💥Crashing Satellites💥
Hughes Satellite Systems Corporation, Uniroyal Holding Inc., PJT Partners LP ($PJT), Houlihan Lokey Inc. ($HLI) & More.
Whoa boy.
One week ago the market was pricing in a 33% chance that the Fed would keep rates steady and a 67% chance that the Fed would increase rates. After this week’s market data, that expectation got flipped around and now … as you can see here 👇 … the market thinks the Fed is gonna …
What drove the old switcheroo? A couple of things.
First, and foremost, the US nonfarm payrolls report surprised very much to the downside: the US labor market experienced a July contraction, shedding 23k jobs in the face of expected growth.
Wait. But, PETITION, the unemployment rate went down. Yes, that’s true, but so did the labor force participation rate — to the lowest level since February ‘21. You can see which sectors got hit the most 👇:
Labor market softness mixed with the most recent easing of PCE to 3.7% make for a powerful cocktail.*
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Which we desperately want to drink.
Johnny reviewed July’s RX action and hot damn it was pathetic. A newly released Pitchbook report highlights why. Check out these charts:
Your eyes aren’t deceiving you: these particular rates are down. LME flow, however, enjoyed a sequential 0.10% uptick in July thanks to System1 Group, SonicWall Holdings, and Medical Solutions all consummating deals.
But even LME activity is depressed. Per Pitchbook:
“Over the past 12 months, 18 index issuers that conducted distressed LMEs contributed to the dual-track default rate, which compares to 37 issuers for the same period last year.”
They add:
“Proportionately speaking, LMEs accounted for 56% of the dual-track default rate at the end of last month, down from a 73% share in July 2025.”
There is a bright side for those of you looking for something more to do than play golf:
“The distress ratio by amount (again, defined as the share of loans trading below 80 cents on the dollar) remains elevated, ticking up to 6.89% in July to mark a sixth straight month above 6.25%. The ratio is nearing the 7.11-7.36% range reached in Q4 2022, which was a period marked by the Federal Reserve’s significant interest rate hikes.”
Of course, a lot of that probably pertains to the recent bloodbath in software so it may be far too early to get excited about any of that. Time will tell.
For now, though, we guess you ought to milk em’ if you got em’:
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Speaking of LMEs, let’s dive into some IB earnings below. We also discuss a couple of recent filings, including one that looks like an unmitigated sh*t show. Let’s dig in ⬇️.