Three Things (11/17)

Thursday, Nov 17th 2022


"If you strive for the moon, maybe you'll get over the fence." — James Woods

1) To the Moon - The Real One: NASA's most powerful rocket to date took off Wednesday after years of delays and billions of dollars over budget. The rocket will now fly over 1.3 million miles and reach as close as 60 miles above the moon's surface. NASA is tentatively planning to send astronauts back to the moon by 2025 as part of the Artemis missions.

Titan's Takeaway: The Artemis Rocket is built with the help of numerous contractors ranging from Boeing, Lockheed Martin, Airbus, and others leading the effort. While it may not be fiscally sustainable, the mission is a rare example of the power of public/private partnerships.

2) Apollo Scoops Credit Suisse Unit: Apollo is set to acquire Credit Suisse's Sector Financial, which concentrates on direct lending to middle-market companies. For Apollo, the move is another step to take market share from banks and take advantage of a $1.3 trillion and growing private credit market. Sector Financial provides loans ranging from $10 million to $100 million and operates mainly in the healthcare and technology verticals.

Titan's Takeaway: With interest rates rising, many companies are leaning on direct lending for expedient financing. Credit platforms like Apollo are leaning into the market dislocation and accessing high-quality deal flow while credit fundamentals remain strong.

3) No Presents for Target this Year: Target's profit fell by nearly 50% in its fiscal third quarter, sending its stock plunging and lowering expectations for the holiday season. Target's print comes only a day after Walmart posted surprisingly resilient earnings but is a sign that consumers are pulling back on their spending amid high inflation, rising interest rates, and broad economic ambiguity.

Titan's Takeaway: Target and Walmart are good barometers of the broader market as they can give a read on consumer spending. With the holiday season approaching, look for retailers to start offloading the glut of inventory with steep discounts.

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