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🍋 The Carry Crunch

🍋 The Carry Crunch

Plus: Millennium raised $30 billion, Oura is four times oversubscribed, and a JPMorgan alum made $640,000 running a NYC run club.

Short Squeez
September 28, 2026

Together With

“A lot of financial debates are just people with different time horizons talking over each other.” — Morgan Housel

Good Morning! Millennium's new capital raise attracted more than $30 billion, well above its $20 billion target. Peter Rahal, founder of RxBar and David protein bars, is now a billionaire after his parent company raised $250 million at a $2.25 billion valuation. And Citadel wants to hire more quants and increase its headcount at a “healthy” double-digit rate over the next year.

Oura's IPO is about four times oversubscribed and is on track to raise as much as $2.2 billion. A former JPMorgan algo trading sales associate built a run club side hustle in NYC that brought in $640,000 in 2025. And private equity firms, including CVC, are circling a Japanese company at the center of a 2024 contamination controversy.

Plus: Microsoft packaged its business AI into a single app to compete with Anthropic, Goldman sees hyperscaler AI capex rising 50% next year to $1.2 trillion, and is it better to be a good follower or a bad leader?

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SQUEEZ OF THE DAY

The Carry Crunch

For years, the Wall Street career path for the ultra smart was straightforward. If you graduated from a target school, could survive two years in investment banking, eventually you could jump to a private equity firm where you’d grind just a little bit longer before eventually getting filthy rich off carried interest. But in 2026, some PE professionals are starting to wonder whether they should’ve just stayed in banking.

Both private equity exits and carry are jammed up, which means a lot of PE professionals are still waiting on that promised “one more year” indefinitely. Higher interest rates jammed up the buyout machine earlier this decade, and ever since, firms have been sitting on thousands of companies they bought when debt was cheaper, and valuations were higher.

In the U.S. alone, private-equity firms are sitting on roughly 13,500 unsold companies, and PwC and PitchBook estimate it could take nine years to clear the backlog at the current pace. And since dealmakers generally don’t get their biggest carry payouts until investments are actually sold, a lot of theoretically valuable compensation is still stuck on paper. Blackstone, KKR and Carlyle alone had almost $17 billion of accrued performance compensation tied to unrealized investments at the end of last year, tripling from roughly ~$5 billion in 2018.

That matters because carry was a huge part of the reason people were willing to spend their 20s grinding for 80-100 hours a week and getting yelled at over LBO models. Once a fund clears its return hurdles, PE teams typically receive around 20% of the profits, and senior investors get the biggest slices. Partners at $10 billion-plus funds have an average of roughly $37 million of carry allocated to them over the life of a fund, making private equity one of Wall Street’s most tried-and-true paths to generational wealth.

Some executives are now borrowing against future carry just to fund commitments to new vehicles or cover major purchases while they wait for exits that keep getting pushed further out.

And some people are deciding they don’t feel like waiting. Mid-level investors are leaving PE to start companies, jump to competitors or even boomerang back into investment banking, where at least the bonuses look a lot more predictable.

One former Palladium VP left the rat race entirely and traded his Midtown office for a truck-equipment company in Oklahoma. Meanwhile, the share of first-year bankers ranking PE among their top three career choices slipped to 86% from 91% in 2024, and interest in corporate development, startups and AI has climbed.

Investment-banking bonuses are expected to rise 10% to 15% this year, versus basically flat pay at middle-market PE firms before carry.

The pain isn’t evenly distributed, and the rich keep getting richer. Blackstone, KKR, and other megafunds are starting to see exits recover, but smaller and middle-market firms are having a much harder time raising new funds and unloading aging investments. So the private equity industry looks a lot more K-shaped because the biggest platforms still have scale and multiple ways to make money, while everyone else is finding out that the golden days of launching a fund might be in the rearview mirror.

Takeaway: Private equity became Wall Street’s dream job because the upside was theoretically unlimited. But the catch is that carried interest only feels like compensation once somebody actually sells something. With thousands of companies stuck in portfolios and exits taking years longer than expected, some dealmakers are discovering that the safest path to getting rich in finance might, for once, be going back to banking and collecting a bonus every February.

