January 16, 2025 | Read Online

What You Need To Know For January 16th

The End of Hindenburg and the Start of Earnings Season

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Welcome back! We're going to email you guys twice today, with an important message coming later this afternoon. Stay tuned on that front.

Let's get into earnings:

Earnings Corner 📜

JPMorgan Chase (JPM) reported earnings that beat estimates, with revenue up 10% y/y to $43.74B (vs. $41.73B expected) and EPS of $4.81 (vs. $4.11 expected). Mgmt. noted that profits rose 50% from Q4 2023, when the firm was hit with a one-time $2.9B assessment from the FDIC related to the regional bank failures. Fixed income and equities trading revenues were up 20% and 22%, while investment banking fees jumped 49% to $2.48B. Jamie Dimon described the economy as resilient, but voiced caution on persistent inflation and geopolitical tensions. The stock was up 2% at Wednesday's close

Citigroup (C) reported earnings that beat estimates, with revenue up 12% to $19.58B (vs. $19.49B expected) and EPS of $1.34 (vs. $1.22 expected). Quarterly net income jumped to $2.86B, versus a net loss of $1.84B last year, when the firm incurred major restructuring charges. Citi's markets, wealth management, and investment banking divisions all saw strong growth, with the last seeing a 35% increase y/y, largely due to momentum in investment grade debt issuances. Mgmt. projected 2026 ROE of 10%-11% (vs. their goal of 11%-12%). The stock was up 6.5% at Wednesday's close

Wells Fargo (WFC) reported earnings that beat estimates, with revenue up 6% y/y to $20.38B (vs. $20.59B expected) and EPS of $1.58 (vs. $1.35 expected). Mgmt. touted the firm's improved earnings profile, as investment banking fees grew 59% y/y to $725MM. The bank projects 1%-3% growth in net interest income for 2025, compared to $47.7B in 2024. Wells Fargo repurchased 57.8MM shares, totaling $4B, in Q4. The stock was up 6.7% at Wednesday's close

BlackRock (BLK) reported earnings that beat estimates. The firm's AUM hit a record $11.55T in Q4, up from $10.01T last year and $11.48T in Q3, with increased fees boosting profitability by 21% y/y. This growth was driven by the post-election surge in equity markets and strong capital inflows of $281.4B (vs. $95.6B a year ago). This year has also seen BlackRock funnel resources into growing its private investment arms, spending $25B to purchase infrastructure investment fund Global Infrastructure Partners and private credit platform HPS Investment Partners. The stock was up 3.3% at Wednesday's close

KB Home (KBH) reported earnings that beat estimates, with deliveries rising 17% due to faster home construction times. The stock was up 6.9% at Wednesday's close

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Today's Headlines 🍿

Stocks surged on Wednesday after an encouraging inflation report - CPI came in at 3.2%, lower than estimates of 3.3%, sending the Nasdaq in particular up a great 2.5%. Rates also rallied, with Fed Rate Cut predictions shifting from September to this Summer.
Quantum Computing Stocks ripped higher again after Microsoft urged businesses to get "quantum ready" in 2025
Hindenburg Research, the notable short-seller firm is closing up shop. In a moving letter, the founder highlighted the success of their reports, but alluded to the downsides of the business, such as the stress and the lawsuits
The TikTok Latest: Chinese authorities are reportedly considering engaging with Elon Musk as a potential broker to keep TikTok active in the U.S. President Elect Trump meanwhile has pledged to keep the ByteDance site alive so an orderly sale process can take place. The U.S. unit is expected to be worth $40-$50B, with Kevin O'Leary and Mr. Beast among those circling the app. Meanwhile, US TikTok users are flocking to RedNote, a similar Chinese app
The New Congestion Pricing Law in NYC has driven traffic down by 7.5%. 539k vehicles drove through Manhattan during Jan 6-Jan 10, a 43k drop from normal levels. It's estimated that it now takes 4 minutes and 27 seconds to drive through Holland Tunnel - down from the prior average of 13 minutes
Investors are seeking $5 Billion to form a Basketball League to rival the NBA: LeBron's business partner, Maverick Carter, is advising on the move, with UBS and Evercore helping raise financing. The planned league is expected to include six men's and six women's teams who will travel around the globe
Shake-ups under Dimon: JPM COO Daniel Pinto will retire in 2026, with Jenn Piepszak taking his spot as COO. With Pinto leaving, it's now less clear who will take the reins of America's biggest bank once Jamie steps aside
Citi is putting aside $600mm in conjunction with severance payments they plan to make this year. Last year, Citi cut 10,000 jobs, but fewer cuts are expected this year
Ares is raising a $30B European private credit fund. The fund will be the largest ever in Europe, with nearly $20B in equity commitments
Harvard MBAs are struggling to get jobs. Over the past couple of years there's been a massive spike in Ivy League MBAs struggling to get a job three months after graduating

