In this week’s market roundup, we explore some of the latest developments in the financial world. From activist hedge funds targeting Rupert Murdoch’s News Corp to the changing outlook on a looming recession, there are intriguing shifts taking place. Additionally, we delve into Morgan Stanley’s role as a victim in a high-profile trial, Birkenstock’s less-than-optimal IPO debut, clashes over university stances, and the impending arrival of a Bitcoin exchange-traded fund (ETF). Let’s dive right in.
Activist Hedge Fund Eyes News Corp:
Recent reports indicate that activist hedge fund Starboard has set its sights on Rupert Murdoch’s News Corp. However, this endeavor may not be easy, as Starboard would need Murdoch’s consent to bring about significant changes. The Murdoch family trust currently controls 39% of the company’s voting shares, which has garnered objections from several investors. Interestingly, last year, another activist hedge fund, Irenic Capital Management, successfully pushed News Corp to spin off its real estate websites and Dow Jones, the publisher of the Wall Street Journal. Furthermore, Irenic generated investor opposition to Murdoch’s proposed merger with Fox Corp, ultimately leading to its abandonment.
Recession Outlook Improves:
In positive news, industry experts are becoming less pessimistic about the likelihood of a recession in the near future. According to the latest quarterly survey by The Wall Street Journal, business and academic economists have lowered the probability of a recession within the next year. The shift in sentiment from an average of 54% in July to a more encouraging 48% indicates a reversal of negative market sentiment. Experts attribute this growing optimism to several key factors: a decline in inflation, the Federal Reserve halting interest rate hikes, and robust economic growth coupled with a strong labor market that has outperformed expectations.
Morgan Stanley’s Role in Glen Point Trial:
Prosecutors in a high-profile trial sought to keep Morgan Stanley’s involvement under wraps, raising concerns about potential distractions for jurors. Neil Phillips, co-founder of Glen Point Capital, argued that the government needed to demonstrate the material impact of a $20 million option on Morgan Stanley. This case puts the spotlight on the intricate relationships between hedge funds and financial institutions when legal battles ensue.
Birkenstock’s IPO Woes:
A shaky IPO market affected shoemaker Birkenstock, resulting in a lackluster market debut. The company’s stock closed down 12.6%, marking the worst first-day performance among US IPOs worth $1 billion or more in over two years. Birkenstock faced several challenges, including potential US government shutdowns, public holidays, delayed listings in Europe, an outbreak of war, and disappointing earnings from its indirect backer, LVMH. These factors contributed to a less-than-ideal start for the cork-soled sandals producer.
University Clash Over Stances:
The clash between Wall Street bosses highlights a wider debate on university policies. Apollo CEO Marc Rowan called for Greenhill CEO Scott Bok and Penn’s university president, Elizabeth Magill, to resign after the Palestinian literature festival held on campus allegedly invited speakers with antisemitic ideas. Rowan urged donors to send just $1 to Penn until the resignations took place. This incident has led to discussions around the financial pressure exerted by donors in influencing university decisions.
Bitcoin ETF on the Horizon:
In a significant development for cryptocurrency enthusiasts, the Securities and Exchange Commission (SEC) has ceased its fight against a Bitcoin ETF. With the clock running out for the agency to appeal a crucial court ruling, analysts predict the imminent arrival of a Bitcoin ETF. Bloomberg’s crypto analyst gnomes estimate a 90% probability that the product will debut by January 10th, signaling a potential landmark moment for the crypto market.
Market Capital Research 