Weekly Research Briefing: Pool Now Open

Trade war price increases are coming for American shoppers.

Retail goliath Walmart WMT -0.24% decrease; red down pointing triangle on Thursday said it plans to raise prices this month and early this summer, when tariff-affected merchandise hits its store shelves. Some prices already have increased.

“The magnitude and speed at which these prices are coming to us is somewhat unprecedented in history,” Walmart Chief Financial Officer John David Rainey said in an interview.

Walmart, which counts 90% of Americans as customers, is the biggest company so far to signal that tariff-related price increases on everyday goods are coming. Other companies also have announced price increases. Ford Motor last week said it would raise prices on three of its popular vehicles. Birkin handbag maker Hermès said prices in the U.S. would rise. Next week, Target, Lowe’s and Home Depot are set to report earnings and discuss their financial forecasts.

Jay Powell, chair of the US Federal Reserve, stressed in a speech last week that “higher real rates may…reflect the possibility that inflation could be more volatile going forward than in the inter-crisis period of the 2010s. We may be entering a period of more frequent, and potentially more persistent, supply shocks — a difficult challenge for the economy and for central banks.”

Stagflation is, of course, the big risk here. As TS Lombard managing director Steve Blitz wrote in a note last week to clients: “Even if a mild recession takes hold, a higher inflation outcome seems assured given the addition of tariffs to the trajectory of ever bigger budget deficits. Monetary policy alone cannot reverse the trend without the deficit shrinking.”

Federal Reserve Bank of Atlanta President Raphael Bostic emphasized his worries over inflation as he repeated his expectation for one interest-rate cut this year.

“Given the trajectory of our two mandates, our two charges, I worry a lot about the inflation side, and mainly because we’re seeing expectations move in a troublesome way,” Bostic said Monday during an interview with CNBC, referring to consumer expectations for the future rate of price increases.

Bostic said he wants to see the elevated levels of uncertainty, driven by tariffs and other Trump administration policies, abate before he backs any interest-rate changes — a process that could take three to six months.

“Today, things are very much in flux, there’s a lot of uncertainty,” Bostic said. “And what it means for me is before I want our policy to move in any dramatic direction we’ve got to let things sort out.”

He added, “I’m leaning much more into one cut this year because I think it will take time.”

The U.S. has lost its last triple-A credit rating.

Moody’s Ratings downgraded the U.S. government on Friday, citing large fiscal deficits and rising interest costs.

Expanding budget deficits mean U.S. government borrowing will rise at an accelerating rate, pushing interest rates up over the long term, Moody’s said. The firm said Friday that it didn’t believe that any current budget proposals under consideration by lawmakers would do anything significant to reduce the persistent gap between government spending and revenues.

The move strips the U.S. of its last remaining triple-A credit rating from a major ratings firm, following similar cuts by Fitch Ratings in 2023 and S&P Global Ratings in 2011. Moody’s downgraded the U.S. to Aa1, a rating also held by Austria and Finland.

“Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,” Moody’s wrote in a statement.

@lisaabramowicz1: “This is a reminder that it is expensive to kick the fiscal can down the road:” JPM's Priya Misra. After Moody's downgrade of the US, 30-year yields climb past 5%, approaching some of the highest levels since 2007.

@wabuffo: Forget about Moody's downgrade. Focus on the fact that US employment income is quickly slowing.

@TheTranscript_: $JPM CFO on ROTCE: "If you focus only on the $JPM row, you might be misled into believing that this type of performance is entirely normal. But if you then look at the other rows, it makes it quite clear how truly exceptional the performances in the context of the industry."

