Exxon’s acquisition, Birkenstock’s IPO, and the FTX scam.

Hello Folks,

Today, we take a look at the big-ticket acquisition announced by ExxonMobil, the upcoming IPO of Birkenstock, and the ongoing court case against FTX founder Sam Bankman-Fried.

So, let’s get into it.

ExxonMobil Corporation agreed to buy Pioneer Natural Resources Company for $60 billion in the world’s biggest takeover this year. It is Exxon’s biggest deal since it merged with Mobil in 1999.

When all is said and done, Exxon should be able to crank up its daily oil production to around 50% more than its nearest rival’s and tap into tons of onshore oil wells that can be fired up within months.

That quick turnaround may come in handy: demand for oil fluctuates fast, so the ability to rapidly tweak production could help Exxon use market conditions to its advantage.

Major-scale oil companies once shrugged off The Permian Basin, doubtful that its wells could deliver enough crude oil to turn into worthwhile profit. That left smaller independent producers like Pioneer free to roam what’s become the US’s most prolific oil and gas basin.

Birkenstock all set for NYSE debut

Birkenstock is a Germany-based shoe brand that is going public on the NYSE. It priced shares at $46, valuing the company at $8.64 billion by market cap.

The company will release 10.75 million shares during the IPO, raising close to $500 million in the process.

Caroline Ellison Testifies Against SBF

In a scathing testimony against Sam-Bankman Fried, the co-founder of FTX, Caroline Ellison stated the former misappropriated funds worth $14 billion from clients.

SBF allegedly utilized these funds to settle debts with companies that had loaned capital to Alameda Research, a crypto trading company part of FTX.

Ellison claimed SBF directed her to commit these crimes while having an unlimited credit line on the crypto exchange!

Headlines You Can’t Miss!

The U.K. economy grew by 0.2% in August 2023

The IMF raises India’s growth forecasts

YouTube passes Netflix as top video source for teens

Bitcoin slumps to a two-week low following the U.S. inflation data

Profits are making a comeback

Chart of the Day

The Federal Reserve’s (the Fed’s) most aggressive rate-hiking run in decades, coupled with low initial bond yields and a growing government budget deficit, has resulted in huge losses in the Treasury market over the past two years.

The brunt of this impact has been felt in long-term bonds, which are highly sensitive to changing interest rates and are now facing losses comparable to some of the most significant market downturns in US financial history.

Bonds with maturities of ten years or longer have declined by a stunning 46% since their peak in March 2020, according to Bloomberg data. That’s only just shy of the 49% drop in US stocks following the burst of the dot-com bubble at the start of the century.

The rout in 30-year bonds has been even steeper, with a 53% fall. That’s close to the 57% drop in stocks at the height of the global financial crisis.

The key takeaway here is that while US government bonds are considered to be among the safest investments, the ones with long maturities can be volatile and prone to big drawdowns.

The longer the maturity of the bond, the greater its sensitivity to changing interest rates. So, while these bonds perform particularly well when rates are falling, they often get hammered when central banks are aggressively hiking rates.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell assets or make financial decisions. Please be careful and do your own research.