Goldman Takes Silver

Plus: Who says China doesn’t Buy American — check out the spy balloon. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

June 30, 2023

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TOGETHER WITH

Good morning and Happy Friday.

Bed Bath & Beyond may be in the Great Retail Beyond, but its leases are a hot ticket item. The failed big-box retailer has already auctioned off the leases to more than 100 of its shuttered storefronts to competitors like Burlington and Michaels as part of its bankruptcy proceedings, according to court records. The auction comes amid the lowest vacancy rate in shopping centers since at least 2007, according to real estate firm Cushman & Wakefield.

“These are generally in well-established, mature markets that have a proven track record of generating high sales,” Bill Read, executive vice president of commercial real estate firm Retail Specialists, told CNBC. Just ask Bed Bath — oh wait.

Morning Brief

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Advertisers turn on YouTube.

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Goldman loses a prized title.

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Chinese spy balloon partly American-made.

Tech

Tech’s Love Affair With Advertising Needs Serious Counseling

(Christian Wiediger/Unsplash)

Advertisers aren’t sure you’re really listening.

This week, a study by advertising research firm Adalytics said that video ads appearing on Google-owned YouTube violated its promise to advertisers 80% of the time by making the ads eminently ignorable. Meanwhile, over at Twitter, the company’s new CEO is trying to revamp its ad business by focusing on video ads that are both loud and unavoidable.

Skipping a Beat

Adalytics’ report focused on a YouTube/Google video advertising product called TrueView, which attaches ads both to YouTube videos and other videos on the web. The idea is that TrueView ads have the classic “skip” button that appears after five seconds, and advertisers only have to pay for the ad placement if a user lets it play for a full 30 seconds rather than hurriedly pushing skip. According to Adalytics, many TrueView-placed ads were placed in ways that meant users didn’t even notice they were playing — for example, it said many were automatically muted — so letting them play to the end was an accident rather than an active choice.

Google pushed back hard against the report, saying most of TrueView’s ads run on YouTube, where they’re nice and visible. It seems that wasn’t enough to get advertisers off the warpath:

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Joshua Lowcock, global chief media officer at advertising agency UM, told the Financial Times that “Google must have a qualified third party do a full independent audit of policy enforcement, as well as this failure, and refund all impacted advertisers.” He gave a similar quote to The Wall Street Journal, too.

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Giovanni Sollazzo, CEO of digital ad agency AIDEM, also doubled up on expressing his ire in both the FT and the WSJ. “I feel cheated,” he told the WSJ, “What I requested to buy was not what I got. This should entitle me to a refund for invalid traffic.”

Google isn’t alone in trying to convince advertisers their ads will be loud and prominent. Twitter CEO and advertising veteran Linda Yaccarino has been temporarily hamstrung from actively courting advertisers by a non-compete clause from her old employer NBCUniversal, The New York Times reported Thursday.

Symmetrical Cloning: Yaccarino hasn’t been idle, though, and reportedly wants to do something of a pivot to video by serving large, sound-on ads that pop up as users scroll through a new short-form video service. She’s apparently also all-in on trying to recruit both celebrities and influencers, suggesting she thinks the way to turn Twitter’s fortunes around is by mimicking the success of Instagram/TikTok. Funny, given that Instagram’s owner Meta is on the verge of launching a Twitter clone.

– Isobel Asher Hamilton

M&A

Goldman Sachs is no Longer the Top Dog in M&A Advising

Silverman Sachs doesn’t have the same ring.

For the first time in half a decade, the mega-investment bank lost its title as the world’s go-to advisor for mergers and acquisition deals, ceding the top spot through the first half of the year to the unyielding JPMorgan Chase, according to data compiled by Bloomberg. But if JPMorgan CEO Jamie Dimon is popping champagne, it better be the cheap stuff: excluding the early covid era, 2023 so far marks the worst year for M&A in, well, years.

Let’s Make a (Small) Deal

So just how weightless is JPMorgan’s new crown? Global M&A deals have notched roughly $1.3 trillion in value year-to-date, according to data firm Refinitiv, a 38% plummet over the same period last year. In Europe and the US, it’s even worse, with each region seeing a 50% and 41% downturn, respectively. Curiously, however, deal volume hasn’t quite seen an equivalent dip. In the US, the number of deals has decreased just 5% so far this year compared to last year’s blockbuster frenzy.

