Daily Musings

Evening all

Over the weekend, Tesla unveiled its cybercab—an ode to minimalism. All the unnecessary clutter — like a steering wheel or pedals — has been cut.

I lost points on my driver’s license exam for checking the box stating you should keep both hands on the steering wheel most of the time. Turns out, never might have been the correct answer — yet it was not one of the options. While I’m on hold with the driving school hotline to demand a refund, I share today’s musings.

Cheers

Phil

Today’s Reads

• Leading European ventures and investors — including Deep, Personio and Remote founders — have called for EU action to implement a single unit for innovation. The purpose is to more holistically scale European startups across the entire ecosystem of the 27 member countries. This planned supergroup is earmarked for the name EU Inc. The proposed plans include simplified cross border operations, a harmonized investment process and unified ESOP frameworks. The project launch keeps the momentum rolling that recent calls by Draghi, von der Leyen and Letta for a unified European effort and transform the bloc’s innovative competitiveness. The petition for those interested can be signed here 

• Monzo stepped up its valuation to USD 5.9bn in an employee share sale. He fresh capital is supposed to bolster the Neobank expansion plans into the EU. Terra of the share include StepStone and GIC, which also got in on the USD 610m funding action earlier this year

• S&P predicts more foreign-currency debt defaults - the Bund vs. French Government Bond Yields are rising to new heights

Chart Art

We approach the ECB rate cut meeting and expectations are relatively aligned on a 25bps cut. About a month ago this was a ruled out scenario - evident in the pre-September path for rate expectations. Terminal market rate expected to now approach 200bps by 2026.

I owe an apology to all equity analysts that I have mentioned yesterday. The worst is in fact not over and we are about to hit an earnings wall coming in the next two weeks. For non researchers exciting times as cross reads on the economy may crystalise.

Blue Owl dominates PIK interest amongst the PC space. The FT points out the immense stress signal that the PIK overhang signals for corporate America. When PEs levered their PortCos to the roof, betting on expansion plans to provide enough momentum to cover the looming interest accrual, market commentators are now questioning if the wager will materialise or end up with bust assets. LMEs are ever-present

Alas not all is doomed. At least not according to the CBOE P/C ratio. On Equity enthusiasm, calls are outpacing puts as the ratio dips to the lowest level since July 2023.