What you Need to Know for October 16th

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The Week Ahead Of Us 🔍

Welcome back!

We’ll get right into it, but look, stocks have recovered, bank earnings look solid, and I sometimes forget the government is shut down rn. Still, it looks like there’s no end in sight to the government shutdown. Little progress has been made from either side on addressing the Democrat’s demands to extend Affordable Care Act Subsidies. In many ways the shutdown looks like a way to materially cut headcount. White House budget director is looking into slashing >10k jobs and a significant amount of funding, while a federal judge has temporarily blocked the White House from laying off thousands of workers.

Earnings Corner 📈 📉

Big Bank Round Up $JPM ( ▼ 1.34% )  $WFC ( ▼ 2.97% )  $GS ( ▼ 0.53% )  $C ( ▼ 3.45% )  $MS ( ▼ 0.18% )  $BAC ( ▼ 2.97% ) Some of the biggest lenders across the nation had strong reports. Namely JPMorgan, Wells Fargo, Citigroup, Bank of America, Morgan Stanley, and Goldman Sachs all beat beat expectations on both revenue and EPS, powered by a rebound in trading, investment banking, and wealth management. Investment banking fees surged and prime brokerage activity hit records as markets volatility and corporate confidence drove a sharp rebound in capital markets results.

Traditional lending, however, was far more muted. High rates kept mortgage and home equity borrowing soft, while credit card volumes soared due to strong discretionary spending from higher income households. Banks modestly boosted loan-loss reserves amid early signs of stress among younger and lower income borrowers, but analysts say credit conditions remain “yellow flag, not red flag.” Overall, the results reflect a two-speed economy with strength in capital markets and affluent consumers balancing caution in rate sensitive lending.

BlackRock $BLK ( ▼ 2.3% ) Top and bottom line beat. Revenue rose 25% to $6.5B, while EPS of $11.55 topped estimates, driven by record ETF demand and a rebound in global markets. AUM hit an all time high up 17% y/y, as investors poured $205B in new money, including $171B in long-term assets, back into risk and fixed-income funds following the Fed’s September rate cut. Recent deals like HPS and Preqin added about $500M in revenue and boosted exposure to higher-margin private credit. Private markets drew $13.2B in new assets, helping fee income climb 8%. Analysts said the results underscored BlackRock’s growing strength across ETFs, data, and private markets.

ASML Holdings $ASML ( ▲ 1.36% ) Slight top line miss but a solid beat on margins. Revenue missed coming in at €7.52B but ESP topped exceptions as profit margins held firm at 51.6%. Orders jumped 105% due to booming AI chip demand from TSMC, Intel, and Samsung. The company also recognized revenue from its first High-NA EUV system and partnered with Mistral AI to accelerate product development. Guidance reaffirmed FY2025 sales around €32.5B, with 2026 expected to be at least flat as China demand slows under export curbs.

United Airlines $UAL ( ▼ 7.08% ) Top line miss but a bottom line beat. Revenue came in at $15.2B just below estimates, while EPS of $2.78 topped forecasts. Premium and loyalty demand helped offset softer domestic travel. Cabin Upgrades and service improvements are boosting brand loyalty. United guided to record Q4 revenue and EPS of $3.00–$3.50, above expectations, on continued premium and international strength. The stock is down after hours.

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Today’s Headlines 🍿 

• Tariffs latest: Rare earths are causing most of the tension, for China recently announced new plans for strict export controls on critical rare earths. Trump threatened a 100% tariff in response, but Bessent says that would likely be paused if Beijing walks back their plan to limit exports on the metals. Trump and Xi are set to meet later this month in South Korea

  • Trump is also concerned with U.S. soybean exports, saying that China is “purposefully not buying our Soybeans” and threatening to block all cooking oil imports as retaliation

• Everyone is partnering with OpenAI: Walmart became the latest to announce a deal with OpenAI; shoppers will soon be able to browse and buy Walmart products directly on ChatGPT using its new “Instant Checkout” feature, which already offers some products from Etsy and Shopify. Walmart’s stock rose almost 5% on the news

