seeds, ~$7.4B crop protection) and could ring-fence potential chemical liabilities while reshaping sector M&A amid tariff and farm-income pressures

• Private Credit Deal Flow Latest:

  • Tamara secures $1.4B financing from global banks
    Saudi fintech Tamara is set to receive at least $1.4 billion in asset-backed financing from a group of lenders including Goldman Sachs, Citigroup, and Apollo Global Management. The deal ranks among the largest of its kind in the Middle East and underscores the growing scale of private credit in the region.

    Blue Owl, Oak Hill arrange $1.3B debt for Wrench: Replacing bank financing, the package includes a TL, DDTL and revolver. Wrench, a residential HVAC and plumbing services company, is backed by Leonard Green & Partners, TSG Consumer Partners, and Oak Hill

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M&A Transactions💭 

Zentiva Group (XBRA: 1SKF401E), engaged in the development, production, and distribution of generic medicines, has entered into a definitive agreement t be acquired for $4.8B by GTCR. PJT Partners and Goldman Sachs advised on the sale. 

Vimeo (NAS: VMEO), the all-in-one video software solution, has entered into a definitive agreement to be acquired for $1.3B by Bending Spoons. EV/EBITDA was 180.34x and EV/Revenue was 3.13x. J.P. Morgan, Allen & Company, BNP Paribas, and Wells Fargo advised on the sale.

Potbelly Sandwich Works (NAS: PBPB), owns and franchises hundreds of limited-service restaurants, has reached a definitive agreement to be acquired for $566.0M by RaceTrac. EV/EBITDA was 2.64x and EV/Revenue was 1.21x. Piper Sandler advised on the sale.

Molycop, manufacturer and supplier of mining consumables, has reached a definitive agreement to be acquired for $.B by Apollo Asset Management (NYS: APO) and Tega Industries (BOM: 43413).

HBI Health & Beauty Innovations, producer of pharmaceutical products, was acquired for GBP 1.B by DCC (LON: DCC). EV/EBIT was 27.32x and EV/Net Income was 28.66x. Jamieson Corporate Finance and J.P. Morgan advised on the sale.

XD Connects, manufacturer of promotional gifts, has entered into a definitive agreement to be acquired for $1.1B by Platinum Equity. J.P. Morgan, Wells Fargo, and BNP Paribas advised on the sale.

Proficy, developer of AI based software, has entered into a definitive agreement to be acquired for $600.0M by TPG. Evercore Group and Morgan Stanley advised on the sale.

Mercury Financial, operator of a non-bank credit card company, was acquired for $162.0M by Atlanticus Holdings (NAS: ATLC). EV/Revenue was 27.0x. Deutsche Bank advised on the sale.

Technip Energies (PAR: TE) reached a definitive agreement to acquire The Advanced Materials & Catalysts Business of Ecovyst (NYS: ECVT) for $556.0M. Lazard advised on the sale.

D P Jain TOT Toll Roads, provider of civil engineering and construction services, has reached a definitive agreement to be acquired for INR 13.42B by Adani Road Transport.

CalypsoAI, developer of a security and orchestration platform, has reached a definitive agreement to be acquired for $180.0M by F5 (NAS: FFIV).

Grupo Educare, provider of school services, was acquired for EUR 200.0M by Swiss Life Asset Management.

Private Placement Transactions💭 

Reflection AI, developer of an autonomous coding agent platform, raised $1.0B of venture funding led by Nvidia at a pre-money valuation of $4.5B.

Perplexity AI, developer of AI powered information discovery tools, raised $200.0M of venture funding from undisclosed investors at a pre-money valuation of $19.8B.

Omie, operator of an enterprise resource planning platform, raised $150.0M of Series D venture funding led by Partners Group at a pre-money valuation of $550.0M.

Line Man, operator of an online-to-online service management platform, raised JPY 15.2B of venture funding from LY Corporation at a pre-money valuation of JPY 172.45B.

Odds of the Day 🍒 

25bps looks officiial - Kalshi traders are pricing in a 91% chance of the Fed cutting 25bps this week.

*New Traders on Kalshi receive a $20 bonus of trading credit when depositing $100+ with the code “HYH”.

Noteworthy Chart 🧭

New York’s wealthiest are seeing massive rent hikes:

Meme Cleanser 😆 

Until next time!

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