Good morning! Tesla’s revenue grew after two down quarters but missed earnings. Meta cut 600 jobs from its bloated AI unit, and Jamie Dimon’s portrait was chosen for the National Portrait Gallery honoring “extraordinary individuals.”

Unprofitable companies are outperforming profitable ones, with early results pointing to the best U.S. earnings in four years. Gold steadied as Bitcoin slumped, with the “debasement trade” losing steam, and traders at top hedge funds are taking home about 25% of profits.

Plus: Amazon plans to replace 500K+ U.S. jobs with robots, short sellers are trimming bets against BDCs after a $127M month, and Apollo says the AI energy gap won’t close in our lifetime.

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SQUEEZ OF THE DAY

Barbarians at the (Japanese) Gate

Japan’s running out of heirs and private equity is circling for the opportunity of the decade. Across the country, aging founders are realizing their kids would rather work in finance than run the father’s 70-year-old auto-parts business.

With inheritance taxes as high as 55% and heirs required to settle tax obligations within ten months, many owners simply choose to sell rather than let the government dismantle their companies.

That has created a $30B/year buyout boom in Japan. More than 65% of deals now come from “succession failures,” as tens of thousands of family-owned firms hit the wall at once. By next year, some 1.27 million SME owners aged 70+,  roughly a third of all family-run firms, are likely to have no successor.

PE megafunds like KKR, Carlyle and Bain Capital are now preferred buyers of old-line Japanese manufacturers that once prided themselves on remaining wholly independent. Their template: buy from a retiring founder, clean up the books, install professional management, and package it as a “succession solution.”

The cultural stigma around selling to private equity has largely vanished, foreign funds once feared for boardroom raids are increasingly seen as lifelines preserving legacy businesses.

And given sluggish U.S. deal flow, scarce exits, record global dry powder, low interest rates, a weak yen and a tsunami of willing sellers, Japan is emerging as one of the cleanest plays left on the board.

That said, all that glitters may eventually overheat. Historically, Japan’s PE penetration is still just about 0.4% of GDP (versus 1.3% in the U.S. and 1.9% in Europe), which means there’s significant runway for growth, but also one to watch carefully if everyone piles in.

Takeaway: Japan’s succession crisis has become private equity’s next big opportunity. The country built on loyalty and legacy is now handing over its small businesses to Wall Street. For funds starved of deals at home, the land of the rising sun is starting to look like the land of the falling heirs.

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HEADLINES

Top Reads

• Tesla stock dips after Q3 earnings miss and minimal robotaxi updates (YF)

• Meta lays off 600 employees within AI unit (CNBC)

• Companies with negative earnings are outperforming positive ones (Axios)

• Early U.S. earnings point to the best corporate results in four years (BB)

• Gold steadies while Bitcoin plunges as “debasement trade” rally stalls (YF)

• Amazon aims to replace over half a million US jobs with robots (NYP)

• Short sellers pare wagers against BDCs after a $127 million month (BB)

• Apollo says the AI energy gap won’t be closed in our lifetime (BB)

• Jamie Dimon portrait picked for National Portrait Gallery (Axios)

• UAE and Saudi PE-backed IPOs are gaining traction (BB)

• Barclays boss Venkat can’t see Dimon’s “cockroaches” even after Tricolor hit (BB)

• NHL deal with Kalshi adds pressure on sportsbooks (WSJ)

• Gold and silver stabilize after massive drops as the rally cools (BB)

• Why new NYC office towers are breaking ground (NYP)

• Barclays plays down £20bn private-credit exposure (Guardian)

• Fed lost access to private jobs data ahead of government shutdown (WSJ)

• Top hedge fund traders take home nearly 25% of profits (HW)

• Beyond Meat surges for a third straight day as meme traders pile in (CNBC)

CAPITAL PULSE

Markets Rundown

Market Update

• Equity markets declined sharply, extending October’s volatility.

• Nasdaq fell over 1%, dragged lower by weakness in mega-cap tech stocks.

• Small-caps underperformed, while bonds rallied, pushing the 10-year yield down to 3.95%, a new 2025 low.

• Oil prices rose more than 4% on expectations of new Russian sanctions but remain below $60 per barrel.

• Gold stabilized after yesterday’s sharp drop but remains around 6% off its recent peak.

Economic Data Highlights

• Earnings season remains a key focus, with 85% of S&P 500 companies that have reported beating estimates.

• If sustained, this would mark the strongest earnings season in four years, though only 20% of market cap has reported so far.

• Corporate balance sheets remain resilient despite trade and tariff headwinds.

• Amid the data blackout from the government shutdown, earnings continue to offer the clearest read on the economy’s health.

Reported Earnings

• Tesla (TSLA) – Tesla posted revenue growth after two straight down quarters but still missed earnings.

• IBM (IBM) – Delivered solid cloud and AI revenue growth, supporting overall results.

• SAP (SAP) – Posted steady performance, with strength in cloud services offsetting softness in European enterprise demand.

Earnings Today

• T-Mobile (TMUS) – Watch for subscriber growth and postpaid churn trends.

• Intel (INTC) – Focus on AI chip demand and data center recovery.

• Ford (F) – Key to monitor EV margins, pricing power, and union-related cost impacts.

Movers & Shakers

• (+) Winnebago ($WGO) +29% after the mobile home manufacturer reported strong earnings.

• (–) Netflix ($NFLX) -10% because the streaming company reported a large Brazilian tax hit.

• (–) Oklo ($OKLO) -14% after the Financial Times profiled the company as a $20B startup without any revenue.

Prediction Markets

• The current record is 35 days.

• Trade on real-world events with Kalshi. Use code OWS to get a $10 bonus when you trade $10.

Private Dealmaking

• Uniphore, an AI business cloud provider, raised $260 million

• Sesame, a smart glasses and conversational AI startup, raised $250 million

• Leju Robotics, a maker of humanoid robots, raised $200 million

• LangChain, an agent engineering platform, raised $125 million

• Spiro, an electric bikes provider, raised $100 million

• Elevara Medicines, a biotech focused on rheumatoid arthritis, raised $70 million

For more PE, VC & M&A deals, subscribe to our Buysiders newsletter.

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Book Length: 240 pages (Hardcover)
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DAILY ACUMEN

The Silent Edge

Everyone chases visible advantages. Titles, metrics, brand names.

The real edge is invisible.

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Like quiet capital, silent edges compound quietly until one day, they look like genius.

Visibility attracts applause.

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ENLIGHTENMENT

Short Squeez Picks

• Jeff Bezos tells Gen Z entrepreneurs to gain work experience 

• The power of a beginner’s mind

• 6 things doctors wish you’d stop lying about

• Don't confuse a nice boss with a good boss

• Scott Galloway says the key to landing jobs is to be as social as possible

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Memes of the Day

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