Good Morning! Nvidia officially dethroned Tesla as Wall Street’s most traded stock, and the chipmaker reports earnings after the bell today. M&A is making a comeback faster than Wall Street expected, with total deal volume racing past $400 billion after Capital One bought Discover. Barclays is focusing on Britain, cost-cutting, and buybacks to win over investors. Elon Musk says patients at his brain interface startup Neuralink can control a mouse through thinking. Plus the paradox of goals, and how to overcome a negative workplace perception.

With reports of Barclays handing out bagels for bonuses, please help us increase Wall Street pay transparency by filling out your 2024 bonus number here. (even if it was a bagel)

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Private Credit Price Wars

Some of the largest investment banks on Wall Street like Goldman Sachs and Barclays are going all-in on private credit, trying to win back the underwriting deals they’ve lost to private equity over the past few years.

They’re even willing to venture into the riskier subordinated debt deals and dangle carrots like payment-in-kind (PIK) options to woo companies.

It's all part of investment banks’ plan to reboot their fee-generating engines, which sputtered to a halt as the Fed aggressively increased rates.

Now, with the debt markets on their way back again (after Fed paused rate hikes), these traditional lenders are ready to outdo the direct lending private equity titans such as Blackstone and Ares with more attractive price tags.

Last week, banks agreed to lend KKR $5 billion for a stake in Cotiviti, offering a lower rate than private credit (350bp spread vs the 525-550bp spread on offer from private credit).

However, the fight for fees isn't just about outmaneuvering direct lenders on price. It's also about reclaiming territory lost during a few rough years for banking. With the M&A market still shaky, banks are circling back to deals previously snapped up by private lenders, hoping to lure them back with the promise of refinancing in the syndicated market. 

Takeaway: When banks got conservative, private equity firms like Blackstone and Ares were ready to capitalize on the opportunity. But private credit isn’t exactly cheap, so a key strategy for these investment banks is trying to win on pricing. The golden age of private credit may slowly be turning silver, as banks reclaim their share of financing fees.

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_HEADLINES

Top Reads

• Blackstone, Advent said to be circling Sanofi consumer arm (YF)

• Retirements spike again as the stock market booms (Axios)

• Nvidia dethrones Tesla as Wall Street’s most traded stock (Reuters)

• Elon Musk says Neuralink patient can control a mouse through thinking (CNBC)

• M&A races past $400B after Capital One-Discover deal (YF)

• How companies are using generative AI to improve their businesses (WSJ)

• Barclays focuses on Britain, buybacks to win over investors (Reuters)

• New York rents are squeezing out the young and ambitious (BB)

• Super Micro short sellers notch $1.2 billion as shares fall (YF)

• Thanks to AI, business technology is finally having its moment (WSJ)

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Markets Rundown

Stocks closed lower on Tuesday and were dragged down by Nvidia.

Movers & Shakers

• (+) Discover Financial ($DFS) +13% after Capital One agreed to buy the company.

• (+) Barclays ($BCS) +12% after the bank reported earnings, strong cost-cutting initiatives.

• (–) Nvidia ($NVDA) -4% ahead of the company reporting earnings on Wednesday.

Private Dealmaking

• Truist sold its insurance brokering business to Stone Point Capital for $15.5 billion

• Walmart bought TV maker Vizio for $2.3 billion

• Recogni, an AI chip company, raised $102 million

• Kairos Aerospace, a methane leak detection startup, raised $52 million

• Rasa, a conversational AI platform, raised $30 million

• Tuum, a core banking tech startup, raised $27 million

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

_{BOOK OF THE DAY}

Impostor Syndrome

In 2006 Julia Lerner is living in Moscow, a recent university graduate in computer science, when she’s recruited by Russia’s largest intelligence agency. By 2018 she’s in Silicon Valley as COO of Tangerine, one of America’s most famous technology companies.

In between her executive management (make offers to promising startups, crush them and copy their features if they refuse); self promotion (check out her latest op-ed in the WSJ, on Work/Life Balance 2.0); and work in gender equality (transfer the most annoying females from her team), she funnels intelligence back to the motherland. But now Russia's asking for more, and Julia’s getting nervous.

Alice Lu is a first generation Chinese American whose parents are delighted she’s working at Tangerine (such a successful company!). Too bad she’s slogging away in the lower echelons, recently dumped, and now sharing her expensive two-bedroom apartment with her cousin Cheri, a perennial “founder’s girlfriend”.

One afternoon, while performing a server check, Alice discovers some unusual activity, and now she’s burdened with two powerful but distressing suspicions: Tangerine’s privacy settings aren’t as rigorous as the company claims they are, and the person abusing this loophole might be Julia Lerner herself.

The closer Alice gets to Julia, the more Julia questions her own loyalties. Russia may have placed her in the Valley, but she's the one who built her career; isn’t she entitled to protect the lifestyle she’s earned?

Part page-turning cat-and-mouse chase, part sharp and hilarious satire, Impostor Syndrome is a shrewdly-observed examination of women in tech, Silicon Valley hubris, and the rarely fulfilled but ever-attractive promise of the American Dream.

“A sharp novel about women in the workplace, the power of Big Tech, and the looming threat of foreign espionage.”

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What Americans Think About Medical Cannabis

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Sleep

Navigating life on minimal sleep distorts our reality, akin to wandering through a maze of funhouse mirrors. Sleep deprivation blurs the lines between reality and illusion, leading to a "fuzziness" in processing sensory input and philosophical inquiries about the reliability of our senses.

This state scrambles how we store memories, prioritize emotions, and perceive time, underscoring that the foundation of our cognitive faculties and ability to reason heavily depends on quality sleep.

Hence, prioritizing sleep is crucial not just for physical well-being but for maintaining the integrity of our perception and cognition, ensuring we can trust our understanding of reality itself.

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Short Squeez Picks

• The paradox of goals

• The people who use Notion to plan their whole lives

• Why scientists haven’t been able to crack consciousness 

• 4 biggest regrets from a digital nomad 

• How to overcome a negative workplace perception 

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Memes of the Day