Crypto News: Wall Street hunts for gold

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US hiring picked up in August and wage growth slowed.
Jon Corzine's critics want him banned from futures trading.
Tesla revamped the Model 3 and slashed prices of its top-end cars.
Wall Street is still working on cajoling staffers back to the office.

Bankers are famished. The market for mergers and acquisitions is some $1 trillion shy of last year, and financing for deals has withered. This is the worst year for initial public offerings since the wake of the financial crisis in 2009. With a dearth of deals at so many levels, it's no wonder so many dealmakers have lost their jobs.

After Labor Day, there's reason for a dose of optimism, if not outright hope. Goldman Sachs, JPMorgan Chase and some two dozen other banks will market the listing of SoftBank's Arm, potentially one of the largest IPOs ever. Instacart's and Klaviyo's public debuts look promising, too—after all, they're already profitable. The "grow-at-all-costs-and-ask-questions-later era is gone," Phil Haslett, co-founder of EquityZen, said in a Bloomberg Television interview this week. Uber, DoorDash and Lyft all trade below their IPO prices, he noted, while WeWork is on the brink of bankruptcy.

Haslett's company tracks 1,400 unicorns that could eventually go public. "A lot of them are not doing well, but some of them are," he said. For investors who've held illiquid stakes for years and are eager to find an exit, according to Haslett, there's really only a three- or four-week window to consider this year. Venture investors are joining private equity firms, who are hoping to exit investments through IPOs and other transactions.

Haslett on Bloomberg Television on August 28, 2023.

That's also partly why M&A could yet stage a comeback. Some $15 billion of risky buyout debt could finance private equity and corporate takeovers, Jill Shah and Michael Tobin reported for Bloomberg News. Deals to watch after Labor Day include more than $8 billion of debt tied to GTCR's purchase of a large stake in Worldpay and, eventually, private equity firm Roark Capital expects to borrow nearly $5 billion in an esoteric, structured debt market to finance its purchase of Subway, the sandwich chain.

Buyout firms are looking to exit old holdings just as much as they're trying to spend $2.5 trillion of "dry powder," or unspent money they've accumulated—a record figure for the industry that's larger than the gross domestic product of Canada. With markets whipsawing, they've been saddled with their older assets, unable to collect meaningful profits to disburse to investors and staff.

Doesn't sound like much of a gold mine. More like panning for speckled nuggets—aka fees—which gives you a sense of just how bleak things have been for dealmakers of late. Speaking of which, Goldman Sachs leads the way on underwriting IPOs this year, followed by Citigroup. Goldman, however, still trails JPMorgan on M&A volume, according to Bloomberg data—a space it's led for years.

But how's this for hope: It's not even Labor Day yet.

The Wall Street giant is quickly reversing transactions made earlier in David Solomon's era, when Goldman tried to catapult into the consumer business.

Goldman this week agreed to sell investment adviser United Capital, which it acquired a few years ago for about $750 million. The firm didn't disclose the sale price but said it looks to book a gain, a contrast from the writedown it's taking from the exit of the GreenSky business it bought at an even bigger price tag in recent years, Bloomberg's Sridhar Natarajan reported. The GreenSky sale is in its final stretch with buyout firms circling.

That deal, plus the sale of Marcus loans, has Goldman suddenly looking more like, well, a behemoth investment bank and money manager. Can the Wall Street institution finally leave the messy consumer foray behind? "I never thought that was a good idea," said Wells Fargo analyst Mike Mayo of the experiment. "Goldman is becoming more of that Wall Street bank, which has made it strong for over 150 years."

United Capital's business is being acquired by Creative Planning, a $250 billion investment firm whose CEO Peter Mallouk joined us for an exclusive on Bloomberg Television. He also didn't disclose the purchase price—but he's happy, he said.

That's how many milligrams of psilocybin, the drug found in magic mushrooms, patients in a study were given before spending time with a therapist. The study found the drug could ease major depression.

"The conventional wisdom seems to be flipping from a concern with the unstoppable rise of Chinese power to a worry about the irrevocable decline of China's economy and population."

Richard Fontaine

Chief executive officer of the Center for a New American Security in Washington

In China's economic travails, Group of Seven nations increasingly see evidence of deep-seated structural problems that ultimately will strengthen the West's hand against Beijing.

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