— Volkswagen Invests in XPeng; Boeing Loss Widens Amid Soaring Costs; Warburg Pincus Backs PacWest; Deutsche Bank Boosts Loan Loss Provisions; Investors Snap Up Dr Pepper Call Options; Fed Announces 11th Rate Hike; JPMorgan Buys $2 Billion Mortgage Portfolio

1. Volkswagen Invests in XPeng

Today, Volkswagen AG announced it will invest $700 million in Chinese EV maker XPeng, acquiring a 4.99% stake and a seat on the board.

In recent years, Tesla and BYD have gained market share by better meeting consumer preferences, while Volkswagen’s share has declined.

Although China’s EV market expanded 20% in the first half of this year, Volkswagen’s market share shrank.

Volkswagen and XPeng plan to jointly develop two new EVs, with the first model expected to launch in 2026.

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Source:Bloomberg – Volkswagen Takes $700 Million Xpeng Stake for EV Pact to Win Back China

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2. Boeing Loss Widens Amid Soaring Costs

Today, Boeing reported Q2 revenue up 18% to nearly $20 billion, with commercial aircraft deliveries rising to 136 units.

However, soaring costs pushed Boeing’s quarterly net loss to $149 million, as the company spent $514 million addressing supply chain and labor instability.

Before market open, Boeing’s stock rose more than 3%.

Earnings per share (EPS) was a net loss of $0.82, slightly better than Wall Street expectations.

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Source:Financial Times – Boeing reports loss as costs outweigh boost from jet deliveries

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3. Warburg Pincus Backs PacWest

Warburg Pincus and Centerbridge Partners will provide $400 million to fund the Banc of California–PacWest Bancorp merger, acquiring shares of the merged company at $12.30 apiece.

With fresh funding, the two struggling banks can accelerate asset sales and boost share prices.

Following the merger announcement, PacWest’s stock surged 28.9% to $9.91, while Banc of California rose 1.95% to $14.90.

At current prices, Warburg Pincus and Centerbridge stand to gain about $90 million, plus $150 million in warrants.

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Source:Bloomberg – Private Equity Dips Into Its Cash Stockpile for PacWest Deal

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4. Deutsche Bank Boosts Loan Loss Provisions

Today, Deutsche Bank reported Q2 results, raising loan loss provisions by 72% year-over-year to €401 million, citing macroeconomic uncertainty and lower loan volume.

Net profit attributable to shareholders shrank 27%, largely due to a 9% decline in bond trading revenue and a 15% increase in costs.

Return on tangible equity fell to 5.4% from 7.9% a year earlier, well below the bank’s 10% target.

Nonetheless, profits exceeded expectations thanks to strong corporate finance performance.

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Source:Financial Times – Deutsche Bank braced for rise in bad loans

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5. Investors Snap Up Dr Pepper Call Options

Ahead of Keurig Dr Pepper Inc’s earnings release on Thursday, investors bought over 26,000 bullish call options expiring September 15 at a $34 strike price—worth more than $1 million.

Chris Murphy, co-head of derivatives strategy at Susquehanna International Group, said the trades appear speculative rather than hedging.

Analysts expect Keurig Dr Pepper’s Q2 revenue to rise 4.2%.

Bloomberg data shows nine Buy ratings, nine Hold ratings, and one Sell rating for the stock, which is down more than 9% year-to-date.

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Source:Bloomberg – Keurig Dr Pepper Sees $1 Million in Bullish Call Options Ahead of Earnings

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6. Fed Announces 11th Rate Hike

Today, the Fed raised its benchmark interest rate by 0.25%, bringing it to 5.25%-5.5%—the highest in 22 years and the 11th increase since March 2022.

The next Fed meeting is scheduled for September, but officials have not decided whether to raise rates again or hold steady.

Chair Jerome Powell said future moves will be data-dependent, aiming for slower growth, moderating inflation, and improved labor market balance.

Swap traders largely maintained expectations for one more hike this year.

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Source:Bloomberg – Fed Raises Interest Rates to 22-Year High, Leaves Door Open for More

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7. JPMorgan Buys $2 Billion Mortgage Portfolio

Sources revealed that JPMorgan will buy Banc of California’s single-family mortgage portfolio for nearly $2 billion to assist its merger with PacWest Bancorp.

The two banks previously announced plans to sell $7 billion in loans, mortgage-backed securities, and other assets to pay down $13 billion in debt with a 5% interest rate.

It is unclear whether JPMorgan intends to hold or resell the mortgage assets.

The $7 billion asset pool yields less than 4%.

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Source:Bloomberg – JPMorgan to Buy Almost $2 Billion of Mortgages in PacWest Deal

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This content is sourced from Financial TimesBloomberg, and The Real Deal, among other financial news outlets.