  • OpenAI financial snapshot: Per the FT, OpenAI has 800mm users, of which 5% pay (40mm), implying $13B in ARR. Still, this comes with a $8B 1H25 loss, so the leading AI company is dramatically losing money

• Another Apple exec leaves for Meta: Ke Yang, who a few weeks ago became the lead of the charge to develop a ChatGPT-like web search for Apple, has stepped down and will join Meta

• Data centers become the new political punching bag: In Virginia and beyond, candidates from both parties are blaming AI-fueled server farms for rising power bills and campaigning to slow or ban new projects. GOP nominee Winsome Earle-Sears defends the centers while Democrat Abigail Spanberger says tech firms should pay their way, as local races turn into referendums on whether communities should host Big Tech’s energy-hungry infrastructure

• Anthropic chases a $20–26B run-rate: The AI firm says its annualized revenue is nearing $7B this month and is targeting ~$9B by end-2025, with 2026 scenarios ranging from >$20B to as high as $26B. Momentum comes from 300,000+ enterprise customers (~80% of revenue), cheaper Haiku 4.5 and Claude Code (~$1B ARR), plus government deals and a 2026 Bengaluru expansion

• Private Credit vs Bankers: After Jamie Dimon called out a “cockroach” issue in the credit markets following the First Brands and Tricolor fiilings, Blue Owl’s Marc Lipschultz hit back against the perceived dig against private credit, saying “I guess he’s saying there might be a lot more cockroaches at JP Morgan…It’s not a private credit issue. It’s a liquid credit market.”

  • Unpacking this further: Lipschultz is right - unitranche financing isn’t a core part of the First Brands story - broadly syndicated loans & off-balance sheet financing is. While some of the off-balance sheet providers consider themselves private credit firms, Pitchbook found that these are the BDCs exposed to First Brands

• HSBC offloads loan risk to free capital: The bank plans a risk transfer tied to £3 billion in corporate loans, selling credit-linked notes to investors to insure against defaults. The move will bolster capital as HSBC pauses buybacks and pursues its $14B Hang Seng Bank buyout

• Goldman Sachs is planning layoffs: Goldman is planning another round of job cuts this year, seeking savings across its businesses as AI presents opportunities to increase efficiency and reduce roles. More than 1,000 employees are expected to be affected, although the bank will still end 2025 with a higher net headcount than last year

• JPMorgan to invest in national security: The bank said it would directly invest $10B in companies it deems critical to U.S. national security, such as rare earth producers, defense contractors, and AI firms

• Oak Hill doesn’t see a private credit bubble: Though CEO Glenn August acknowledged that there might be some “cockroaches” in the market, he argued that risk was “idiosyncratic” as companies face challenges ranging from tariffs to AI disruption to higher borrowing costs

• Sponsors’ hospital takeovers turn deadly: A new study found that private equity–owned hospitals have seven more Medicare emergency patient deaths per 10,000 than others. Researchers linked the spike to staffing cuts, wage reductions, and more patient transfers

• Private equity’s rebound hits a cash crunch: Despite big deals like the $55bn buyout of Electronic Arts and rising exits, the industry’s revival is stalling as fundraising sinks to a seven-year low. With limited fresh capital and investors demanding returns before reinvesting, dealmaking momentum remains jammed

• CalPERS dominates in private markets: The nation’s largest public pension fund posted the highest private equity returns among 74 U.S. peers for the fiscal year ending June 30, outpacing rivals as it continues to lean on the asset class for long-term growth

• Grindr LBO? The LGBT+ dating app may go private - owners are currently in talks with Fortress Investment Group to secure financing for a buyout at around $15 a share, which would value the company at about $3B

• Apollo & Papa Johns? The PE Giant is looking at an LBO of Papa John’s, reportedly offering $64/share

• Trump eyes another mining company: Shares of Nova Minerals rose 110% after a press release revealed Trump’s interest in one of its gold and mineral extractions sites in Alaska

• Palantir rival Govini has hit $100mm in ARR: The defense tech start up, backed by Bain Capital, holds a $900mm U.S. government contract, along with multiple Pentagon deals

• Brooklyn Mirage meets its final act: Bankrupt owner Avant Gardner has filed for a permit to demolish the iconic East Williamsburg venue after years of safety and regulatory issues. The 32,000-square-foot outdoor space will be torn down as the company restructures, though its indoor halls remain open

• Spotify and Netflix are teaming up: Spotify will have video podcasts hosted on Netflix

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M&A Transactions💭 

RG Gold, operator of a gold mining and production company, was acquired for $1.2B by Zijin Gold International (HKG: 02259). J.P. Morgan and BMO Capital Markets advised on the sale.

