—— Evergrande’s Hui Ka Yan Detained by Police; CarMax Stock Plunges Amid Used Car Market Pressure; Lululemon and Peloton Form Strategic Partnership; Carl Icahn Sells Entire Xerox Stake; Italian Bond Sell-Off Spreads in Europe; Former Blackstone Employee Charged With Insider Trading; US 30-Year Mortgage Rate Hits 23-Year High
1. Evergrande’s Hui Ka Yan Detained by Police
Sources revealed that earlier this month, Evergrande Group founder Hui Ka Yan was taken by police to a designated location for surveillance, although he has not yet been formally charged with any crime.
This month, judicial authorities also detained several employees from Evergrande’s asset management division, as well as two former executives.
On Wednesday, three Evergrande entities had their stocks suspended from trading. The company’s market value plummeted from a previous HK$81.4 billion to just HK$2.1 billion.
After the collapse of Evergrande’s restructuring plan, the likelihood of liquidation has significantly increased, further impacting China’s financial markets.
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2. CarMax Stock Plunges Amid Used Car Market Pressure
Today, used car company CarMax reported that adjusted net income for its fiscal second quarter was $0.75 per share, falling short of analyst expectations of $0.77 per share.
CEO Bill Nash stated that this year, increased new car inventory and the Federal Reserve’s interest rate hikes have negatively affected the business of used car sellers like CarMax.
However, if the United Auto Workers strike impacts new vehicle production by the Big Three automakers, the used car market could receive a boost.
Before market open this morning, CarMax shares plunged as much as 11.6% to $70.48 per share.
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3. Lululemon and Peloton Form Strategic Partnership
On Wednesday, connected fitness company Peloton Interactive announced a collaboration with popular athletic brand Lululemon Athletica.
Under the agreement, Peloton will sell co-branded apparel on its website, while Lululemon will integrate Peloton’s online fitness content into its smart fitness device, Lululemon Studio Mirror.
The Mirror device has a monthly subscription fee of $39. Subscribers can access workouts via mobile app. Peloton’s classes will be added to Lululemon’s current content library, and beginning next year, Lululemon will cease production of its own workout content.
Starting November 1, Lululemon Mirror users will be able to access Peloton content.
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4. Carl Icahn Sells Entire Xerox Stake
According to a statement released by Xerox Holdings today, activist investor Carl Icahn will sell his remaining $542 million stake back to the company, ending years of involvement.
Xerox will use recently secured loans to repurchase Icahn’s shares at the closing price of $15.84 per share.
Following the transaction, Jesse Lynn and Steven Miller — who work for various Icahn-affiliated firms — will resign from the Xerox board.
Icahn first disclosed a stake in Xerox in 2015 and has actively pushed for various strategic changes to improve company performance.
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5. Italian Bond Sell-Off Spreads in Europe
Today, European government bond prices plunged as Italy’s fiscal deficit exceeded expectations and concerns rose that the U.S. Federal Reserve will maintain high interest rates for an extended period.
Italian Prime Minister Giorgia Meloni raised the country’s budget deficit forecast and lowered GDP growth estimates for both this year and next.
As a result, the yield on Italy’s 10-year government bond surged 0.17 percentage points to 4.96%, the highest level in a decade.
The sell-off in Italian government bonds also pushed the yield on the UK’s 10-year bond up by 0.2 percentage points to 4.57%.
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6. Former Blackstone Employee Charged With Insider Trading
Today, U.S. federal prosecutors announced that Anthony Viggiano, a former employee of Goldman Sachs and Blackstone, shared confidential trade information with friend Stephen Forlano, including details about Blackstone’s $2.2 billion investment in insurance firm AIG.
Court filings show that Anthony also leaked information to another friend, Christopher Salamone. The two agreed to split illegal profits from insider trades, totaling approximately $300,000. Last week, Salamone pleaded guilty and agreed to cooperate with the government.
Although Forlano was not involved in the AIG-related insider trading, he profited $100,000 from other trades.
Blackstone clarified that Anthony worked for seven months as a junior analyst in a non-financial, non-investment division and resigned two years ago.
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7. US 30-Year Mortgage Rate Hits 23-Year High
Today, Freddie Mac reported that the 30-year fixed mortgage rate rose to 7.31% last week, the highest level since December 2000.
Since the third week of August, long-term mortgage rates have consistently stayed above 7%. Federal Reserve officials continue to emphasize that higher rates may need to persist longer to bring inflation back down to 2%.
The high rate environment has shattered many would-be homebuyers’ dreams — and it appears these conditions may last even longer.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.