Bribe locally, fundraise globally.

That pretty much sums up the business philosophy of Indian billionaire Gautam Adani laid out by US prosecutors late Wednesday. On Thursday, reverberations from the US indictment accusing the powerful tycoon of paying off government officials exploded across three continents.

The Big Man, Mr. A, and Numero Uno

The allegations: Adani and his nephew Sagar agreed over the last four years to bribe Indian government officials to the tune of $265 million, according to US officials. They say he did it to secure contracts for his eponymous conglomerate, Adani Group, that would rake in $2 billion in profit over the next two decades, including one to develop India’s biggest solar plant. They then turned around and borrowed over $3 billion in loans and bond issuances obtained under false pretenses, a fraud scheme that involved unknowing US lenders, according to prosecutors.

So why is the US Department of Justice involved? It’s illegal for foreign companies that raise money from US investors to pay overseas bribes. It’s also illegal to raise money from investors while making false representations to them. Adani raised some $175 million from US investors during the alleged scheme, according to the SEC.

Why Adani matters: At $85 billion, his net worth makes him one of the two dozen richest people on earth. His firm dabbles in ports, factories, power plants, mining, food, TV news, you name it. Much of its business is sourced from government contracts, bringing him close to powerful leaders, including Indian Prime Minister Narendra Modi. The fallout is already global:

• Kenyan President William Ruto on Thursday canceled a procurement process to expand the country’s largest airport, located in Nairobi, because it included a proposal by Adani. He also moved to kill a $700 million deal with Adani Group to build power transmission lines.
• Shares in Adani went into a tailspin Thursday, falling 23%, or more than $30 billion, and the company scrapped an imminent $600 million bond sale.

Victory Lap: Swashbuckling short-seller Hindenburg Research savaged Adani last year as “the largest con in corporate history,” alleging stock manipulation and accounting fraud in a scathing report. If Hindenburg still holds any short positions, that’ll be a nice Christmas bonus.

It’s always good to buy the dip, but we barely had a chance. 

Sales of used homes in the US rose in October, the National Association of Realtors announced Thursday, as buyers took advantage of a dip in mortgage rates. But it may have been a flash sale, because rates are already climbing again. So what gives?

Get ‘Em While They’re Hot

Used home sales increased 3.4% in October compared with the month before, the National Association of Realtors said, besting a 2.9% monthly increase forecasted by economists surveyed by The Wall Street Journal. Compared with the same period in 2023, home sales increased 2.9% — the first year-over-year gain seen since June 2021. 

The leap in home sales largely reflects the drop in mortgage rates — which fell to as low as 6.08% — following the Fed’s supersize rate cut in September (home sales take a long time to close; October’s sales increase largely reflect buyers who took advantage of low mortgage rates in September). 

But even with another quarter-point rate cut from the Fed earlier this month, mortgage rates are continuing to climb — and they’re not likely to stop any time soon:

• Mortgages usually get packaged together into bonds and are often guaranteed with government backing, so mortgage rates typically end up reflecting 10-year Treasury yields more than short-term interest rates.
• The yield on 10-year Treasury notes began climbing again following the Fed’s September cut, and mortgage rates have followed. The average 30-year fixed loan climbed to 6.84%, Freddie Mac said Thursday, up from 6.78% the week before and the highest since July.

Cancel Culture: The rise in rates may have made some buyers jittery. About 53,000 home purchases were canceled in October, good for just over 15% of homes that went under contract in the month, RedFin said in a report published last week. That marks the highest per-month cancellation rate in nearly a year. 

If at first others don’t succeed, make money by figuring out where they came up short.

After two competitors hit major setbacks with muscular dystrophy treatments, Swiss pharma giant Novartis announced Thursday its purchase of Kate Therapeutics, a San Diego-based gene therapy startup focused on the same group of diseases. If all goes well, it will fork over $1.1 billion, including cash paid when the deal was completed and subsequent milestone payments.

“Learn From Failures”

Kate’s pipeline includes drug candidates for Duchenne muscular dystrophy (DMD), facioscapulohumeral dystrophy (FSHD), and myotonic dystrophy type 1 (DM1).

Novartis is banking on the California startup’s promising treatment candidates for neuromuscular diseases, many of which are genetic in nature. It also comes on the heels of two competitors whiffing in the same sector:

• Pfizer laid off 150 workers and took a $230 million financial hit after its DMD gene therapy failed a phase three trial in June. Fulcrum Therapeutics shares cratered in September—and still haven’t recovered—after its FSHD treatment flunked a phase three trial a mere four months after Sanofi paid $80 million for partial rights, not to mention offering up to $975 million in milestone payments.
• Novartis CEO Vasant Narasimhan said at an investor conference Thursday that his company is “thinking about how we can learn from the experiences of the first wave of companies that have had failures and perhaps some success with targeting these diseases.” Novartis projects a potential $55 billion market for its cell and gene therapies by 2030.

No Patent, No Problem: Novartis raised its sales guidance Thursday and said it’s aiming for an equal split between the US, where it made $15 billion or 41% of revenue in the first nine months of the year, and the rest of the world. The firm now expects sales growth of 6% through 2028, up from a previous 5% projection. While its top-selling drug, the heart treatment Entresto, is set to lose US patent protection in 2025, Novartis boosted sales estimates for other drugs including breast cancer treatment Kisqali and increasingly popular cholesterol treatment Leqvio.