Good Morning! Private equity just logged its worst year since 2008, with a new Bain study showing deal volume down 6% and distributions near historic lows. Activists like Saba and Cox are circling Blue Owl as the private credit firm’s stock slides. And one former Citi exec says AI robots could outnumber humans within decades.

PayPal is drawing takeover interest after a multi-year slump wiped out nearly half its value. 42% percent of recent college grads are now classified as underemployed. Hedge funds that piled into U.S. Bitcoin ETFs were first to exit, cutting top-holder allocations 28% from Q3 to Q4 2025.

Plus: OpenAI’s partnerships with Accenture, BCG, Capgemini, and McKinsey, and the NYC dating events where women pay $100, men pay $0, yet women still outnumber men 3 to 1.

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SQUEEZ OF THE DAY

Citrini’d

Citrini Research dropped a Substack memo on Sunday, written as a fictional piece from 2028, modeling what a doomsday "left tail" scenario could look like if AI agents destroyed the economy.

The post flagged 10.2% unemployment, the S&P 500 down 38% from its October 2026 highs, and AI "exceeding every expectation." It went viral with 20M+ views on X and rippled through markets, wiping hundreds of billions in market cap.

The core idea is the "toll booth" problem. Businesses that sit in the middle of transactions and skim a fee (payments networks, delivery platforms, marketplaces) rely on being the default rails.

Citrini argues AI agents, programmed to optimize ruthlessly for cost, will route around fees wherever possible. Yesterday's moat becomes tomorrow's middleman risk. And when a stock is priced for perfection, that's exactly the kind of systemic downside markets tend to ignore until forced to look.

Delivery and payments names like DoorDash, Visa, and Mastercard sold off on fears that AI-handled purchasing would compress take rates and kill loyalty.

KKR, Blackstone, and Apollo also tanked as the memo flagged risks in private credit, if AI compresses SaaS pricing power, software revenue stops looking "durable," leveraged loans get marked down, and PE portfolios get revalued.

Citrini is explicitly modeling a hypothetical scenario, not issuing a forecast. But markets didn't sell because it's certain, they sold because it's plausible enough to force a repricing when positioning is crowded and multiples assume stability.

Takeaway: Markets are now pricing AI as a systemic downside factor, not just an upside productivity story. When a scenario analysis moves hundreds of billions in market cap, valuation is no longer just about growth, it's about whether your business model survives an AI agent that hates fees.

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HEADLINES

Top Reads

• Private equity's dry spell worse than 2008 crisis (BB)

• Activist hedge funds circle Blue Owl as private credit’s software jitters grow (CNBC)

• AI robots may outnumber workers in a few decades, ex-Citi executive says (CNBC)

• PayPal attracts takeover interest after stock slump (BB)

• 42% of recent college graduates are classified as underemployed (Forbes)

• Hedge funds that piled into US Bitcoin funds are first to exit (YF)

• KKR is said to acquire school firm XCL in $1.3 billion deal (BB)

• OpenAI lands multiyear deals with consulting giants in enterprise push (CNBC)

• Is the swipe era over? (NYT)

• How the AI debt binge shattered hyperscalers’ ‘unspoken contract’ with investors (CNBC)

• Private equity logjam hits record as firms struggle to sell (FT)

• Enhabit to go private in $1.1 billion deal with Kinderhook  (MSN)

• Dimon seeks to sell JPMorgan investors on $2B-a-week costs bill (FT)

• DEI rules that changed corporate boards are vanishing (WSJ)

• Citi nears Banamex stake sales to Blackstone, Televisa CEOs (BB)

CAPITAL PULSE

Markets Rundown

Market Update

• U.S. equities declined broadly after President Trump raised the global tariff rate under Section 122 to 15%

• Technology led losses, with software down ~4%

• Private investment managers sold off sharply; Blackstone and KKR fell more than 5%

• Financials dropped over 3%

• Defensive sectors outperformed, with consumer staples and health care each up more than 1%

