Good Morning! Disney hired its parks chief Josh D’Amaro to replace Bob Iger as CEO. Walmart crossed a $1 trillion market cap thanks to e-commerce and newer ventures powering growth. And Bitcoin briefly slid below $73,000, its lowest level since November 2024, as heavy selling resumed.

Ray Dalio is warning the world is “on the brink” of a capital war. A Brookfield-owned Chicago office tower sold for about 87% less than its pre-pandemic value. And Intel is ramping up its GPU push as the data center buildout accelerates.

Plus: Ex-Goldman rainmaker’s Primavera is back raising a fund, Japan now has a bar for people thinking about quitting their jobs, and the drinks are free.

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SQUEEZ OF THE DAY

SaaSpocalypse

The “SaaSpocalypse” is here, and AI is causing a slump in the software industry. And, surprisingly, private equity megafunds are some of the biggest losers.

Yesterday, Wall Street’s alternative-asset giants got hit like they were the software sector. For a decade, private equity treated application software as “the safest place to pay up,” and private credit treated that same software as “the safest place to lever up.“ And, yesterday, that leveraged software trade blew up. 

Blue Owl Capital dropped as much as 13% intraday before closing at its lowest level since September 2023. Ares Management, KKR, and TPG each fell more than 10% at one point, and Apollo and Blackstone slid as much as 8%. And it’s been a brutal start to the year for the group, with the big names down roughly 15% year-to-date and badly lagging the broader market.

Private equity firms loved SaaS, and it was supposed to be the exact high-margin, cash-flowing business that they crave. Recurring revenue was supposed to be sticky, contracts were supposed to renew, and the debt was supposed to look conservative. Now AI is attacking the exact assumption that made software lendable: that the product stays essential, pricing stays rational, and churn stays low.

The sell-off accelerated after Anthropic unveiled tools aimed at automating legal drafting and research. That struck a nerve as a reminder that AI is moving from demos to replacing billable workflows. Software stocks fell hard, and private equity stocks followed.

UBS analysts warned defaults in private credit could rise as high as 13% in an aggressive disruption scenario and, even if reality comes in well below that, markets don’t need apocalypse math to reprice a crowded trade. They just need enough uncertainty to force a higher risk premium on the entire software-backed credit stack.

Takeaway: Software was the perfect private-credit product because it looked predictable enough to leverage and boring enough to underwrite. Now AI is making it neither. If public software loans keep sliding and BDCs keep trading like the marks are wrong, the pressure will travel upstream fast: lower NAVs, tougher fundraising, and a lot more uncomfortable questions about how much of the private credit boom was really just leveraged confidence in yesterday’s business models.

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HEADLINES

Top Reads

• Disney names parks boss Josh D’Amaro as new CEO to replace Bob Iger (CNBC)

• Walmart joins the trillion-dollar stock club (Axios)

• Bitcoin hits lowest level since 2024 (CNN) 

• Cavu raises $325 million "better-for-you" consumer fund (Axios)

• Ray Dalio warns the world is ‘on the brink’ of a capital war (CNBC)

• Intel is moving into GPUs and has hired a chief architect (CNBC)

• Chipotle stock sinks after sales drop, dour outlook (YF)

• What Oracle has to lose from OpenAI and Nvidia’s rocky relationship (WSJ)

• Chicago office tower sells at an 87 percent discount to pre-Covid price (BB)

• Ex-Goldman rainmaker’s Primavera is seeking to raise fund (BB)

• Builders push ‘Trump homes’ to win backing for a million houses (BB)

• PepsiCo is cutting the price of Doritos, Cheetos and other snacks by up to 15% (CNN)

• Japan has a new bar just for people thinking about quitting their jobs, and the drinks are free (JT)

CAPITAL PULSE

Markets Rundown

Market Update

• U.S. equities closed lower, pressured by weakness in technology, particularly software

• Cyclical sectors such as energy and materials outperformed, alongside defensive consumer staples and utilities

• Asian markets finished higher overnight, led by a ~4% gain in Japan’s Nikkei; Europe was little changed

• Treasury yields were steady, with the 10-year ~4.27% and 2-year ~3.57%

• The House passed legislation funding five of six agencies and extending DHS funding for two weeks

Economic Data Highlights

• ISM Manufacturing PMI rose to its highest level since August 2022, signaling improving manufacturing momentum

• Bond markets were largely unmoved, reflecting a stable macro backdrop

• Government funding progress reduced near-term shutdown risk, though negotiations continue