The SEC fined KKR, Blackstone and Apollo for texting misuses
BlackRock's Mark Wiedman, a former CEO candidate to replace 72-year-old Larry Fink, is leaving the Company
New York Diners are Dying: Between 2020 and 2024, 13% of New York's 500 24-hour diners closed. The NYT just published a profile of a few still making it work
Qantas had to delay flights to South Africa after SpaceX rocket debris began falling from the sky in the southern Indian Ocean
Beacon Roofing Supply rejected an acquisition bid from Brad Jacob's new building supply company QXO. Beacon's management said the $124.25/share bid "significantly undervalued" their firm
Prospective Home Buyers can't catch a break: New data reveals that first time home buyers will only have a harder time finding starter homes this spring, thanks in part to limited land availability, rising construction costs, and too much red tape. Since 2020, home prices have surged more than 52%
Red Dye No. 3 which has been linked to cancer will be banned in U.S. foods. Red Dye No. 3 has already been banned in U.S. cosmetics, but is used in thousands of foods such as candy, cherries in fruit cocktails, and cereals
Intel is restructuring (again): The original chipmaker is spinning off its corporate venture arm, Intel Capital, into a standalone fund with the parent company as an "anchor investor"
Layoffs at Meta: Zuck announced on Tuesday that ahead of an "intense year" the bottom 5% of the workforce would be cut and positions would later be back-filled
US hedge funder Boaz Weinstein announced that he aims to be a "white knight" in the United Kingdom with plans to buy into the nearly $300B investment trust sector
America spends more than it has (again). The budget deficit rose in December, up 40% YoY driven by rising financing costs and falling tax revenues. The national debt has now swept past the $36 trillion mark
DJ D-Sol is Worried: Goldman Sachs CEO David Solomon warned that de-regulation promised by Trump would spark investment but warned that the US economy is in a "fragile place," urging caution
Indonesia, the world's fourth most populous country just announced that it would plan to launch one of the world's largest free meal programs for more than 82mm people at an annual cost of $82B
OpenAI beefs up its Board: The ChatGPT parent just announced that billionaire investor and founder of Global Infrastructure Partners (which sold to BlackRock for $12.5B last year) Adebayo Ogunlesi will be joining its board. After Sam Altman retook the reins last year he has positioned OpenAI to become a for-profit company
Southwest Airlines is on a hiring freeze and cancelling summer internships: Amidst intense pressure from Elliott Investment Management, the budget airline is pursuing a plan to boost profits and cut costs, including abandoning its 50-year old free seating model, launching overnight flights, and eliminating unprofitable routes

Geopolitics 🌎️

Israel and Hamas have reached a ceasefire and hostage release deal
Canada is preparing retaliatory tariffs on the U.S.
IRS Part Deux: Trump announced that he will create an "External Revenue Service" charged with collecting his planned tarrifs on imports. On Truth Social, the President-Elect wrote, "We will begin charging those that make money off of us with Trade, and they will start paying, FINALLY, their fair share. January 20, 2025, will be the birth date of the External Revenue Service"
Trump is encouraging Vivek Ramaswany to run for JD Vance's open Ohio Senate seat
Donald Trump Jr. is joining Kalshi as an advisor

M&A Transactions💭

Scorpion Therapeutics, operator of a precision therapeutics company, reached a definitive agreement to be acquired for $1.0B by Eli Lilly and Company (NYS: LLY). Centerview Partners and Morgan Stanley advised on the sale.

Vistar Media, developer of an end-to-end programmatic ecosystem platform, reached a definitive agreement to be acquired for $600.0M by T-Mobile US. Canaccord Genuity advised on the sale.

Life Molecular Imaging, developer of novel PET tracers designed for molecular imaging research and development services and a subsidiary of Alliance Medical, reached a definitive agreement to be acquired for $780.0M by Lantheus Medical Imaging (NAS: LNTH). Bowman and Morgan Stanley advised on the sale.

Intracellular Therapies (NAS: ITCI), a biopharmaceutical company, reached a definitive agreement to be acquired for $14.6B by Johnson & Johnson (NYS: JNJ). EV/Revenue was 23.83x. Jefferies advised on the sale.

Fiber Materials, developer and manufacturer of composite materials, was acquired for $165.0M by Tex Tech Industries. Morgan Stanley advised on the sale.

Enfusion (NYS: ENFN), a software-as-a-service, reached a definitive agreement to be acquired for $1.467B by Clearwater Analytics Holdings (NYS: CWAN). EV/EBITDA was 83.67x and EV/Revenue was 7.52x. Goldman Sachs advised on the sale.

