🍋 From Buyouts to Bailouts

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Good Morning! Mother's Day was a big consumer success this year. Americans spent an estimated $36 billion to celebrate, up $4 billion from 2022. And it’s been a busy couple of days in the private dealmaking landscape, with the magazine brand Forbes finding a new owner and Apollo’s co-founder closing his $6.05 billion takeover of the NFL’s Washington Commanders.

Airbnb's CEO is criticizing RTO mandates from bosses that will work remotely from the Hamptons and Europe this summer. Some venture capitalists are pausing AI investments and say many of these startups lack viable business plans.

And Taylor Swift's Era Tour is making waves, breaking records, and bringing economic prosperity wherever she performs. She performed in Philly this weekend - data from her Houston performances reveal occupancies surpassed those of the Final Four tournament just a few weeks prior.

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1. Story of the Day: From Buyouts to Bailouts

It’s been a wild few months for the banking industry. With big banks saddled with loans written before interest rates started rising, businesses need to start looking elsewhere for loans.

Enter the shadow banking industry. Large private equity firms don’t take deposits, so they’re able to take greater risks and they’re chomping at the bit to step into the vacuum.

Private equity firms pivoting to private credit is nothing new. The private credit industry has exploded sixfold since 2013 and is now worth $850 billion. And it could grow even more.

But amidst the banking turmoil, private equity firms are ramping up their involvement. Some experts say commercial real estate, for example, is going to need a new home and private credit could be a solution.

But it comes with risk. Private credit is alluring because it’s not hampered with the same financial regulation as banks. But what happens if the majority of American loans move to less-regulated entities on the heels of a recession?

Takeaway: The banking turmoil doesn’t change the fact businesses still need to borrow money. And many private equity firms are pivoting and essentially becoming full-fledged shadow banks. What could possibly go wrong? Private equity understands the debt markets very well but some economists aren’t so sure private equity firms will make good lenders at a large scale.

2. Markets Rundown

Stocks fell as banking, inflation concerns linger.

Movers & Shakers

• (+) First Solar ($FSLR) +26% after the company announced an acquisition of Evolar AB.

• (+) News Corp ($NWSA) +8% after the company's earnings exceeded analyst expectations.

• (–) Robinhood ($HOOD) -9% after Morgan Stanley said Robinhood’s new 24-hour trading won’t lift the company’s financials.

Private Dealmaking

• Citigroup wants to sell 90% of its stake in Banamex for $7 billion

• Crosspoint Capital Partners bought Absolute Software, a cybersecurity solutions provider, for $870 million

• Amino Health, a health benefits navigation startup, raised $80 million

• Modern Hydrogen, a hydrogen machine developer, raised $32.8 million

• Wellthy, a digital concierge for caregivers, raised $25 million

• Cable, a financial risk control startup, raised $11 million

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3. Top Reads

• A defense of short selling (Axios)

• Why the markets aren’t sweating the debt ceiling (BB)

• CEOs thought the return-to-office debate was over, but they were wrong (CNBC)

• Who would want to be a CEO? (NYT)

• America’s five-year sports betting cash craze (Axios)

• Why the U.S. needs regional banks (CNN)

• Plunging tax revenue addresses debt ceiling deadline (WSJ)

• Some top industrial CEOs still super bullish on the economy (YF)

• Chinese VCs lived the high Silicon Valley life, now the party’s over (Wired)

• Which states will be hit hardest if the debt ceiling standoff isn’t resolved (CNN)

4. Book of the Day: Starving Billionaires

The reality of hyperinflations is exponential price increases, worthless currency, and food shortages. They are normally preceded by war, revolution, famine, or pandemics. In some cases, they are the results of decades of fiscal malpractice. Inflation has become a prominent subject of discussion in the United States and across the world.

There have been dozens of recorded hyperinflations in modern history. The most devastating hyperinflation happened just after World War II in one of the Axis powers when prices surged by 4.19 quintillion percent. One quintillion is one followed by 29 zeros.

Prices doubled every few hours. The most recent hyperinflation episode has been happening in Venezuela since 2016. America has never had hyperinflation, but they came close twice. This book looks at ten prominent hyperinflations across history.

We look at what led to the hyperinflation, the first troubling signs, and government malpractices. We also pay close attention to life for the common man, life for wealthy Government officials, and popular inflation hedges employed by people and businesses.

Finally, we look at how the country attempted to solve the inflation problem and deleverage the currency.

“Imagine the price of a loaf of bread doubling in a matter of a few hours.”

5. Short Squeez Picks

• The difference between a growth and fixed mindset

• The top 5 skills you need for the future of work

• How to get more done during the day

• What is the point of your 20s?

• The mindset of millionaires

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• How to use automation to achieve "timefulness," the state of having enough time

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6. Daily Visual: US Average Retail Prices for Select Breakfast Foods

_{Source: Axios}

7. Daily Acumen

“Impossible is just a big word thrown around by small men who find it easier to live in the world they've been given than to explore the power they have to change it.

Impossible is not a fact. It's an opinion. Impossible is not a declaration. It's a dare. Impossible is potential. Impossible is temporary. Impossible is nothing.”

— Muhammad Ali

8. Memes of the Day

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