Sector Trends

• Technology lagged amid concerns that advances in AI models could pressure legacy software business models

• Energy and materials benefited from cyclical strength

• Defensive sectors outperformed as investors rotated away from growth

Earnings Season

• With ~40% of the S&P 500 reported, Q4 earnings growth expectations have risen to ~10%, up from ~7% at the start of the year

• Technology earnings are tracking ~30% growth in Q4

• 2026 EPS growth expected to exceed 14%, with all sectors positive except energy

Market Context

• The S&P 500 gained 1.4% in January and is ~16% higher YoY

• Historically, a positive January has been associated with stronger full-year returns

• While not predictive, the combination of firm economic data, rising productivity, and strong earnings momentum supports a constructive outlook for 2026

Looking Ahead

• AI spending trends remain a key swing factor for market leadership

• Higher tax refunds tied to 2025 tax legislation may provide incremental support to consumers

Movers & Shakers

• (+) Palantir ($PLTR) +7% after beating earnings.

• (–) Novo Nordisk ($NVO) -15% because the drugmaker warned of a sales slowdown this year.

• (–) PayPal ($PYPL) -20% after the fintech company missed on earnings; appointed a new CEO.

Prediction Markets

• Earnings Call Spotlight (today after markets close): Alphabet

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

Private Dealmaking

• Brookfield Asset Management acquired Peakstone Realty Trust for approximately $1.2 billion

• Rocket Software, a Bain Capital portfolio company, acquired Vertica for $150 million

• Varo, a digital banking platform, raised $124 million

• Tandem, an AI platform focused on prescription workflows, raised $100 million

• Datarails, a financial planning and analytics platform for finance teams, raised $70 million

• Jetson, a manufacturer of residential heat pump systems, raised $50 million

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

BOOK OF THE DAY

Unplugged

Description: A candid, hilarious, and deeply human memoir from comedian and podcast pioneer Marc Maron. Maron takes readers behind the mic and off the beaten path, from his early days in stand up to the social revolution of MTV Unplugged and finally his transformative trek across the Sahara to Timbuktu. Along the way he reflects on art, failure, connection, and the messy, relentless pursuit of authenticity in a world obsessed with image.

Book Length: 320 pages
Release Date: October 14, 2014

Ideal For: Memoir lovers, comedians, seekers, storytellers, and anyone who appreciates vulnerability and humor delivered with unfiltered wisdom.

“Real connection begins where performance ends.”

DAILY VISUAL

Only 10% of Chinese Exports Go to the US

PRESENTED BY MOSAIC

M&A Term of the Day: Sources and Uses

Every major transaction answers two questions: What are you buying, and how are you paying for it? The Sources and Uses table lays out both sides in one clean schedule.

The "Uses" side lists what you're paying for: purchase price, transaction fees, and financing costs. The "Sources" side shows where the capital comes from, ranked by seniority. Senior debt sits at the top, followed by junior debt, mezzanine debt, preferred equity, and common equity at the bottom.

Common equity serves as the "plug," automatically solving to make both sides balance. In LBOs, this equity often splits between sponsor funds, management rollovers, and seller stakes.

If you want your LBO modeling made simpler, Mosaic automates the entire Sources and Uses build and handles complex multi-shareholder structures so you can model faster.

Try Mosaic’s LBO modeling platform today.

DAILY ACUMEN

Satisficing

Herbert Simon won a Nobel Prize for observing that humans don't optimize, we "satisfice." We don't find the best option. We find the first good enough option and stop searching.

This isn't laziness. It's rational given constraints. Finding the absolute best restaurant in a city requires visiting every restaurant. The search cost exceeds the benefit. So you find one that's good enough.

But we satisfice in the wrong places. We optimize trivial decisions, what to watch on Netflix, and satisfice crucial ones, who to marry, where to live. We spend hours comparing laptops but minutes choosing careers.

The key is knowing when to optimize and when to satisfice. Reversible decisions? Satisfice quickly. Irreversible decisions? Invest in optimization. Most people invert this.

ENLIGHTENMENT

Short Squeez Picks

• The tool you are missing to unlock focus

• Our lives don’t need to be overly confusing

• 6 essential skills for slow-time leadership

• How leaders sound smart without saying too much

• 12 marathons worth traveling for

• The sleep position that reduces depression symptoms by 30%

MEME-A-PALOOZA

Memes of the Day

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