• "We do look at a range of potential outcomes. One of the worst for most companies—& especially for banking—is stagflation, which is essentially a recession with inflation. The odds of that are probably twice what the market thinks."
• 
  
• "Forward P/E ratios are around 20 or 21 today. And you know, tariffs do affect the E...Earnings forecasts will come down. We started the year expecting earnings to be up 12%. Now it’s more like 6–7%. My guess? In six months, that could be zero. So earnings estimates have dropped—and that probably means P/E ratios will drop too. If P/E multiples fall by just one turn, that’s another 5% down. So between earnings and valuation compression, you could be looking at a 10% market impact. I think that’s a likely outcome, in my personal opinion"
• "Even if you wanted to bring manufacturing back, it takes time—three to four years at a minimum to build serious capacity. For large-scale facilities, it can take eight years."
• "We’ve gone from 8,000 public companies in 1996 to just 4,000 today. That’s a dramatic drop. And if you look around the world, the trend is similar. We are driving companies out of the public markets because of expensive reporting requirements, litigation risk, cookie-cutter approaches to boards, compensation, and the constant legal scrutiny that comes with being public"
• "And it's not just one regulation—it’s the whole blanket of rules and risks that make people not want to go public. Honestly, I’d love to be a private company."
• "Today you can get capital privately, at scale…you can also get liquidity in the private markets. So the reasons to go public, when you really reach an incredible scale, are getting pushed out.. If you are running a company that’s working and it’s growing, if you take it public, it will force you to change the way to run it and you really should do that with great caution

The market’s long M&A winter could finally be about to thaw. It’s good news for investment-banking stocks.

This was supposed to be a great year for mergers and acquisitions. Investors believed President Donald Trump’s deregulatory bent would unleash a torrent of deals that had been blocked by concern over how the Biden administration might react.

So far, it hasn’t worked out that way, in large part because Trump’s tariffs threw markets into chaos. Corporate executives scrambling to deal with the fallout put big decisions like merger deals on hold.

Now, things finally seem to be getting back to normal. Trump moderated his tariff program, including a recent deal to slash levies on Chinese imports for 90 days while the two countries work out their differences.

The past week has brought a handful of headline-making announcements. Friday morning, the cable company Charter Communications said it planned to buy Cox Communications in a deal that valued its privately held rival at $34.5 billion. Thursday, Dick’s Sporting Goods disclosed an agreement to acquire Foot Locker for $2.4 billion. And earlier in the week, the online brokerage Robinhood said it would purchase WonderFi, a Canadian digital asset company, for 250 million Canadian dollars, or about $179 million.

Asset manager Blackstone is expanding its flourishing infrastructure business with a deal to buy energy holding company for nearly $5.7 billion in cash.

Blackstone Infrastructure has agreed to pay $61.25 a share for the TXNM, the companies said Monday, a roughly 16% premium to Friday’s closing price of $52.88 for the Albuquerque, N.M., company.

The deal, slated to close in the second half of 2026, carries an enterprise value of $11.5 billion, including net debt and preferred stock, the companies said.

If there was any lingering doubt about whether gas-fired generation plants are the hottest targets in the US power system, the recent flurry of deals likely extinguished it.

NRG Energy Inc. grabbed attention May 12 by agreeing to pay $12 billion, including debt, for 13 gigawatts of capacity — the equivalent of 13 nuclear reactors. Three days later, Vistra Corp. made its move with a $1.9 billion acquisition for 2.6 gigawatts of gas plants.

Today, Blackstone Infrastructure Partners agreed to acquire TXNM Energy Inc., owner of New Mexico’s largest utility, for about $5.7 billion.

This was already shaping up to be a bumper year for US power M&A. In January, Constellation Energy Corp. agreed to pay $16.4 billion for Calpine Corp. to create the country’s largest fleet.

Underlying it all is a boom in electricity demand driven by the rapid development of artificial intelligence. Gas offers greater reliability than renewables along with round-the-clock availability, making it a vital ingredient in satiating the thirst of new data centers.

Simply installing more gas capacity is problematic, with yearslong delays caused by a shortage of turbines. The cost of new plants is anywhere from $1.5 billion to $3 billion per gigawatt, according to Bloomberg Intelligence.

That makes the $700 million to $1.1 billion per gigawatt paid by NRG, Vistra and Constellation look like great value.

