—— Citadel Eyes Cookware Company Assets; Americans’ Pandemic Savings Nearly Depleted; Evergrande Faces Liquidation, Stock Plunges 22%; Global Trade Sees Biggest Drop in 3 Years; Hedge Funds Cut UK Bond Shorts; Zara Founder Buys $230M Residential Tower; US August New Home Sales Miss Forecast
1. Citadel Eyes Cookware Company Assets
Sources revealed that various assets of bankrupt cookware firm Instant Brands have attracted acquisition interest from firms including Centre Lane Partners and Citadel Securities.
Citadel is reportedly interested in purchasing Instant Brands’ existing debt from current bondholders at 7% of face value. It has also invited investors unwilling to sell their debt to jointly bid for Instant Brands’ consumer goods business, enabling them to convert debt into equity.
In June, Instant Brands filed for Chapter 11 bankruptcy protection, citing high interest rates that severely strained its balance sheet.
The company will continue operations and seek debt restructuring under bankruptcy protection.
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2. Americans’ Pandemic Savings Nearly Depleted
According to the Federal Reserve’s survey on household finances, only the wealthiest 20% of U.S. households still retain excess savings accumulated during the pandemic.
For the remaining 80%, total income, bank deposits, and liquid assets have fallen below March 2020 levels.
Compared to the 2021 peak, assets for all households have declined. The top 25% of households still hold 8% more in cash savings than at the onset of the pandemic, while the bottom 40% have seen their cash savings drop by 8%.
These figures highlight the diminishing purchasing power of U.S. consumers. Analysts warn that at this rate, a recession remains a real possibility.
The Fed’s San Francisco branch estimates that remaining excess savings may be depleted by the end of this quarter.
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3. Evergrande Faces Liquidation, Stock Plunges 22%
On Monday, China Evergrande’s potential liquidation crisis sparked investor concern, sending its stock down 22% — the biggest drop in nine months — with year-to-date market cap losses reaching $56 billion.
Bloomberg’s China developer stock index fell 7.1%, with China Aoyuan shares plummeting 72%.
Evergrande abruptly canceled a key bondholder meeting and announced a need to reassess its restructuring plan, leading to widespread negative sentiment in the real estate sector.
Markets are now concerned that Country Garden may also default soon.
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4. Global Trade Sees Biggest Drop in 3 Years
According to the Netherlands Bureau for Economic Policy Analysis (CPB), global trade volume recorded its largest annual drop in three years in July, showing that high interest rates are impacting global goods demand.
The data shows global trade volume fell 3.2% year-on-year in July, following a 2.4% drop in June.
China, the world’s largest exporter, saw trade volume fall 1.5%. The Eurozone and the U.S. posted declines of 2.5% and 0.6%, respectively.
Capital Economics economist Ariane Curtis noted that cars, home goods, and capital equipment — often bought with credit — are the most affected by rate hikes.
Global trade surged during the pandemic but has slowed sharply as rates have risen.
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5. Hedge Funds Cut UK Bond Shorts
Markets increasingly believe the Bank of England may soon end its tightening cycle, prompting many hedge funds to unwind short positions on UK government bonds.
According to S&P Global, the total value of bets against gilts fell below £65 billion this week, the lowest since 2006.
Pictet Asset Management’s chief economist Nikolay Markov said the UK base rate likely has peaked.
UK bond prices have steadily recovered in recent weeks. Earlier this year, gilts were the worst-performing sovereign bonds.
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6. Zara Founder Buys $230M Residential Tower
Last month, Zara billionaire founder Amancio Ortega purchased the luxury residential tower 727 West Madison in Chicago for $232 million.
Over the past decade, U.S. billionaire investments in multifamily housing have more than doubled. As commercial real estate corrects, many investors are doubling down on properties with falling prices. A housing shortage also boosts the appeal of rental apartments.
Earlier this year, Israeli billionaire Eyal Ofer bought a 57-unit building near Manhattan’s Gramercy Park.
Before the pandemic, wealthy investors focused on office towers for their stable income from long-term leases.
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7. US August New Home Sales Miss Forecast
The latest data shows annualized U.S. new home sales in August dropped to 675,000 units, below the forecast of 700,000, but still 5.8% higher than the same period last year.
In contrast, August existing home sales dropped 15.3% on an annualized basis, as many homeowners are unwilling to sell or move in the current environment, resulting in tight inventory.
Due to the short supply of both new and existing homes, demand for new homes remains relatively strong.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.