🍋 Debt Ceiling Impacting Bankers
The squeeze on how the debt ceiling could impact investment bankers, plus why Mizuho bought elite boutique Greenhill and AI wreaking stocks.
"Don't be afraid to give up the good to go for the great." — John Rockefeller
Good Morning! A fake AI-generated photo of an explosion at the Pentagon briefly went viral on Facebook, momentarily causing the S&P 500 to descend by 0.3% and wipe away $500 billion in value (the index quickly rebounded). TikTok sued Montana, demanding the state lift its ban on the social media platform.
Mizuho bought boutique investment bank Greenhill for what Bloomberg calls a $550 million bet the bank can convince its top talent to stay put. And all eyes are on debt ceiling talks - in today’s Story of the Day we’ll dive into the ‘so what’ about it for investment bankers.
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1. Story of the Day: How Does The Debt Ceiling Impact Bankers?
Unless you’ve been living under a rock, you’ve probably heard of the debt ceiling crisis. But for most of us, it’s nothing really more than a headline in the background. After all, it’s hard to consider that something that seems abstract and granular could impact our day jobs.
But it turns out the debt ceiling actually could impact finance professionals’ day-to-day jobs. The reason? Further dealmaking limbo.
M&A activity is the lifeblood of the investment banking industry. It’s been a rough year, but it was looking to some investment bankers like the worst was in the rearview mirror. Dealmakers love clarity, and we got some when the Fed signaled a willingness to pause interest rate hikes.
Right now, most dealmakers say are they’re dragging out M&A talks, hesitant to pull the trigger until greater clarity from Washington is provided. But if debt ceiling talks continue to drag on into June, expect deals to stay on the back burner. And a default could bring even more turmoil to the economy, likely dragging the investment banking industry down with it.
Takeaway: However, there is a glimmer of hope. If we manage to avoid a debt default and the Federal Reserve maintains interest rates at their current levels as expected, the M&A market might finally regain its footing. We could witness a resurgence in the fourth quarter of this year and carry that momentum into the early months of 2024.
2. Markets Rundown
Stocks closed higher as Wall Street eyes debt ceiling talks.
Movers & Shakers
(+) DraftKings ($DKNG) +5% after UBS upgraded the stock to buy on strong growth in new states.
(+) Pfizer ($PFE) +5% after a peer-reviewed study said an oral drug for weight loss showed faster results than its competitor.
(–) American Airlines ($AAL) -3% after the Department of Justice won a lawsuit to end its partnership with JetBlue in the Northeast.
Chevron bought PDC Energy for $6.3 billion
Mizuho bought boutique investment bank Greenhill for $550 million
Patient21, a digital primary care startup, raised $108 million
Hippocratic AI, a large language model developer, raised $50 million
Hallow, a faith-based app, raised $50 million
Ideal Semiconductor, a semiconductor startup, raised $40 million
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3. Top Reads
The healthcare plan most people should buy - and why they don’t (WSJ)
JPMorgan’s $3B bump from First Republic (YF)
Corporate America is doing fine as Q1 earnings show (Axios)
Could a stock market plunge solve the debt ceiling crisis? (CNN)
JPMorgan hosts its investors day (Reuters)
Morgan Stanley warns stock market rally is not start of bull market (Fox)
Meta hit with record $1.3B fine (CNBC)
In a deal drought, lawyers try M&A (Reuters)
Hedge funds rush to buy stocks on S&P 500’s momentum (BB)
4. Book of the Day: Burn Rate
At twenty-eight, fresh from Stanford’s MBA program and steeped in the move-fast-and-break-things ethos of Silicon Valley, Andy Dunn was on top of the world.
He was building a new kind of startup—a digitally native, direct-to-consumer brand—out of his Manhattan apartment. Bonobos was a new-school approach to selling an old-school product: men’s pants. Against all odds, business was booming.
Hustling to scale the fledgling venture, Dunn raised tens of millions of dollars while boundaries between work and life evaporated. As he struggled to keep the startup afloat, Dunn was haunted by a ghost: a diagnosis of bipolar disorder he received after a frightening manic episode in college, one that had punctured the idyllic veneer of his midwestern upbringing.
He had understood his diagnosis as an unspeakable shame that—according to the taciturn codes of his fraternity, the business world, and even his family—should be locked away.
As Dunn’s business began to take off, however, some of the very traits that powered his success as a founder—relentless drive, confidence bordering on hubris, and ambition verging on delusion—were now threatening to undo him.
A collision course was set in motion, and it would culminate in a night of mayhem—one poised to unravel all that he had built.
Burn Rate is an unconventional entrepreneurial memoir, a parable for the twenty-first-century economy, and a revelatory look at the prevalence of mental illness in the startup community.
With intimate prose, Andy Dunn fearlessly shines a light on the dark side of success and challenges us all to take part in the deepening conversation around creativity, performance, and disorder.
"Arrestingly candid . . . the most powerful book on manic depression since An Unquiet Mind."
5. Short Squeez Picks
The spectrum of financial independence and dependence
The mental benefits of seeking awe
7 of the best beach towns near NYC
How to use psychology to gain a competitive advantage in business
Cracking the code of executive presence
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6. Daily Visual: Golden Age of Liquidity Comes to an End
Americans who say they would cover a $400 emergency expense completely using cash or its equivalent
7. Daily Acumen
The F.I.R.E. (Financial Independence, Retire Early) movement is a financial strategy and mindset that aims to achieve financial independence at an early age, allowing individuals to retire and have greater freedom and flexibility in their lives.
Financial Independence: The goal of achieving financial independence is to accumulate enough wealth and passive income to cover your living expenses, without the need for traditional employment. This often involves saving a high percentage of your income, reducing expenses, and investing wisely.
Retire Early: The "Retire Early" aspect of the F.I.R.E. movement refers to the ability to leave traditional work at a younger age, typically in your 40s or even earlier. It provides the freedom to pursue passions, hobbies, travel, or engage in work that is personally fulfilling, without the constraints of a traditional 9-to-5 job.
The F.I.R.E. movement encourages individuals to adopt frugal lifestyles, focus on financial literacy, and make intentional choices with their money. It emphasizes saving and investing early, taking advantage of compounding interest, and reducing debt to expedite the path to financial independence.
While the F.I.R.E. movement has gained popularity, it's important to note that it may not be suitable for everyone. It requires discipline, long-term planning, and a clear understanding of personal financial goals and values.
However, incorporating some principles of the F.I.R.E. movement, such as mindful spending, saving, and investing, can benefit individuals in achieving financial security and greater control over their lives.
8. Memes of the Day
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