UBS and Credit Suisse Merger to Close on 31 May 2024

The merger of UBS AG and Credit Suisse AG is expected to complete on 31 May 2024. 

Merger of the US intermediate holding companies and Swiss specific entities is on hold for future quarters pending regulatory approvals. 

UBS made a net profit of 1.8bn USD in Q1 2024 with underlying QoQ revenue growth of 15%. A reduction of USD 16bn in RWA for non-core and legacy was achieved reflecting active unwinds. RWA now stands at 526bn USD. It spent 523m USD on integration expenses in Q1.

Musk raises $6bn for xAI

 xAI has raised $6n from investors including Andreesen Horowitz to bring its “first products to market, build advanced infrastructure, and accelerate the research and development of future technologies.” Some of this money will go into data centers with some expensive GPUs. Founder Elon Musk is also suing its competitor OpenAI for its partnership with Microsoft citing an abandonment of its mission to benefit humanity.

Griffin Urges Al-Mat to Embrace "Western Values"

Citadel hedge fund manager Ken Griffin has stopped giving funding to Harvard over how it has handled campus protests. He has stressed a necessary return to values of meritocracy, speaking at the Managed Funds Association Conference in Miami.

Trend Followers Triumph in Q1 2024

SocGen has showed quant hedge funds gained 12% for the year to the end of March with positive outcomes for Man Group. Aspect Capital and Winton, helped by soaring cocoa prices.

Klarna Preps IPO after 5th annual consecutive loss

Swedish BNPL (buy now pay later) fintech Klarna is prepping for an IPO reputedly in New York in order to boost investment. It posted a 2.5bn SEK loss (£191m), an improvement over a 10.4bn SEK loss in 2022. Sebastian, its Chief Executive, said the company was a path to long term profitability but in the short term had decided to invest in growth.  Once one of Europe's most valuable companies, its valuation has been hit by higher interest rates. It has around 150m active users.

Oversupply in BattMats Leads to 80% Fall in Lithium Price in 1 Year

Lithium, a key raw material in batteries for electric vehicles, has fallen in price, with oversupply and a scaling back in EV production forecasts. 

Lithium carbonate trades at around 95 000 CNY/tonne from around almost but not quite 500 000 CNY/tonne at the same point last year. Its absolute peak was in November 2022 at just over 600 000 CNY/tonne. 

At the time of this update, 1 USD buys 7.18 CNY.

China is the world's largest electric vehicle market, where EV penetration continues to grow but at a slower rate. At the end of 2023, Goldman Sachs cited the trend in a report entitled "The Short Trade Must Go On" highlighting both supply and demand drivers.

For a good introduction to lithium's role in the energy transition, the following report from IRENA (the International Renewable Energy Agency) is worth reading.

Clearlake and Insight to Acquire Alteryx for $4.4bn

Clearlake Capital Group LP with Insight Partners (co-founded by Colorado-based Twitter investor Jerry Murdock) have agreed to acquire Irvine, CA-based Alteryx (NYSE:AYX), a cloud analytics platform company, in a $4.4bn definitive agreement. Regulatory and stockholder approvals are required.  Alteryx will then become a privately held portfolio company of Clearlake and Insight.

Competitors of Alteryx include Tableau, DataDog and even Microsoft Power BI. 

DataDog has more of a niche around cloud infrastructure metrics and supports AWS, Azure, GCP, RedHat OpenShift and VMWare amongst others and raised substantial capital in a Series D funding round led by ICONIQ Capital.