“We have seen a structural shift in the type of M&A deals that get announced,” Valeriya Vitkova, senior lecturer at City University of London’s Bayes Business School, told Bloomberg. That’s left big banks to fight over the scraps of advisory fees — and fret about costs following a hiring spree amid the pandemic-era dealmaking bonanza:

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JPMorgan has advised on deals cumulatively worth $284 billion so far this year, or a nearly 23% market share, according to Bloomberg. Goldman, meanwhile, has advised on transactions worth $237 billion, or around a 19% market share — its first runner-up finish since the first half of 2018.

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The dearth of deals has pummeled both banks, with Goldman poised to slash 125 managing directors across various departments in its third layoff round in a year, sources told Bloomberg earlier this week, while over at Chase, Bloomberg also reported that the bank is set to lay off around 40 investment bankers.

Times have been even tougher for banks outside the top two. Morgan Stanley announced some 3,000 layoffs a month ago. UBS, meanwhile, plans to cut 20,000 positions at Credit Suisse amid the takeover of its former local rival.

Antitrust Alphabet Soup: The slow drip of big deals may soon get even slower. The US antitrust divisions within the FTC and the DOJ are set to revamp the filing process for M&A deals valued over $111.4 million. It’s the first overhaul in 45 years and would require firms to disclose far more details and data than before. The added paperwork would turn a typical 7-to-10-day merger-approval process into a two-or-three-month march, one antitrust law expert told Bloomberg. As if the legal teams at Microsoft and Activision attempting to complete the largest M&A deal in tech industry history didn’t have enough to sweat about.

– Brian Boyle

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International

The Chinese Spy Balloon Was Reportedly Full of American Technology

President Biden isn’t talking about the balloon, okay?

While public statements on the matter are still minimal and the White House has yet to release an official report, government personnel told The Wall Street Journal that the infamous Chinese spy balloon from a few months back was loaded with US technology, some of which sounds like stuff you can buy on Amazon.

Don’t Worry About the Balloon, Man

In February, some sort of an aircraft, which Beijing still says was a civilian-made weather balloon, was spotted floating over US and Canadian airspace. For more than a week, it drifted above Alaska, British Columbia, and several other contiguous US states — some of which contained military bases used for firing ballistic missiles — before finally being shot down off the coast of South Carolina.

To avoid exacerbating tensions between the US and China even more, the White House has remained rather tight-lipped about the whole scenario. Biden has even said the balloon fiasco was not a big deal and that the “chapter should be closed.” Meanwhile, decent progress was made earlier this month when Secretary of State Anthony Blinken visited Beijing, and Treasury Secretary Janet Yellen is expected to do the same in July. All of this sets the stage for a possible future meeting between Biden and Chinese President Xi Jinping.

But that hasn’t stopped those in-the-know from speaking up:

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The balloon was “crammed with commercially available US gear, some of it for sale online, and interspersed with more specialized Chinese sensors and other equipment to collect photos, video and other information,” according to the WSJ. Officials said it appeared any data the balloon collected was not transmitted back to China.

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China remains the US’ third-largest economic partner, behind Canada and Mexico, accounting for roughly 11% of all of America’s trade. Despite the two nations’ heated rivalry, American companies like Apple, Tesla, and Nike have achieved great success in the Middle Kingdom, so Washington has a keen interest in keeping the trading door as open as possible.

Honey, Not Vinegar: China should want to keep the door open, too, as its National People’s Congress passed laws this week that will give Xi further control over how the country responds to Western security and economic threats. We’ve already seen raids on corporate offices of Western companies and frustrating levels of oversight and censorship. If things get worse, foreign investment could deflate even faster than a balloon with a bullet hole in it.

– Griffin Kelly

Extra Upside

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Khaaaaaan!: The FTC is planning its biggest lawsuit against Amazon yet.

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Too hot to handle: Sriracha shortages are causing some to buy a two-bottle pack for $124.

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Working hard: US jobless claims fall by 26,000, the largest drop since October 2021.

Just For Fun

Too eager.

Bloom boom.

Have a great weekend!

Disclaimer

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