First, Diamondback is buying Endeavor in a $26 bn deal (cash + stock) to create the largest pure-play operator in the Permian Basin. Second, the EZ’s oil refineries are buying crude after a surge in diesel prices and supply disruptions due to Middle East challenges. West African grades moved from $4-6 a barrel over Brent a month ago to $5-7.
We’ve covered Germany’s dismal office building market, suffering its biggest drop in 2 decades last year. The banking association VDP noted that things could get worse. With its manufacturing output heading downward since 2017, and continuing on that path, its status as an industrial warlord may be done. From cars to chips, other counties are doing it better.
We finished Dry January. Now, it sounds like we’re getting no-sweat February, per the data, which shows that the post-pandemic growth in gyms in the US came to an abrupt halt last mo, which is typically the busiest mo of the year.
P/E funds returned the lowest amount of cash to investors since the GFC 15 years ago, per Ray Jay. So….do you feel bad for them?….they are having a hard time raising more cash for new vehicles. The median of distributions per net asset value per year is usually 25%. Last year they were 11%, given fewer IPOs, buyouts, and lower M&A. Or was it higher borrowing costs, so that they couldn’t do musical chairs and buy each other’s portfolios? The median holding period used to be 4 years, and now it is 5.6 years. So, if investors don’t get cash back (and typically have a set % allocation to p/e funds), they can’t recycle cash into new funds. Flywheel Broken. These guys cannot wait for Powell to lower rates. Maybe they shouldn’t have raised so much capital in 2021 and thought about spreading out their marketing work.
We’ve got one former Prez threatening 60% tariffs on all Chinese imports, which is causing our current Prez to focus on ways to look tougher for the polls, and a Prez hopeful to call the plan “ludicrous.” Remember how they just cleaned up the streets in SF for Xi’s visit, which we hoped could ratchet things down a bit? Imagine what curtailing China imports to zero would do, which is what BBG is estimating would happen? Interestingly, supposedly Beijing doesn’t care if Trump or Biden takes power, because Trump looks unpredictable and does aggressive stuff—even versus supposed allies. Biden does put pressure on China but maintains strong intl ties. Who would benefit from the big tariff, if it occurs? Southeast Asia, Mexico, the EZ…so they are also watching our elections closely.
A CA startup plans to suck up water from the Great Salt Lake to extract lithium this summer. The peak will be 80k gallons of water a minute. It hopes to produce 20k tons of battery-grade lithium a year at its one site, in the future. Their goal is to get a required input material (lithium) and lessen the environmental impact.
If Blackstone gets its way, there will be a second mega-consolidation of warehouse landlords in the UK, as it tries to merge its take-privates, basically St Modwwen plus a bunch of other stuff bought over 25 deals. Indurent, the newco name, will own more than 200 properties spanning 26mm sq feet, so it would be on par with Segro. They believe global supply chains will keep prices high for warehouse rents, which have been strong. Plus, they can offload big properties to sovereign wealth funds with loads of cash looking for a use.