PSI Software (ETR: PSAN), a software producer in process control and information systems, has entered into a definitive agreement to be acquired for EUR 577.25M by Warburg Pincus. The transaction values the company at EUR 702.0M. EV/EBITDA was 36.06x and EV/Revenue was 2.69x. Goldman Sachs advised on the sale.

PAL Cooling Holding, provider of district cooling services, was acquired for $1.1B by Tabreed (DFM: TABREED) and CVC Capital Partners (AMD: CVC). BNP Paribas and Citigroup advised on the sale.

Industry Ventures, operator of an investment firm, has reached a definitive agreement to be acquired for $665.0M by The Goldman Sachs Group (NYS: GS). The company will receive a contingent payout of $300.0M upon the completion of future performance through 2030. Oppenheimer & Company advised on the sale.

Genetic, operator of a pharma contract development and manufacturing firm, was acquired for $797.09M by Renaissance Partners, Aurora Growth Capital, Mr. Rocco Pavese, Mr. Francesco Pavese, and Ms. Francesca Pavese. Rothschild & Co. advised on the sale.

Chaitanya Bilva, provider of civil engineering and construction services, was acquired for $4.991B by Lodha Developers (BOM: 543287).

The Industrial Distribution Facility of Arcapita was acquired by Ares Management for $200.0M.

The Oxford Science Park, operator of science and technology facilities, was acquired for GBP 890.0M by Ellison Medical Institute.

NAVEX Global, developer of a risk and compliance intelligence platform, was acquired for $2.5B by Blackstone and Goldman Sachs. EV/Revenue was 8.54x. Evercore Group and J.P. Morgan advised on the sale.

Loncor Gold (TSE: LN), a Canadian gold exploration company, has reached a definitive agreement to be acquired for CAD 259.54M by Chengtun Mining Group Company (SHG: 600711). EV/Cash Flow was 48.43x. Stifel advised on the sale.

Liberty Tire Recycling, provider of tire recycling services, has entered into a definitive agreement to be acquired for $1.5B by I Squared Capital. EV/Revenue was 2.0x. Jefferies and BMO Capital Markets advised on the sale.

Calastone, developer of a global funds network platform, was acquired for EUR 766.0M by SS&C Technologies Holdings (NAS: SSNC). Barclays advised on the sale.

Astria Therapeutics (NAS: ATXS), a biopharmaceutical company, has reached a definitive agreement to be acquired for $738.408M by BioCryst Pharmaceuticals (NAS: BCRX). Evercore Group advised on the sale.

Private Placement Transactions💭 

EcoRobotix, developer of autonomous machines, raised EUR 90.0M of Series D venture funding led by Highland Europe.

Tachyum, developer of intelligent information processing products, raised $220.0M of Series C venture funding from undisclosed investors.

Oura, developer of a wellness wearable ring, raised $900.0M of Series E venture funding led by Fidelity Management & Research at a pre-money valuation of $10.1B.

Lila Sciences, developer of a scientific superintelligence platform, raised $350.0M of Series A venture funding led by Braidwell and Collective Global.

Lean Mobility, manufacturer of compact urban electric vehicles, raised an estimated $450.0M of venture funding from Techsphere and other undisclosed investors.

Kardigan, operator of heart health company, raised $254.0M of venture funding from Fidelity Management & Research, T. Rowe Price Group, and other undisclosed investors.

Hualan Gene, producer of traditional herbal medicine, raised CNY 800.0M of venture funding from undisclosed investors.

Dexory, developer of autonomous robots, raised $100.0M of Series C venture funding led by Endeavor Catalyst and LTS Investments.

Odds of the Day 🍒 

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Until next time!

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