Good Morning! Jay Powell spoke yesterday and he seems to believe the Fed won't raise interest rates again. But he's all about that lower economic growth to cool down inflation, spooking investors. But Piper Sandler is optimistic we're going to see record-breaking rallies from the S&P 500 before the year wraps up.

Home sales hit a 13-year low, but Netflix shattered subscriber growth estimates, showing up with 3.27 million more subscribers than Wall Street expected. And Tesla’s quarterly profit took a 44% nosedive, but Elon wants us to tamper expectations - he thinks the Cybertruck can be the company’s best product of all time.

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Banking Long Game

If you’ve worked in banking for a minute, you’ve probably heard of green shoots - MDs use it all the time to either reference their latest lead, or broader signs the economy is bouncing back.

And Wall Street was starting to wrap its head around a summer of green shoots. Everyone figured this dealmaking lull would be short-lived, and bankers got right back to work thanks to an IPO comeback and trillions in private equity dry powder.

But if this quarter’s bank earnings have been any indicator - we might need to get used to this dealmaking lull.

M&A revenue ticked up a little bit in Q3. But it’s still less than half of what it was at its 2021 quarterly peak.

It could still take years to get back to the peak of investment banking fees. In 2007, global M&A volume was $4.6 trillion. It took until 2014 to get 75% of that level again, and until 2021 to surpass it - even in an era where interest rates were pretty low.

Takeaway: Bank CEOs are still trying to figure out which parts of their firms to focus on in 2024 and beyond. They still love investment banking - they’re willing to tolerate the boom-or-bust cycles because the boom years are extremely lucrative. But investors want banks to focus on recurring, stable revenue. It leaves banks in a tricky spot - they’re just trying to wait it out and hope M&A revenue returns soonest.

_{CAPITAL PULSE}

Markets Rundown

Stocks closed lower after a miss on tech profits.

Movers & Shakers

• (+) Netflix ($NFLX) +16% after the company reported a 70% increase in ad-tier subscriber growth.

• (+) AT&T ($T) +7% after a third-quarter earnings beat.

• (–) Tesla ($TSLA) -9% after the company’s earnings slid 37%.

Private Dealmaking

• Employment Hero, an employment management platform, raised $167 million

• Bond Vet, a veterinary care provider, raised $50 million 

• Waymark, a Medicaid provider enablement startup, raised $42 million

• Hivebrite, a community engagement platform, raised $37 million

• Fingerprint, a device intelligence API, raised $33 million

• Ikagi Labs, a generative AI solutions provider, raised $25 million

Get access to private deal flow here.

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_HEADLINES

Top Reads

• Read the text messages that could put SBF behind bars (CNBC)

• Blackstone’s Q3 earnings miss shows toll of interest rate rises (Reuters)

• The housing market is so bad Zillow’s offering some buyers free money (YF)

• New York sues crypto firms for alleged $1 billion fraud (CNBC)

• Is Netflix’s subscriber jolt a one-hit wonder? (WSJ)

• Walgreens settled Rite Aid investors’ merger claims for $192 million (YF)

• Of course Sculptor got sued (BB)

• A record share of U.S. households now own stocks (Axios)

• Tesla hits the brakes on EVs, but not AI (WSJ)

• Rite Aid raises going concern doubts (Reuters)

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The Two-Parent Privilege

In The Two-Parent Privilege, Melissa S. Kearney makes a provocative, data-driven case for marriage by showing how the institution’s decline has led to a host of economic woes—problems that have fractured American society and rendered vulnerable populations even more vulnerable.

Eschewing the religious and values-based arguments that have long dominated this conversation, Kearney shows how the greatest impacts of marriage are, in fact, economic: when two adults marry, their economic and household lives improve, offering a host of benefits not only for the married adults but for their children.

Studies show that these effects are today starker, and more unevenly distributed, than ever before. Kearney examines the underlying causes of the marriage decline in the US and draws lessons for how the US can reverse this trend to ensure the country’s future prosperity.

Based on more than a decade of economic research, including her original work, Kearney shows that a household that includes two married parents—holding steady among upper-class adults, increasingly rare among most everyone else—functions as an economic vehicle that advantages some children over others.

As these trends of marriage and class continue, the compounding effects on inequality and opportunity grow increasingly dire. Their effects include not just children’s behavioral and educational outcomes, but a surprisingly devastating effect on adult men, whose role in the workforce and society appears intractably damaged by the emerging economics of America’s new social norms.

“The surprising story of how declining marriage rates are driving many of the country’s biggest economic problems.”

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Short Squeez Picks

• How to resist hustle culture and become more productive

• Why walking to work stimulates falling in love

• Where the ultra-rich go on vacation

• Why a growth mindset isn’t always useful

• 10 emotions that are undervalued in the workplace

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Americans got richer during the pandemic

US median household net worth

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AI Valley

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_{DAILY ACUMEN}

Bad Decisions

Bad decisions. You know, those moments when your brain decides to go rogue. Here's a rundown of some of the classic hits:

Sample Size Syndrome: Ever heard of the saying, "Don't judge a book by its cover"? Well, we often judge everything by its cover—like that one time a single bad burrito made you swear off Mexican food forever.

Sheep Syndrome: We're social creatures, no doubt, but following the herd isn't always a smart move. Remember when everyone thought mullets were a good idea? Exactly.

Blind Spot Bonanza: Missing the forest for the trees, or in this case, missing the trending Netflix show for cat videos on YouTube. Sometimes, we're just oblivious to the bigger picture.

What's Next Amnesia: Not asking "and then what?" is like leaving a party without saying goodbye. Life's a sequence of events, so not thinking beyond the immediate outcome is like a one-way ticket to Oops-ville.

_{MEME-A-PALOOZA}

Memes of the Day