• Treasury yields declined, with the 10-year at 4.03% and 2-year at 3.44%

• Gold rose more than 3% amid policy uncertainty

Policy Update

• Global tariff under Section 122 increased from 10% to 15%

• Tariffs can remain in effect for up to 150 days

• Effective U.S. tariff rate estimated to decline modestly to ~13.7%, from ~16% prior to the Supreme Court ruling

• Administration likely to pursue additional tariffs under Sections 301 and 232

Earnings

• 85% of S&P 500 companies have reported

• Q4 EPS growth tracking ~12.7%, above ~7% expected entering earnings season

• Technology earnings up 25%+ YoY, strongest among sectors

• Despite strong results, tech is down ~4% YTD, reflecting AI disruption concerns

• This week: NVIDIA (Wed), Salesforce, Home Depot, Lowe’s

Movers & Shakers

• (+) PayPal ($PYPL) +6% after the digital payments company is reportedly receiving takeover interest.

• (–) IBM ($IBM) -13% because Anthropic said Claude Code could modernize legacy systems that run on IBM’s COBOL.

• (–) Novo Nordisk ($NVO) -16% after the company’s weight loss drug failed to match Eli Lilly’s in a trial.

Prediction Markets

• The US potentially faces $150+ billion in refunds.

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

Private Dealmaking

• KKR & Co. will acquire a majority stake in XCL Education Holdings, a Southeast Asian K-12 school operator, for about $1.3 billion

• Ubicquia, a digital infrastructure company, raised $106 million

• Aalyria, an aerospace communications company, raised $100 million

• Fieldguide, an AI-enabled audit and accounting software platform, raised $75 million

• Ares Interactive, a video game developer, raised $70 million

• Spiro Medical, a medical device company developing neuromodulation treatments for asthma, raised $67 million

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

BOOK OF THE DAY

How To Live a Meaningful Life

Description: A thoughtful, practical guide to finding meaning and satisfaction through design thinking principles. Kemp shows how tools like empathy, prototyping, iterative learning, and intentional choice can help you clarify values, refine priorities, and build a life aligned with what truly matters. This is not abstract self-help, but a step-by-step framework for experimenting toward a life that feels purposeful and fulfilling.

Book Length: 240 pages
Release Date: Feb 3, 2026

Ideal For: Seekers of purpose, creative thinkers, designers, leaders, and anyone who wants a structured method for crafting a life that feels meaningful day to day.

“Meaning is not found, it is designed.”

DAILY VISUAL

Norway Wins the Winter Olympics

PRESENTED BY PARADIGM PRESS

A Little-Known Law That Could Change the Economic Playbook

Most market narratives focus on rates, earnings, or AI. Far fewer examine the legal infrastructure that governs how the U.S. mobilizes resources during periods of strategic urgency.

There exists a long-standing federal statute that gives the executive branch broad authority to coordinate industrial production, supply chains, and resource allocation when national priorities are at stake. Historically, this framework has only been used during moments of extreme economic or geopolitical pressure; and when activated, it has materially altered demand patterns across energy, materials, and manufacturing.

Understanding how government-directed industrial policy works (and where it concentrates capital) helps explain why certain sectors experience outsized, multi-year tailwinds while others stagnate. This isn’t about predictions. It’s about understanding structure, incentives, and historical precedent.

Watch the full video here.*

DAILY ACUMEN

Constraints

Phil Hansen developed a hand tremor that destroyed his ability to draw straight lines. His art career seemed finished. Then his teacher said: "Why don't you embrace the shake?" He did. That tremor became his signature. What was supposed to end his career defined it.

We spend enormous energy trying to eliminate our constraints instead of working with them. But constraints force creativity in ways that freedom never does.

The budget you don't have. The time you can't find. The skill you lack. These aren't obstacles to your best work. For many people, they are the best work. What limitation have you been fighting that might actually be your edge?

ENLIGHTENMENT

Short Squeez Picks

• Build 3 statement models, DCFs and LBOs in 10 minutes**

• Why sleep regularity is more important than sleep duration

• How to manage an insecure leader

• Hacks every AirPods user should know

• How introverts can measure their social battery

• Why AQ is a non-negotiable skill

MEME-A-PALOOZA

Memes of the Day

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