🍋 Elon Played Your MD

How Musk cost investment banks billions of dollars, plus Goldman's derivative bot, and GOMA > FAANG.

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Today’s edition is brought to you by hear.com, meet the device ushering in a new era of hearing clarity.

“Don't worry about the world coming to an end today. It's already tomorrow in Australia, and they're still trading stocks."Charles M. Schulz

Good Morning! It's been a disappointing year at 200 West Street but Goldman has a secret weapon up its sleeve - a derivatives robot. If you’re ready to ditch FAANG after this week’s earnings, you’re in luck - some analysts say GOMA (Google, OpenAI, Microsoft, and Anthropic) is the future of Big Tech. But with Apple set to unveil two new AirPod models next year, it’s safe to say they’re not going anywhere.

SBF's stepping up to testify at his trial this week, and it's a rare and unexpected move. Experts are calling it the ultimate legal Hail Mary. And it’s not just you frustrated by the bleak supply of apartments on StreetEasy - NYC has reportedly lost over 100k apartments thanks to people in rich neighborhoods combining units. It’s like the opposite of a Murray Hill flex 4-bedroom.

SQUEEZ OF THE DAY

Elon Played Your MD

It’s hard to believe it’s been a year since Elon Musk swiped Twitter X off the market for $44 billion. And he hit up MDs at Morgan Stanley, Barclays, and Bank of America to score $13 billion in financing. But, now a year down the line, it’s looking like he played these investment banks and torched their balance sheets.

You see, normally, lending for these take-privates is like a cash cow for the investment banks. They usually just pass the debt around to other Wall Street firms and make a quick buck in the process.

But investor interest in Twitter took a nosedive, and now the banks are stuck holding onto this bad debt. And it's not just any debt, they're expected to take a hit of around 15%, which translates to roughly $2 billion, when they finally offload.

That means the banks holding the biggest chunks are about to lose hundreds of millions. 

The banks planned to dump the debt by Labor Day. But they're struggling to get a decent rating on this mess, and it's no surprise with Twitter in chaos. Elon Musk suggested that Twitter was on the brink of bankruptcy, and to top it off, advertisers are pulling out left and right. So, Twitter could end up with a junk-bond rating.

Takeaway: In investment banking, they call it a 'hung deal,' and it's a rare sight - we haven’t really seen it since the 2007-08 crisis. The banks might eventually get rid of this debt, but they might get rekt taking a fat write-down in the process. Something tells us the next Elon LBO won’t be met as much enthusiasm as this one.

CAPITAL PULSE

Markets Rundown

The S&P 500 closed below 4,200 for the first time since May led by Alphabet’s disappointing earnings.

Movers & Shakers

  • (+) Stride ($LRN) +18% after the compliance startup posted earnings.

  • (–) Amazon ($AMZN) -6% because of cloud-computing slowdown fears.

  • (–) Alphabet ($GOOGL) -10% posted its worst day in over 3 years after missing earnings and an ‘evasive’ earnings call.

Private Dealmaking

  • AMN Healthcare bought MSDR, a healthcare staffing firm, for $300 million

  • HqO, a real estate experience platform, raised $50 million

  • Daiz, a plant-based proteins maker, raised $47.4 million

  • VedaBio, a molecular detection startup, raised $40 million

  • Neo, an asset management startup, raised $35 million

  • Kuku FM, an audio content platform, raised $25 million

Get access to private deal flow here.

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HEADLINES

Top Reads

  • Wall Street CEOs are sounding even more somber about the near future (YF)

  • Morgan Stanley picks its new CEO (CNBC)

  • The four intersecting risks that may hit the global economy (Axios)

  • Carlyle’s CEO sees alpha opportunities ahead in 2024 despite tailwinds (CNBC)

  • Bond selloff has recession indicator flashing new warning sign (YF)

  • Private equity wants a piece of your retirement (BB)

  • Apple TV+ gets a price hike (YF)

  • Bruce Springsteen shows private equity who’s boss (WP)

  • What it will take to make home ownership affordable for most Americans again (CNBC)

  • Princeton posts worst endowment return for the Ivy League (BB)

BOOK OF THE DAY

Determined

Robert Sapolsky’s Behave, his now classic account of why humans do good and why they do bad, pointed toward an unsettling conclusion: We may not grasp the precise marriage of nature and nurture that creates the physics and chemistry at the base of human behavior, but that doesn’t mean it doesn’t exist.

Now, in Determined, Sapolsky takes his argument all the way, mounting a full-frontal assault on the pleasant fantasy that there is some separate self telling our biology what to do.

Determined offers a marvelous synthesis of what we know about how consciousness works—the tight weave between reason and emotion and between stimulus and response in the moment and over a life.

One by one, Sapolsky tackles all the major arguments for free will and takes them out, cutting a path through the thickets of chaos and complexity science and quantum physics, as well as touching ground on some of the wilder shores of philosophy.

“One of our great behavioral scientists plumbs the depths of the science and philosophy of decision-making to mount a devastating case against free will.”

ENLIGHTENMENT

Short Squeez Picks

  • How to stop taking work so personally

  • Ken Griffin is building a $1 billion home

  • 9 tactics to master constructive feedback

  • If you want a game-changing side hustle, study Airbnb’s CEO

  • Confessions of a venture capital-backed startup faster

DAILY VISUAL

Americans' Trust in Media Plummets to Historic Low

Share who said they have a great deal or fair amount of trust in mass media

Source: Axios

HEARD AROUND THE STREET

Wall Street Corner

A Glimpse of Hope for London Investment Bankers

2023 was a rough year for investment bankers.

You know it’s bad when Goldman’s shelling out measly $10k bonuses to analysts.

Anyways, London investment bankers just got their bonuses - and there’s a glimmer of hope from across the pond.

In fairness, British bankers just relaxed rules putting caps on bonuses. But it’s looking like they got paid this fall.

Here’s to hoping it’s a sign of good things to come here in the States.

You can find the full London comp results here.

Source: efinancialcareers

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DAILY ACUMEN

Anxious Loop

To break the anxious loop:

Quit the "I'm always anxious" self-labeling. Your mind believes what you tell it, so speak kindly to yourself. Try "The Occasionally Anxious Adventurer" instead.

Speak up for what you want. No, this doesn't mean ordering an entire pizza for yourself, but it's about asking for what you need and being assertive. "More cheese, please?"

Stop those mind conversations with your worries. Just because worry rings your doorbell, doesn't mean you have to invite it in for tea. Observe, don't engage.

Less coping, more tolerance. Instead of the anxiety escape hatch, let it sit shotgun. It’s about acknowledging the anxiety is there, but not giving it the keys to the car.

Get better at saying "no." Poor boundaries are like the over-friendly neighbor who just won’t quit. Set some limits, and your anxiety might just get the message.

Exercise. It's not just for preventing you from being a potato, but it can also improve your sleep. And better sleep is like the fairy godmother of anxiety management.

Embrace the chaos. Life's a bit like jazz—sometimes you have to roll with the uncertainty instead of trying to play conductor to every note.

MEME-A-PALOOZA

Memes of the Day

 

 

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