Khamenei vows to punish Israel over consulate airstrike

Good morning. Here's what happened overnight and what you need to know today.

---

1.

Israel-Hamas conflict: Iran’s Supreme Leader Ayatollah Ali Khamenei has vowed to punish Israel after a deadly airstrike flattened Iran’s embassy in Damascus, Syria. Monday's attack killed at least 13 people including seven Iranian military personnel and six Syrian nationals, according to Iran’s state media. A high-ranking Iranian general linked to the Islamic Revolutionary Guard Corps, Mohammadreza Zahedi, was among those killed. Khamenei said that Israel “will be punished. We will make them regret their crime,” while the Iran-backed Lebanese militia Hezbollah said that the attack “won’t go without punishment and revenge against the enemy.” The airstrike preceded an Israeli strike in Gaza on Monday which killed seven aid workers, one of whom was an Australian citizen. Netanyahu has admitted that the strike in Gaza was “unintentional.” (Bloomberg)(Capital Brief)

2.

Delivery drop: Tesla suffered its first quarterly fall in deliveries in four years, missing Wall Street estimates. Shares in Tesla fell as much as 6.7% during trading on the back of the news, exacerbating a slide of almost 30% in value during 2024 to date. In a statement released by the EV maker on Tuesday, Tesla said it delivered 369,783 vehicles in the first three months of 2024, falling far short of analysts’ average estimate for 449,080 deliveries. The figures amount to Tesla’s biggest miss to date. The statement explains that the decline in volumes was partially due to the early phase of the production ramp of the updated Model 3, and factory shutdowns resulting from shipping diversions caused by the Red Sea conflict and an arson attack at Gigafactory Berlin. (Tesla statement)(Bloomberg)

3.

Passive enforcement: The US Federal Deposit Insurance Corporation (FDIC) is examining whether investment firms like Vanguard, State Street and BlackRock are keeping to their passive-investing mandate in with respect to their large stakes in US banks. BlackRock and Vanguard each hold over 10% of shares at a number of US banks, which is typically the threshold that determines controlling interest in a lender. Regulators have exempt a number of asset managers from certain banking rules, including one which requires them to gain permission before acquiring shares above the 10% threshold, provided that the investment firm remains a passive investor. Some FDIC board members are pushing to change this approach, and one member, Jonathan McKernan, has developed a plan to improve FDIC monitoring of the firms which is expected to receive bipartisan support among the FDIC board when it goes to a vote in the coming weeks. (Wall Street Journal)

4.

Smart carts: Amazon will scrap its ‘Just Walk Out’ grab-and-go checkout system when it opens a new batch of grocery stores after an 18-month pause. Amazon’s senior VP of grocery stores, Tony Hoggett, told The Information that the new generation of Amazon Fresh supermarkets will focus on ‘Dash Carts’ rather than the Just Walk Out system. The tech giant sees the grocery market as a massive opportunity, but paused its roll-out of Fresh stores in 2022 amid cost-cutting efforts across the company. Amazon will begin opening new Fresh stores later this year, all of which will feature the Dash Cart technology, which allows customers to scan items while they shop. The tech is currently installed in 47 of its 64 Fresh stores across the US and UK. (The Information)

5.

Gas deal: Oilfield services giant SLB has announced plans to buy ChampionX for USD7.8 billion ($11.97 billion) in an all-stock deal. ChampionX shareholders will own about 9% of the combined company in the deal that will see them receive 0.735 SLB shares for each share of ChampionX they already own. SLB CEO Olivier Le Peuch said the deal will expand SLB’s presence in the less cyclical and growing production and recovery space, as ChampionX creates chemistry solutions, and equipment to help companies drill for and produce oil and gas. SLB expects the deal to close this year, and hopes to realise annual pre-tax synergies of around USD400 million within three years. (Wall Street Journal)

6.

Back from the ashes?: Coworking company WeWork announced that it has almost completed restructuring and plans to exit Chapter 11 insolvency by the end of May after filing for bankruptcy in November last year. WeWork says that it has negotiated over USD8 billion in savings on future rent reductions, representing an over 40% reduction in total future rent commitments. As part of the restructure announced Tuesday, the company has agreed to amend around 150 leases to align with current real estate conditions, and is in the process of exiting another 150 leases. WeWork co-founder Adam Neumann has been trying to re-enter the firm, having submitted a bid of over USD500 million to buy the company back earlier this year. (Capital Brief)

7.

Big bank buyback: UBS has promised USD2 billion in share buybacks, restoring its repurchase program as it integrates Credit Suisse. The bank announced the buybacks on Tuesday, after the purchase of Credit Suisse last year led it to suspend its share repurchase program. UBS plans to exceed its pre-acquisition level of buybacks by 2026, despite the two-year, USD2 billion repurchase plan being far smaller than its previous programs. The lender plans to repurchase USD1 billion of shares this year, which will only begin upon completion of the Credit Suisse merger, likely in Q2. (Financial Times)

8.

End of an era: General Electric has completed its breakup into three companies, marking the end of an era for the iconic US industrial giant. GE’s aerospace and energy businesses began trading on the NYSE as separate entities on Tuesday, over a year after its healthcare business began trading on the Nasdaq. GE had been struggling for decades, and almost saw the collapse of its most profitable division, GE Capital, during the 2008 financial crisis. In 2018, GE lost its place on the Dow Jones Industrial average and CEO Larry Culp cut its dividend to one penny just months later. The three-way break up was first considered by Culp in 2021. Culp now helms GE Aerospace, which currently boasts a market value of over USD100 billion. (Reuters)(GE press release)