Blue steel
Metallic dealmaking
Good morning, guardians of the forge. This is your Stock Market Rundown for January 3rd, 2024. Thanks for tuning in, once again. Let’s get started:
TODAY’S TOP STORY: RISING SUN OVER STEEL CITY
The Japanese have a saying: “The weak are meat, and the strong do eat.” Now, Japan’s biggest steelmaker, Nippon Steel, is sitting down to dinner as it gets ready to swallow up US Steel in a $14 billion deal. But some US lawmakers are trying to clear the table.
US Steel was formed over a century ago, when famed tycoons JP Morgan and Andrew Carnegie merged three leading steelmakers into a megacorp. Alas, US Steel was the Johnny Manziel of industrial production—early promise turned to faded glory.
It went from #1 global steelmaker in the 1970s, to 27th today, with a subscale operation and junk-rated bonds. Translation: a consolidation target that could make an investment banker giddy as a schoolgirl.
If Nippon’s deal to acquire US Steel goes ahead, overnight it’d become the world’s second-biggest steel producer. Enough capacity to crank out an awful lot of Nissan doors and Toyota trunks.
While US Steel will keep its name and Pittsburgh headquarters, it’ll be controlled by (obviously) a foreign entity, which has some senators vowing to block the acquisition. Unions are complaining, too, with the United Steelworkers calling the sale “greedy” and “shortsighted”.
What comes next? A regulatory review to rule out national security risks, which will drag on for months. Given Japan is a US ally, most industry experts expect this deal will, in the end, be consummated.
But if it doesn’t, Nippon will owe US Steel a $565 million breakup fee. That could probably buy enough steel rebar to stretch from Pittsburgh to Tokyo.
SO WHAT ELSE IS GOING ON?
In a scene out of a sci-fi movie, a robot at a Tesla factory attacked a worker; the victim escaped down a scrap metal chute. Apparently this is what we have to look forward to in 2024: robots going full Terminator.
US regulators charged a medical device company with fraud for selling implants that were touted as a cure for chronic nerve pain, but in actuality were “fake and nothing more than a piece of plastic.” The company filed for Chapter 11, so no more patients are at risk of being implanted with the functional equivalent of a Pez dispenser.
Who are the worst drivers on the road? A recent study found Tesla drivers are the most likely to get into accidents, but BMW drivers were most likely to have a DUI. Attention, Bimmer boys: if you knock back a few pints, leave the M3 in the parking lot and take an Uber home.
One in five teens say they’re on YouTube or TikTok “almost constantly.” Hey, it can’t be worse for their brains than reality TV… I’d rather kids watch Mr. Beast than the Real Housewives of Beverly Hills.
Time to hit the pause button for today, dear readers; see you bright and early tomorrow. Yours in capitalism, The Axe
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Hit me up at theaxe@stockmarketrundown.co