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HEADLINES

Markets Rundown

Market Update

Stocks closed higher as Treasury yields stabilized and oil fell on reports Iran proposed a seven-day plan to reopen the Strait of Hormuz.
The 10-year Treasury yield closed slightly lower at 5.16% and the 2-year fell to 4.85%.
The 10-year yield rose more than 0.4 percentage points in September, its highest level since 2007.

Economic Data

Headline durable goods orders were unchanged in August, while core capital goods orders rose 1.6% and 14.9% year over year.
Computer and related product orders rose more than 17% from August 2025, reflecting AI infrastructure investment.
Nonfarm payrolls have increased by 214,000 over the past three months.

Rate Spike History

Since 1990, the 2-year Treasury yield has risen 0.5 percentage points in a month only 16 times, including September.
The S&P 500 fell 2% on average over the following three months, with a median of -0.5%.
Excluding periods of falling payrolls, average returns improved to 0.4% over three months and 9.5% over 12 months.

Movers & Shakers

(+) Microsoft ($MSFT) +4% after launching a new Copilot ‘super app’ that merges AI chat, coding, and Autopilot agents.
(–) Twilio ($TWLO) -8% because HSBC downgraded the communications platform to Reduce.
(–) Zscaler ($ZS) -10% after disclosing in an 8-K that Chief Revenue Officer Mike Rich is stepping down effective October 1.

Prediction Markets

The overwhelming favorite amongst traders is an “overheated” economy (below 5% unemployment with higher than 3.5% inflation).
Trade on real-world events with Kalshi. Use code OWS to get a $10 bonus when you trade $10.

Private Dealmaking

OpenEvidence, an AI search engine for doctors, raised $250 million
Savvy Wealth, a provider of back-office tech for RIAs, raised $100 million
HighLife, a French developer of transcatheter treatments for heart diseases, raised $90 million
Ultraviolette, an Indian developer of EV platforms, raised $85 million
BigHat Biosciences, a protein therapeutics developer, raised $75 million
Mind Security, an Israeli cybersecurity startup focused on preventing corporate data leaks, raised $72 million

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

BOOK OF THE DAY

The Curious Case of Mike Lynch

Description:
Katie Prescott chronicles the extraordinary life of Mike Lynch, the British technology entrepreneur who built Autonomy into one of the UK's most valuable software companies before its £11 billion sale to Hewlett-Packard triggered a decade-long legal battle. Prescott follows Lynch from his early life and rise through Cambridge's technology scene to the Autonomy deal, the fraud allegations and his eventual acquittal in the United States. The story then takes an extraordinary final turn: Lynch died in August 2024 when his yacht, Bayesian, sank off the coast of Sicily, only weeks after his acquittal. Drawing on extensive research and interviews, Prescott examines the money, personalities, corporate maneuvering, and legal battles surrounding one of the most consequential stories in British technology.

Book Length: 464 pages
Release Date: November 13, 2025

Ideal For:
Technology executives, entrepreneurs, investors, private equity professionals, and readers interested in software companies, M&A, corporate governance, fraud investigations, and the dramatic history of British technology.

“Great fortunes can be built through extraordinary ambition, but the larger the success, the greater the consequences when trust begins to unravel.”

DAILY VISUAL

Bond sell-off continues as 10-year yield hits 5.19%

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DAILY ACUMEN

Already Priced

When people say something is already priced in, they mean the market's current price already reflects what every participant collectively expects to happen, so the event itself, even a genuinely good one, doesn't move the price much when it arrives exactly as anticipated. What actually moves a price is the gap between what happens and what was expected, not the event in isolation.

This is why a company can report record earnings and see its stock fall the same day. The earnings were good. They just weren't as good as what the price had already assumed, and the market is constantly repricing the delta between expectation and reality, not the raw outcome itself.

The practical discipline this teaches is to stop asking whether news is good or bad and start asking what was already baked into the price before the news arrived. A mediocre report can send a stock up if expectations had fallen low enough, and a genuinely strong one can send it down if the bar had been set even higher. The surprise is the only thing that ever really trades.

ENLIGHTENMENT

Short Squeez Picks

Is it better to be a good follower or a bad leader?
How unrealistic workplace expectations cause burnout
How to have a great 1:1 meeting with your boss
Stop thinking others are happier than you
The paradox of trying too hard

MEME-A-PALOOZA

Memes of the Day

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