Good Morning! SpaceX dropped below its IPO opening price even after a flood of bullish Wall Street ratings, including a price target of $800 from Raymond James. A Manhattan building that’s being converted to apartments and once housed Pfizer's headquarters threatened to partially collapse. And HSBC is halting lending to riskier private credit funds after the firm says high-profile corporate bankruptcies exposed shaky underwriting standards across the industry.

JPMorgan and Bank of America held preliminary discussions to acquire a Fiserv network that could let them bypass federal debit-card fee caps. NYC's vacancy rate for rent-stabilized apartments is rising, with 57,000 units now sitting empty. And hedge funds shook off a brutal March to post their best first half since 2021.

Plus: Private equity firms are sitting on a nine-year backlog of unsold assets, and what Harvard Law faculty are reading this summer.

The largest firms are pouring billions into AI deployment. The smartest are turning to purpose-built solutions like Blueflame. See how Blueflame can help your firm.

SQUEEZ OF THE DAY

Small Caps on Generational Run

It seems like, ever since OpenAI dropped ChatGPT back in November 2022, the stock market has basically been one long Big Tech group project. With AI giants, chip stocks, and hyperscalers all ripping, small caps mostly watched from the sidelines. But in 2026, the little guys finally decided they wanted in.

The Russell 2000 jumped 22% in the first half of the year, its best start since 1991. It beat the Nasdaq by 9 percentage points, which is the widest first-half gap between the two indexes since 2006. And the winners are getting weird, with names like Cracker Barrel, Sezzle, and MaxLinear highlighting the biggest gainers.

And, so far in 2026, the setup has been pretty close to perfect. Smaller companies tend to borrow at floating rates and make most of their money in the U.S., so they like falling borrowing costs and consumers who are still willing to spend. Inflation pressure has eased, and the latest jobs report landed in the Goldilocks zone: soft enough to keep the Fed friendly, but not weak enough to stoke recession fears.

The earnings story is helping too. Analysts expect Russell 2000 companies to grow earnings 54% this year, more than double the rate expected for the Russell 1000. And it does not take much money leaving mega-cap tech to move the group. The entire S&P Small Cap 600 is worth about $1.83 trillion, roughly the same as Broadcom. 

There are caveats, and some of the rally is still just AI in a smaller outfit. The Russell 2000 also just sent some of its best performers up to the Russell 1000, which is basically developing a star player and immediately losing him in free agency. And small caps are more volatile, so the same trade that rips higher can also ruin your week by Tuesday.

Takeaway: While everyone is busy talking about SpaceX, mega-IPOs, and AI data centers, small caps are quietly having their best first half in 35 years. The macro backdrop is helping, and earnings expectations are strong. And after years of every investor crowding into the same handful of giant tech names, the rest of the market is finally doing something interesting. The AI trade is not dead, but it has company now.

PRESENTED BY BLUEFLAME AI

Private Equity Drops $4 Billion Just to Turn AI On

TPG, Advent, Bain Capital, and Brookfield recently put more than $4 billion into a joint venture with OpenAI. It’s not to buy a company but simply to get AI deployed. Blackstone and Goldman answered the same day with a $1.5 billion Anthropic version.

The biggest names in private markets are paying billions for deployment, because these chatbots lack the industry expertise to execute the work at excellence. A chat window can’t tear through a data room or build an LBO.

Deal teams are partnering with the freshly rebranded Blueflame, whose new agent, Amp, runs deal work end to end, from data room reviews to model builds and IC memos. It routes each task to the right model and only pauses where human judgment is needed.

See what AI built for finance can do for your firm.

HEADLINES

Top Reads

• Wall Street floods SpaceX with bullish ratings as quiet period ends (Yahoo Finance)

• NYC building collapse fears: midtown Manhattan high-rise evacuations (Fox News)

• Rogue Wall Street adviser steals $3.5M from client to fund lavish lifestyle (NY Post)

• HSBC retreats from riskier private credit lending, FT says (BB)

• JPMorgan, Bank of America and other banks explore a deal to shake up payments world (WSJ)

• Vacant rent-stabilized apartments on the rise in NYC (NY Post)

• Hedge funds shake off brutal March to post best half since 2021 (BB) 

• Private equity firms are sitting on a 9-year backlog (WSJ)

• Texas Stock Exchange goes live in Dallas, Y'all Street takes on Wall Street (Yahoo Finance)

• The $1.2 billion startup that wants to become Amazon Prime for savings (Fortune)

• Amazon plans to raise at least $25 billion through a bond sale to continue massive AI buildout (CNBC)

• Banks start bullish ratings on SpaceX: 'apex of civilizational ambition' (CNBC)

• Apollo's Slok says S&P 493's stalled margins are a big-tech risk (BB)

• Stellantis to sell small Fiat Topolino EV for $13,995 in US (CNBC)

• Will someone finally blink in the AI spending war? (WSJ)

CAPITAL PULSE

Markets Rundown

Market Update

• U.S. equities closed lower, led by weakness in technology and semiconductor stocks, while energy and defensive sectors outperformed.

