What You Need To Know This Week — October 5th, 2019
What You Need To Know This Week
A weekly recap to keep you informed on the most important events this week impacting markets, business, tech and the global economy.
BROKER BATTLE BREAKS OUT AS SCHWAB DROPS COMMISSIONS TO ZERO
Shares of U.S. discount brokerage firms plunged this week as Charles Schwab Corp said it was eliminating commissions on stocks, ETFs and options on North American exchanges. Competitors E-Trade and TD Ameritrade were forced to follow suit, cutting their customer trading commissions to $0.00. The firms were previously charging $4.95 — $6.95 per trade. Their share prices were down double digits on the news.
U.S. PMI FALLS BELOW 50 IN OMINOUS SIGN FOR THE GLOBAL ECONOMY
The Institute for Supply Management’s Purchasing Managers’ Index (PMI) fell to 47.8 last month, its lowest level since June 2009 and below consensus expectations of 50.2. A PMI reading below 50 signals contraction in the manufacturing sector and is a well-known leading indicator for the broader economy. The S&P 500 dipped -1.2% on the news.
FANDUEL OWNER PUSHES ALL-IN WITH ITS $6 BILLION ACQUISITION OF POKER STARS PARENT
Ireland’s Flutter Entertainment PLC, owner of online betting sites Paddy Power and Betfair, agreed to acquire gambling company The Stars Group, which owns PokerStars, for US$6 billion. Flutter is seeking to increase its exposure to the budding U.S. online gambling market. The Stars Group shares were up 31% on the TSX.
LBO HOT POTATO CONTINUES AS GREAT WOLF RESORTS BOUGHT BY A THIRD PRIVATE EQUITY FIRM
Private Equity firm Blackstone Group announced that it is acquiring a 65% stake in water-park owner Great Wolf Resorts in a $2.9 billion joint venture with its current private equity owner Centerbridge Partners. Fellow private equity firm Apollo Global owned Great Wolf prior to selling it to Centerbridge in a so-called secondary deal in 2015.
Recommended Articles, Podcasts, Books and Tweets
Listen to noted China bear Chris Balding on the mirage masking China’s slowing economy.
U.S. nonfarm payrolls rose by 136,000 in September and the unemployment rate dropped 0.2% to 3.5%, representing a 50-year low. The median forecast called for a 145,000 increase for the month.
Short sellers are betting against WeWork debt after its failed IPO. The bearish bets amount to over 10% of its bonds.
Scooter startup Bird raises $275mm of equity capital at a $2.5 billion valuation.
A profile of Orlando Bravo, leader of software-focused private equity firm Thoma Bravo.
RxBar co-founder, Peter Rahal, who sold his company for $600 million, discusses what its like to “become an overnight millionaire”.
With their superior risk-adjusted returns, Beta + Alpha strategies make smart beta seem dumb.
Private equity returns are not persistent among managers: “Performance in PE tends to be randomly distributed: A large proportion of fund managers delivers middle-of-the-road returns, a few significantly outperform, and a similar number fail”.
Quantitative strategies now account for 60% of institutional equity assets, and are only increasing.
WeWork officially pulls the plug on its IPO.
Airbnb is leaning toward a direct listing instead of a traditional IPO.
One of the largest custodians in the world, BNY Mellon, is restricting clients from trading cannabis securities.
After dismal showings from portfolio companies Uber and Slack, in addition to the failure of WeWork’s IPO, many of Softbank’s bets on disruptive companies are not paying off.
Premium valuations should be for companies with high gross margins, according to venture capitalist Fred Wilson.
-The Accelerate Team
