Well done on making it to the end of the week. We will be taking a break on Friday and Monday, and rather than discussing baskets of assets, we will be discussing baskets of eggs. See you next week.

The lowdown

• 🧴 Johnson & Johnson offers $8.9 billion to settle talc-related lawsuits.

• 🦞 Switzerland cuts bonuses and will seek to claw back payouts to top Credit Suisse management.

• 📚 Amazon to shut down global book seller Book Depository as part of further cost cutting.

Flex your finance muscle

Default swaps

Default swaps are financial instruments that allow investors to hedge against the risk of default on a debt instrument, such as a bond or loan. The buyer of the contract pays a premium to the seller in exchange for the right to receive a payment if the underlying debt instrument defaults.

Default swaps are sometimes used to assess the health of a bank because they provide a measure of the perceived credit risk of the bank. If the market perceives the bank to be at a higher risk of default, the price of the CDS contract will be higher, as buyers will demand a higher premium to compensate for the increased risk.

So, when the price of a Deutsche Bank default swap spiked last week, people began panicking wondering whether the bank was at risk of collapse – which seems to be happening a bit lately. It did not collapse and, according to the FT, default swaps are actually bad barometers of a bank’s health.

Featured stories

L'Oréal’s plans for its latest acquisition

Earlier this week, it was announced that the world's largest cosmetics group L'Oréal acquired Australian luxury skincare (mainly hand wash) brand Aesop in a $2.5 billion deal, outbidding LVMH.

L'Oréal is generally known for acquiring and scaling smaller brands (such as CeraVe). This acquisition is L'Oréal's largest to date and is aimed at maintaining the French beauty company's market dominance.

Aesop’s revenue has grown tenfold in the past 10 years to $537 million in 2022. L'Oréal intends to use its size and resources to grow revenue further still, aiming to double or triple Aesop's sales within a few years. That will involve a lot of work but, with Aesop’s gross margin of 87 per cent ($), it is worth L'Oréal getting its hands dirty.

The content we're consuming today

• The Economist: Technology Quarterly: Electric Grids ($).

• Chamath Palihapitiya: 2022 Annual Letter.

• Bloomberg: Terry Smith Builds $1 Billion Fortune With Riches Outside UK ($).

Off-balance sheet items

• If you're looking for a board game to play over Easter, Catan is the way to go – particularly to honor the passing of its creator, dental technician-turned-game designer Klaus Teuber. It is way more fun than monopoly and will definitely lead to fewer arguments.

The bottom line