Wall Street: Investors’ nightmare

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Hi. I'm Aaron Weinman. Talk of a recession, rough inflation data, and the persistent increase in costs of certain staple goods has got Wall Street's biggest investors living in fear of an economic nightmare.

The Bureau of Labor Statistics released a bevy of data last week, and it was a mixed bag. While gas prices fell, grocery costs were up by 13.5% in the past year — the largest increase since 1979 — and health insurance costs jumped 24.3%, the largest in US history.

The data leaves investors uncertain over whether the US Federal Reserve can avoid a hard landing or navigate a soft landing, and the plan to shake higher prices out of the system is proving difficult.

Let's get started. 

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1. Wall Street investors fear an economic nightmare. And discouraging inflation data means they might be right to brace for such a nightmare.

The nightmare is not simply the economy tipping into a recession. It is much worse than that.

Disappointing data from the BLS could see the economy get stuck. Inflation might come down slightly, but it remains high enough that the cost of important items like food and toiletries remain stubbornly high.

To make matters worse, higher interest rates will swell mortgage rates and credit-card repayments. All of this while wage growth remains stagnant and companies tighten their own purse strings on growth.

Basically, the economy is stuck in a rut.

For more, check out this piece from Insider's Linette Lopez on Wall Street's nightmare.

In other news:

A crowd of festival goers dance under pink light at night.

2. Beach yoga, weed bets, and Big Boi. Here is how the first-ever "wealth festival" thrown by finance influencers lived up to the hype.

3. Inside a college student's "abusive" summer from hell on Wall Street. At an investment bank, one student lost 10 pounds and was afraid to leave his desk, he told Insider.

4. A two-man London shop is acting as the debt-market middleman for Russian firms like Gazprom and Lukoil. I2 Capital Markets provides trust services, and over this summer, it has quietly become the main conduit between Russian companies that issue bonds overseas, and the investors who hold them, according to this story from Bloomberg.

5. Goldman Sachs' Marcus is the focus of a new review at the Federal Reserve, Bloomberg reported. Fed officials have been peppering Goldman management with questions about the consumer-banking platform's operations. Insider previously reported that executives felt too much money was being spent on Marcus.

6. The US Securities and Exchange Commission has charged cloud company VMware with misleading investors. Employees said they are frustrated with leadership's communications and it is eroding their trust. The development comes as chip giant Broadcom tries to close a $61 billion deal for VMware.

7. Adobe's chief product officer explained why the company made a $20 billion bid for Figma. The deal, announced last Thursday, shocked many in the design community and sent Adobe's market value tumbling.

8. Citi will submit a multi-year plan to address concerns from the Fed. The plan, submitted to the Fed and the Office of the Comptroller of the Currency, outlines steps to fix weaknesses in Citi's risk management and internal controls, Reuters reported.

9. BMO Capital Markets is cutting jobs amid the broader downturn in dealmaking, according to Bloomberg. BMO's capital-markets revenue fell 20% last quarter, compared to the same period in 2021. The bank also allocated about $28 million in severance pay related to the job cuts.

10. A luxury-hotel concierge has revealed the most outlandish requests of VIP guests who pay up to $25,000 a night. At the Four Seasons in New York, one customer only played Xbox on an 85-inch television, and staff needed to buy two new screens for the room.

Done deals:

  • Veritas Capital has agreed to buy Sequa Corporation, parent of Chromalloy, from Carlyle. Evercore and Bank of America advised Sequa, and Latham & Watkins was its legal counsel. Gibson, Dunn & Crutcher, and Covington & Burling counseled Veritas.
  • Private-equity investment firm Corsair has made an investment in Miracle Mile Advisors, a wealth advisory firm based in Los Angeles. Miracle Mile will also combine with Karp Capital Management, a fellow wealth-management firm based in San Francisco.
  • Alternative investment firm Stonepeak has agreed to buy tech services company Intrado's Safety business for $2.4 billion. Safety provides public-emergency telecommunications services. RBC Capital Markets and LionTree advised Intrado, Paul, Weiss was legal counsel. Simpson Thacher & Bartlett advised Stonepeak.

Curated by Aaron Weinman in New York. Tips? Email aweinman@insider.com or tweet @aaronw11. Edited by Hallam Bullock (tweet @hallam_bullock) in London.

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