Blaize (NAS: DUMY0000466), provides customized, programmable processor architecture suite, acquired BurTech Acquisition through a reverse merger for $894.0M resulting in the combined entity trading on the NAADAQ stock exchange under the ticker symbol $BZAI.

Bank of Idaho (PINX: BOID), a single-tier holding bank, reached a definitive agreement to be acquired for $245.4M by Glacier Bancorp (NYS: GBCI). EV/Net Income was 21.17x and EV/Revenue was 4.46x. MJC Partners advised on the sale.

Starface, developer of voice-over-internet protocol software, reached a definitive agreement to be acquired for $206.42M by Gamma Communication (LON: GAMA). EV/EBITDA was 12.72x and EV/Revenue was 4.34x.

Bullabulling Gold, operator of mining exploration company, was acquired for $103.95M by Minerals 260 (ASX: MI6).

Arch Resources, a producer of metallurgical and coking coal, was acquired for $2.5B by CONSOL Energy (NYS: CEIX). EV/EBITDA was 7.15x and EV/Revenue was 0.93x. Perella Weinberg Partners advised on the sale.

Combi-Blocks, manufacturer of chemical products, reached a definitive agreement to be acquired for $215.0M by Bide Pharmaceutical (SHG: 688073).

Pflegen & Wohnen Hamburg, provider of inpatient hospital care, has reached a definitive agreement to be acquired for $394.51M by HGC Hamburger Ges Vermogens und Beteiligungsmanagement.

Miller Electric Company, provider of electrical contracting services, reached a definitive agreement to be acquired for $865.0M by Emcor Group (NYS: EME). Stephens advised on the sale.

Jamco (TKS: 7408), Japan-based aircraft engine and engine parts company, has entered into a definitive agreement to be acquired for $634.0M by Bain Capital. EV/EBITDA was 32.47x and EV/Revenue was 2.17x.

Industrious, operator of flexible workspaces, has reached a definitive agreement to be acquired for $400.0M by CBRE Group (NYS: CBRE).

H&E Rentals (NAS: HEE), an integrated equipment services company, has reached a definitive agreement to be acquired for $4.8B by United Rentals (NYS: URI). EV/EBITDA was 7.02x and EV/Revenue was 3.16x. Bank of America advised on the sale.

Evident Inspection Technologies, provider of inspection technology and a subsidiary of Evident Scientific, has reached a definitive agreement to be acquired for $1.78B by Westinghouse Air Brake Technologies (NYS: WAB). EV/EBITDA was 15.89x and EV/Revenue was 4.11x.

Spindrift Beverage Co., producer of sparkling water, has entered into a definitive agreement to be acquired for $650.0M by Gryphon Investors. J.P. Morgan and Piper Sandler advised on the sale.

Private Placement Transactions💭

D.E. Shaw Renewable Investments received approximately $1.725B of developmental capital from Macquarie Asset Management. The transaction underscores MGIF's objective of expanding its global portfolio of diversified core infrastructure assets.

Kardigan, operator of a heart health company, raised $300.0M of Series A venture funding led by Sequoia Heritage, Perceptive Advisors and ARCH Venture Partners.

Tune Therapeutics, developer of an epigenetic programming platform, raised $175.0M of Series B venture funding led by Hevolution Foundation, Regeneron Ventures, and Yosemite.

Cera Care, operator of a digital-first home healthcare company, raised $150.0M of venture funding through a combination of debt and equity led by BDT & MSD Partners and Schroders Capital at a pre-money valuation of $850.0M.

Truveta, developer of a health data platform, raised $320.0M of Series C venture funding from Illumina, Regeneron Pharmaceuticals, and other undisclosed investors at a pre-money valuation of $580.0M.

Qventus, developer of hospital management software, raised $105.0M through a combination of debt and equity at a pre-money valuation of $315.0M. $85.0M of Series D venture funding was led by Kohlberg Kravis Roberts. The transaction was supported by $20.0M of debt financing.

Umoja Biopharma, provider of immunotherapies, raised $100.0M of Series C venture funding led by DCVC Bio and Double Point Ventures.

Loft Orbital, developer of a satellite deployment and management platform, raised $170.0M of Series C venture funding led by Tikehau Capital and Axial Partners.

Harbinger, developer of electric vehicle technologies, raised $100.0M of Series B venture funding led by Leitmotif and Capricorn Investment Group.

Synthesia, developer of a video synthesis technology, raised $180.0M of Series D venture funding led by New Enterprise Associates at a pre-money valuation of 1.92B.

Odds of the Day 🍒

Prompt

The NYC Mayor race is heating up, and even though he hasn't announced, Kalshi traders are pricing in a 37% chance of former NY Governor Andrew Cuomo winning the democratic mayoral nomination.