IRVINE, Calif. and DALLAS, May 12, 2025 (GLOBE NEWSWIRE) -- New Home Co. (“New Home”) and Landsea Homes Corporation (Nasdaq: LSEA) (“Landsea Homes”) today announced that they have entered into a definitive agreement under which New Home will acquire Landsea Homes for $11.30 per share in an all-cash transaction that represents an enterprise value for Landsea Homes of approximately $1.2 billion. Upon completion of the transaction, the combined company will be a privately held, top-25 national homebuilder across 10 high-growth markets.

The transaction brings together two leading homebuilders, each of which has strong management teams and a reputation for quality construction, differentiated platforms and an exceptional customer experience. Together, New Home and Landsea Homes will offer homebuyers a diverse range of options, including single-family detached and attached residences across some of the nation’s fastest-growing markets in Arizona, California, Colorado, Florida, Oregon, Texas and Washington. The transaction will create an asset-light, returns-focused homebuilder generating nearly 4,000 annual closings. The combined company’s talent, scale and market diversity will create a strong foundation for the next chapter of growth. New Home is a portfolio company of funds (the “Apollo Funds”) managed by affiliates of Apollo Global Management, Inc. (NYSE: APO) (together with its consolidated subsidiaries “Apollo”).

This transaction is supported by the Apollo Funds, the majority shareholder of New Home since 2021, who are committing $650 million of new cash equity to facilitate this credit enhancing transaction and position the business for future growth.

EToro rose as much as 42.8 per cent during intraday trading on Wednesday, but closed 28.8 per cent higher at $67, valuing it at about $5.5bn. Its initial public offering on the Nasdaq came after an upsized float in which 11.9mn shares were offered to investors at $52 apiece, raising almost $620mn.

The Israel-based company, which was founded in 2007 and whose largest market is the UK, had initially planned to sell 10mn shares for between $46 and $50. The listing was buoyed by BlackRock, which acted as a cornerstone investor and indicated an interest in buying up to $100mn of shares in the offering, according to a previous filing.

Wednesday’s listing comes as the broader US IPO market shows signs of thawing, following an underwhelming start to the year…

The market debut of eToro comes a day after mobile banking group Chime filed for a US IPO, as it disclosed net income of $12.9mn on revenue of $518.7mn for the first three months of 2025. In another sign of the market thaw, San Francisco-based product design software group Figma filed for an IPO in mid-April.

Aspen Insurance priced a nearly $400mn IPO last week and its shares have since gained almost 17 per cent. American Integrity Insurance Group priced a $110mn IPO last Wednesday and is up 7.8 per cent.

Chinese electric-vehicle battery maker CATL said it would raise at least $4bn in what is set to be Hong Kong’s biggest share sale and the largest listing globally so far this year.

The company’s secondary listing will be priced this week and the shares will start trading on May 20, according to a prospectus filed with the Hong Kong stock exchange on Monday.

Chinese oil company Sinopec, the Kuwait Investment Authority sovereign wealth fund and Asian investment firm Hillhouse Investment are leading a group of more than 20 cornerstone investors, which also include insurer Taikang Life and Chinese local government funds.

CATL, which already has shares listed on China’s Shenzhen stock exchange, is the world’s biggest producer of batteries for EVs and energy storage systems.

@wallstengine: CEO Michael O’Leary said summer bookings are solid and pricing is slightly ahead of last year. Q1 fares are trending up mid-to-high teens, helped by a full Easter. He noted “a reluctance to go transatlantic,” as Europeans are choosing to stay closer to home.

@thedailyshot: Euro-area industrial production surprised to the upside in March.

@TheTranscript_: $UBER CEO: "California and New Jersey are quite problematic. About 30%-plus of the average Uber fare is eaten up by insurance, much of which comes from kind of fraudulent legal practices, abuse of legal practices, staged accidents, et cetera. I don't want to throw out a number, but it is significant."

@patrickc: Why are personal injury attorneys the marginal bidder for roadside billboards in so many parts of the US? Is the sector really so large? A priori, I would never have predicted this.

@patrickc: Quick investigation: "Costs and compensation paid in the U.S. tort system reached over $529 billion in 2022, or over $4,200 per U.S. household." 2% of US GDP! Also appears to have compounded meaningfully faster than GDP over the past decade..