• The PHLX Semiconductor Index fell more than 4% despite strong results from Samsung Electronics.

• WTI crude oil rose nearly 5% following renewed tensions in the Strait of Hormuz.

• Treasury yields moved higher, with the 10-year Treasury yield rising to 4.55%.

Earnings

• Second-quarter earnings season begins next week, led by reports from major U.S. financial institutions.

• S&P 500 earnings are expected to grow nearly 22% year over year, with technology and energy projected to lead profit growth.

• Full-year S&P 500 earnings are forecast to increase 24%, the strongest annual growth since 2014, excluding the post-pandemic rebound.

Midyear Performance

• The S&P 500 has gained nearly 11% year to date, including dividends, despite geopolitical uncertainty.

• U.S. mid-cap and small-cap stocks have outperformed, while developed international and emerging-market equities have also posted strong gains.

• Emerging markets have risen roughly 24%, supported by strength in technology-focused regions such as Taiwan and South Korea.

Movers & Shakers

• (+) Cloudflare ($NET) +9% after Scotiabank upgraded to Outperform and Truist, Mizuho, BTIG, and Cantor all raised price targets after last week’s Investor Day.

• (+) Figma ($FIG) +5% because Bank of America reinstated coverage with a Buy rating and a $30 price target.

• (–) Rivian ($RIVN) -18% after announcing a 75 million share equity offering, raising ~$1.5B to fund its loan requirements for the Georgia plant build-out.

Prediction Markets

• Kalshi’s new matchups: S&P 500 Return vs. Gold

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

Private Dealmaking

• Keyfactor, a digital identity management company, raised more than $1 billion

• Oratomic, a developer of a fault-tolerant quantum computer, raised $300 million

• Tripo AI, a Chinese builder of interactive 3D foundation models, raised $150 million

• Quaise Energy, a developer of geothermal energy drilling tech, raised $134 million

• Norm AI, a legal services startup, raised $120 million

• Super, a Toronto-based savings app, raised $65 million

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

BOOK OF THE DAY

If You’re So Smart, Why Aren’t You Happy?

Description:
A compelling blend of psychology, behavioral science, and personal development from Raj Raghunathan that explores why intelligence and success do not automatically lead to happiness. Drawing on years of academic research, the book identifies the common habits and mindsets that prevent high achievers from living fulfilling lives, while offering practical strategies to cultivate joy, stronger relationships, and lasting well-being. It argues that happiness is not the reward for success—it is a skill that can be intentionally developed.

Book Length: 272 pages
Release Date: May 3, 2016

Ideal For:
High achievers, professionals, and anyone interested in understanding the science of happiness and building a more fulfilling life without sacrificing ambition.

Happiness is not something you find after success, it is something you cultivate along the way.

DAILY VISUAL

China's Real Estate Slump Enters Its Fifth Year

PRESENTED BY DILIGENCESQUARED

How to Skip the $500k McKinsey Bill

Most funds skip commercial due diligence early on. Not because it wouldn’t help, but because at $500K to $1M a pop, they can’t afford to. So they wait until after initial IC and first-round bids, go deep on a few late-stage bets, and pray the thesis holds.

DiligenceSquared runs AI-native CDD at a fraction of that cost. Built by ex-Blackstone and BCG operators, it delivers investment-grade market and customer insight, so funds screen more targets earlier, reach conviction before the competition, and save the heavy spend for deals that already cleared the commercial bar.

Help your fund win deals faster. Book a demo today.

DAILY ACUMEN

Optionality Costs

Keeping every door open sounds like freedom, but it has a hidden price that compounds quietly over years. Every option you preserve is a commitment you refuse to make, and commitment is the only thing that produces the deep, cumulative advantages that actually change a life. The person hedging every bet stays flexible and shallow. The person who closes doors goes deep and pulls ahead.

This runs against every instinct to stay adaptable, to avoid being pinned down, to keep the escape routes clear. And in genuinely uncertain moments, optionality is worth paying for. But most people use it as a permanent strategy rather than a temporary tool, and permanent optionality is just a sophisticated way of never fully doing anything.

At some point the flexibility stops being an asset and becomes the reason nothing ever compounds. The doors you keep open cost you the room behind the one you refused to walk through.

ENLIGHTENMENT

Short Squeez Picks

• World Cup visitors marvel at American food

• What Harvard law school faculty are reading this summer

• Are you a morning person or night owl?

• If you do these 3 things, you have self-discipline

• How to make better decisions aligned with your leadership values 

MEME-A-PALOOZA

Memes of the Day

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